Israeli Arabs boost ailing Palestinian economy

JENIN, West Bank (Reuters) - Israeli Arabs long banned from the occupied West Bank have converged on its cities in recent weeks to buy anything from groceries to makeup, taking advantage of lower prices and boosting the Palestinian economy.

Under U.S. pressure to ease Palestinian hardship, Israel has recently removed several key West Bank checkpoints, including one at the entrance to the city of Jericho.

Since May, Israel has also allowed its Arab population to visit the West Bank city of Nablus, though it restricts their entry by private car to Saturdays, when an average 3,000 shoppers arrive, according to the local Businessmen's Forum.

Hundreds of Israeli checkpoints remain in place, limiting Palestinian travel and trade, but the easing in restrictions is proving to be a boon for the Palestinian economy.

"No doubt the return of Arabs has contributed to ... commercial activity in Jenin," said Nasser Atyani, who heads the chamber of commerce in the northern West Bank city of Jenin.

"Many sectors in the city are benefiting. The restaurants are full of them.

On a recent Saturday, about 500 Israeli Arab shoppers took buses from around Israel to spend the day in Jenin's markets, stuffing their trolleys with everything from toys to fruit and vegetables, attracted by lower prices across the Green Line.

Established by a 1949 ceasefire, the Green Line divides Israel from the West Bank. Palestinians who stayed in Israel after the ceasefire received Israeli citizenship, with living standards higher than those in the West Bank, where taxes and prices are lower.

"I brought 500 shekels ($126) with me and I spent all of it," said Rasha Oweida. "Prices here are cheaper."

With her first visit a success, Oweida planned a repeat.

SECURITY MEASURES EASED

Before the first Palestinian Intifada, or uprising, of the late 1980s, Israeli Arabs comprised 80 percent of Jenin's customers, Atyani said. But shops that grew fat on Israeli Arab clients lost out when travel restrictions stopped them coming.

Israeli Prime Minister Benjamin Netanyahu says he is committed to policies that will boost the Palestinian economy in the West Bank, which is ruled by the Palestinian Fatah faction that has signed a peace deal with Israel.

Israel and many Western countries have sought to bolster Fatah against rival Islamist group Hamas since it took control of the Gaza Strip in mid-2007.

While an Israeli blockade against Gaza restricts imports to that territory, relaxed Israeli security measures at the Huwara checkpoint south of Nablus since mid-June have reduced waiting times, encouraging Arab visitors, said Tayel al-Huwari, who is on the board of the local Businessmen's Forum.

"On Saturday specifically, more than 50 percent of the merchants' income in Nablus comes from Israeli Arabs. Trade is noticeably greater on Saturdays," Huwari said.

Israeli authorities are considering allowing Israeli Arabs entry to the city by private car all week long, he added, arguing that prosperity could also promote peace.

"This would improve the economy in Nablus and create political calm. When there's a revitalized economy everyone will be preoccupied with the economy," Huwari said.

Local news website Ekhbaryat Network said on Saturday that about 100 shops and businesses had reopened since Israel began easing restrictions.

EAST JERUSALEM BUSINESS SUFFERS

But Israeli Arabs attracted by cheaper prices in the West Bank are largely ignoring the Arab shops of East Jerusalem.

Israel captured East Jerusalem in the 1967 Middle East war and considers the whole city its "united and eternal" capital, a claim not recognized internationally. Arabs make up some 34 percent of Jerusalem's 750,000 residents and do not recognize Israel's rule over occupied Arab East Jerusalem.

Israeli authorities tax Jewish and Arab businesses alike but Arab businesses say the taxes are more than their businesses can support leaving them unable to compete with West Bank prices.

Some believe Israel's aim is to turn business away from East Jerusalem to the West Bank, so Palestinians leave the city.

An Old City shopkeeper, speaking on condition of anonymity, said he owes nearly 100,000 shekels ($25,300) in property taxes.

Many small businesses in the Old City face the same problem.

"Business is so bad that you have a situation where people are prepared to sell their property on a very large scale to those who are willing to pay," said a senior official working for an international economic organization.

"There's huge demand from the Jewish side to actually purchase land in the Arab Old City."

Palestinians caught selling property to Israelis are seen as traitors and face death threats. But Jewish settlers get around this risk by offering secret buyouts to Old City shop owners, and promises to delay the actual takeover for years.

(Editing by Douglas Hamilton and Lin Noueihed)