The destiny of Area C holds the key to the peace process

Israel has manipulated the West Bank's geography in a way that is very costly to the Palestinians, both economically and politically.

For most news reports the focus of the Israeli-Palestinian dispute is the so-called peace talks which John Kerry, the US secretary of state, has cajoled both sides to resume, even though neither side holds any real hope that they will lead to a Palestinian state.

Far away from this sideshow, a battle for control of the land is being waged on a daily basis in an area of the West Bank known as Area C. Beneath this bland administrative label beats the heart of the Israeli-Palestinian conflict.

The “C” refers to the division of the West Bank territory into three zones under the Oslo peace accords, signed 20 years ago. Areas A and B refer to the main towns and villages, where 96 per cent of West Bank Palestinians live, and where the Palestinian Authority, the government in embryo, has civilian and, in some cases, security control. These population centres are an archipelago of more than 200 little islands separated by great swathes or little fingers of Area C, the 61 per cent of the territory where Israel retains exclusive control.

Area C is where all the Israeli settlers – 325,000 in the West Bank excluding East Jerusalem – live. It includes their settlements’ municipal areas – the land earmarked for expansion – their access roads and security zones, as well as large swathes under army control.

When the A, B, C paradigm was revealed, right-wing Israelis used to joke that their country was going to be salami-sliced into nothing, with the final slice being “Area Z”, Ben-Gurion airport, from which the last Jews of Palestine would be forced to fly out to a new life.

Exactly the opposite has happened. It is the West Bank Palestinians who are cooped up in the 39 per cent of the land where they are allowed to live and build their homes unrestricted. The division of this meagre portion of land into separate enclaves gives the Israeli army an unmatched matrix of control.

Twenty years ago it was planned that Palestinians would gain control of Area C within five years, but the final status talks promised under the Oslo accords never concluded. Some 150,000 Palestinians live in Area C, but their communities are not allowed to develop on most of the territory. New houses are destroyed by order of the Israeli army, even as Israeli settlements grow. Seventy per cent of communities in Area C have no piped water and have to rely on tanker deliveries – making the poorest people pay the highest price for their water.

For years there was a consensus among the Palestinian Authority and foreign aid donors to de-emphasise development of Area C. It was a hopeless case. They could not build anything there because the Israelis would not give a permit and any structure would be knocked down. The residents were mainly poor, sometimes living in caves or shacks, at the mercy of settlers who wanted to clear them off.

That conspiracy of silence has now broken down. The harsh reality is that the Palestinian Authority can no longer live, as it has done for the past decade, on foreign donations. If it is to develop a viable economy it needs room to expand, to develop agriculture, mining and Dead Sea tourism. At the moment all those avenues are closed as the Palestinians cannot expand outside their scheduled enclaves, and moving around is at the whim of the army, even though it claims to have removed several checkpoints in recent weeks.

This week the World Bank issued a report linking the weakness of the Palestinian private sector to the restrictions enforced by the Israelis in Area C: "It is richly endowed with natural resources and it is contiguous, whereas Areas A and B are smaller territorial islands. The manner in which Area C is currently administered virtually precludes Palestinian businesses from investing there."

If the Israelis allowed free access, the benefit to the Palestinian economy would be $3.4 billion a year.

The report warns that the finances of the Palestinian Authority are unsound. Growth is slowing and borrowing is spiralling out of control. Most seriously, foreign aid has dropped by half over the past three years. Faced with the prospect of Egypt going bankrupt, and having to fund relief for a humanitarian crisis in Syria, foreign governments have less money for Palestine and its economy of “donor-financed consumption”, where one quarter of the working population is on the PA payroll.

The logic of the World Bank report is cogent, but is it any closer to reality than the peace talks? Israel has never shown itself keen to reward the Palestinians without major concessions. What interest does the government of Benjamin Netanyahu have in thickening the Palestinian presence there?

Naftali Bennett, leader of the Jewish Home party and a right-wing partner in Mr Netanyahu’s coalition, has called for the annexation of Area C as a way to preclude all talk of a Palestinian state.

That course of action is unlikely in the short term. Area C as currently constituted is a brilliantly flexible means of controlling the territory, making land available for Jewish settlement and corralling the Palestinians inside the smallest areas.

But it may not be possible for it to continue unchanged. If the situation deteriorates, with the peace process running out of road, the economy on its knees and foreign donors out of patience, the Palestinian Authority may have no choice but to dissolve itself. Then Israel, as the occupying power, would have to pick up the bill for administering the Palestinians of the West Bank. And why shouldn’t Israel pick up the cost rather than European taxpayers?

Of course Israel would not want this. It would shed a harsher light on Israel as the occupying power. So if it wants to avoid that, it will have to allow some real economic development in the West Bank. And that means heeding the World Bank’s prescriptions on opening up Area C to Palestinian investment and construction, unpalatable as that may be to the Netanyahu government.

On Twitter: @aphilps