A Good News Story for Palestinians – And Public, Private Partnerships

Doug Wilson
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Posted: Sep 24, 2007 12:00 AM
A Good News Story for Palestinians – And Public, Private Partnerships

Conservatives yield to no one in our criticisms of government. We ridicule bloated programs, lampoon inefficient management, and yearn for the day when private sector principles bring some measure of accountability to the federal government.

But if we are to remain so prone to criticize, we must also, in order to retain our credibility, be able to point to examples where the private sector or public-private partnerships have delivered—or are likely to deliver—solutions to our thorniest public policy problems.

We have such an example in the recently approved Middle East Investment Initiative (MEII), a $228 million partnership that will provide loans to business owners and entrepreneurs in Palestine. This public-private program has taken shape over two years of collaborative efforts between the Aspen Institute, the American Overseas Private Investment Corporation (OPIC), and the Palestine Investment Fund (PIF).

Under the plan, small and family-owned businesses in Palestine are eligible for loans, ranging from $10,000 to $500,000. The program specifically targets small and medium-sized businesses because they comprise 90 percent of the registered businesses in Palestine, and thus stand to gain the most from such an endeavor.

Participating Palestinian commercial banks, microfinance institutions, and non-governmental organizations will administer the financial assistance, which is guaranteed by OPIC and the PIF. Donations from American, European, and Arab donors to the nonprofit and non-ideological Aspen Institute will cover most of the operating costs. The Norwegian government alone has pledged to contribute $5 million.

The sharp minds behind this program understand that economic prosperity does not guarantee peace, or even fully safeguard basic human rights. But it does give individual citizens a skin in the game that they might have never had otherwise. Indeed, this program does a great deal to take down the high collateral barriers that have prevented many Palestinian businesses from procuring loans that could help them grow their businesses and, in turn, expand economic opportunity for others.

What might that economic expansion look like? Well, some estimates say the program could increase employment at small businesses by as much as 400 percent and at larger firms by 240 percent. The average output of all businesses is expected to increase by 90 percent, certainly a number worth an investment.

In the end, the hope is that a society with a flourishing market and open exchange of goods is more likely to be peaceful and self-sufficient than a society plagued by high levels of unemployment and government corruption that diverts the flow of goods and resources to the elite at the expense of the common man.

That same common man is at the heart of this program, as Karen Hughes, Under Secretary for Public Diplomacy and Public Affairs, said at the launch of MEII in the West Bank: "This is not America telling the Palestinian people what they should do. This is America asking, 'What are your dreams? What are your plans? What do you want to achieve?' and providing a way to help you pursue these goals."

While President Bush approved this effort, it's important to note that it was conceived by the Aspen Institute. Indeed, the public-private nature of this program is what makes it so extraordinary. Berl Bernhard, chairman of MEII and a trustee and past-chairman of the Aspen Institute, recently said as much when he noted that "this is neither charity nor a foreign-imposed solution."

The Aspen Institute is certainly no stranger to efforts to assist the Middle East; it has been the focus of some of their most valiant policy efforts. The Aspen Institute is home to the Middle East Strategy Group, whose members are well-known American, Palestinian and Israeli businesses leaders and policy makers who advance practical and peaceful market and political initiatives in hopes of creating and maintaining a two-state solution for the Israeli and Palestinian peoples. This is the private sector at its finest: bringing together the best and brightest minds to solve serious problems.

In an age increasingly defined by over-hyped progressivism, it is refreshing, even surprising, to find a policy that so embodies the very essence of economic conservatism—creating the basic conditions necessary for individuals to provide for themselves. Then again, maybe we shouldn't be surprised to find the private sector generating free market solutions. It is, after all, what it does best.