© Jerusalem Policy Forum 2007 1 Towards Economic Development in East Jerusalem Now A Strategic...

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© Jerusalem Policy Forum 2007© Jerusalem Policy Forum 2007

Towards Economic Towards Economic Development in East Development in East Jerusalem NowJerusalem NowA Strategic Approach by the A Strategic Approach by the Jerusalem Policy ForumJerusalem Policy Forum

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Model

Elements

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IncreasingPoverty

IncreasingPoverty

Middle Class Flight

Middle Class Flight

Income InequalityIncome Inequality

Isolation from natural market

Isolation from natural market

Marginalized by PalestiniansAnd Israelis

Marginalized by PalestiniansAnd Israelis

Deterioration of institutions; Increasingly asymmetric capacities

Deterioration of institutions; Increasingly asymmetric capacities

Limited Tax Base; structural budget deficitLimited Tax Base; structural budget deficit

Context – Context – Where we are going?Where we are going?

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……Where we want to go…Where we want to go…

Improved and sustained economic activity that Improved and sustained economic activity that is beneficial to both Palestinians and Israelisis beneficial to both Palestinians and Israelis

Stable Employment – Jobs and IncomeStable Employment – Jobs and Income

Economic Growth and Opportunity Economic Growth and Opportunity

Change the priorities for governance…Change the priorities for governance…

FROM Politics and Security

TO Economics and Investment

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Taking the Right Taking the Right Approach…Approach…

Economic ActivityEconomic Activity Strengthen economic Strengthen economic

interdependence interdependence

““Rebrand” Jerusalem Rebrand” Jerusalem as an internationally-as an internationally-recognized economic recognized economic areaarea

SustainabilitySustainability Build on competitive Build on competitive

competencies competencies

Institute a fair and Institute a fair and equitable tax structure equitable tax structure and servicesand services

Preserve and protect Preserve and protect of private propertyof private property

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……Will Require the Capacity Will Require the Capacity to Act to Act

Strategically…Strategically…

Policies Programs Projects

Fairness Sustained EffortsOpportunity

Employers

Jobs

IncomesCapacity

Capacity to Plan and Act on a Sustained Basis

Quality of Life

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Key Recommendation:Key Recommendation:Build Capacity, Set Direction, and Ensure Build Capacity, Set Direction, and Ensure Accountability…Accountability…

SymptomsSymptoms Many organizationsMany organizations Mix of agendas, geography, & Mix of agendas, geography, &

leadershipleadership Competing for scarce resourcesCompeting for scarce resources

SymptomsSymptoms Many organizationsMany organizations Mix of agendas, geography, & Mix of agendas, geography, &

leadershipleadership Competing for scarce resourcesCompeting for scarce resources

CausesCauses No professional economic development No professional economic development

staffstaff No focused economic development No focused economic development

strategystrategy Limited public consensus about Limited public consensus about

developmentdevelopment

CausesCauses No professional economic development No professional economic development

staffstaff No focused economic development No focused economic development

strategystrategy Limited public consensus about Limited public consensus about

developmentdevelopment

InitiativesInitiatives

Jerusalem Economic ForumJerusalem Economic Forum Economic development strategyEconomic development strategy Secure International 3Secure International 3rdrd Party to Party to

Monitor ImplementationMonitor Implementation


Jerusalem Economic ForumJerusalem Economic Forum Economic development strategyEconomic development strategy Secure International 3Secure International 3rdrd Party to Party to

Monitor ImplementationMonitor Implementation

Organization & Strategy

R

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Detail: Detail: Jerusalem Economic ForumJerusalem Economic Forum

Mission Mission

guide strategy developmentguide strategy development Manage project development and Manage project development and

implementationimplementation monitor strategy implementationmonitor strategy implementation

CompositionComposition

Reps from leading sectors (e.g. Reps from leading sectors (e.g. tourism, health, education, retail, etc.)tourism, health, education, retail, etc.)

Palestinian/East JerusalemitesPalestinian/East Jerusalemites

Management & OrganizationManagement & Organization

Professional staffProfessional staff Leverage partnerships with “existing” Leverage partnerships with “existing”

organizations (e.g. Chamber of organizations (e.g. Chamber of Commerce, JPF, etc.)Commerce, JPF, etc.)

Tasks and ActivitiesTasks and Activities

Evaluate the market situation & identify Evaluate the market situation & identify short and long term market opportunitiesshort and long term market opportunities

Develop consensus on economic Develop consensus on economic development policies and programs; development policies and programs;

Identify priority projects in the economic Identify priority projects in the economic development strategy development strategy

Manage the preparation and Manage the preparation and implementation of the economic implementation of the economic development strategy development strategy

Work with public and private developers Work with public and private developers in formulating, planning, and in formulating, planning, and implementing economic development implementing economic development projects projects

Track economic development projects Track economic development projects and monitor economic development and monitor economic development progress.progress.

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Detail: Detail: 33rdrd Party Monitoring Party Monitoring

Mission Mission

To ensure To ensure implementation of the implementation of the economic strategy, economic strategy, including policies, including policies, programs, and projectsprograms, and projects

CompositionComposition

Reps from international Reps from international bodies with a supporting bodies with a supporting in the economic strategyin the economic strategy

Tasks and ActivitiesTasks and Activities

Establish benchmarks for Establish benchmarks for performanceperformance

Collect data about outcomesCollect data about outcomes

Report on monitoring effortsReport on monitoring efforts

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Examples of Policy InitiativesExamples of Policy Initiatives

SymptomsSymptoms

Uncompetitive tax situationUncompetitive tax situation Limited public services available to business Limited public services available to business

and communities and communities

SymptomsSymptoms

Uncompetitive tax situationUncompetitive tax situation Limited public services available to business Limited public services available to business

and communities and communities

CausesCauses

High tax burden on real estateHigh tax burden on real estate Unfair tax burden on certain industries Unfair tax burden on certain industries

compared to competitive locationscompared to competitive locations

CausesCauses

High tax burden on real estateHigh tax burden on real estate Unfair tax burden on certain industries Unfair tax burden on certain industries

compared to competitive locationscompared to competitive locations


Evaluate the equity and application of Evaluate the equity and application of business, property, and personal income business, property, and personal income taxestaxes

Recommend policies for tax equalization to Recommend policies for tax equalization to ensure competitive industry ensure competitive industry


Evaluate the equity and application of Evaluate the equity and application of business, property, and personal income business, property, and personal income taxestaxes

Recommend policies for tax equalization to Recommend policies for tax equalization to ensure competitive industry ensure competitive industry Taxes

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Examples of Policy InitiativesExamples of Policy Initiatives

SymptomsSymptoms

Limited building development activityLimited building development activity Limited investment activityLimited investment activity

SymptomsSymptoms

Limited building development activityLimited building development activity Limited investment activityLimited investment activity

CausesCauses

Building permit unapproved for development in Building permit unapproved for development in East JerusalemEast Jerusalem

Incentives unavailable and/or unsuited for E. Incentives unavailable and/or unsuited for E. JerusalemJerusalem

CausesCauses

Building permit unapproved for development in Building permit unapproved for development in East JerusalemEast Jerusalem

Incentives unavailable and/or unsuited for E. Incentives unavailable and/or unsuited for E. JerusalemJerusalem InitiativesInitiatives

Enforce development lawsEnforce development laws PermittingPermitting IncentivesIncentives


Enforce development lawsEnforce development laws PermittingPermitting IncentivesIncentives“Favorable”

EnforcementRaed

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Examples of Program Examples of Program InitiativesInitiatives

SymptomsSymptoms

International business not locating in JerusalemInternational business not locating in Jerusalem Declining key sectors, such as TourismDeclining key sectors, such as Tourism

SymptomsSymptoms

International business not locating in JerusalemInternational business not locating in Jerusalem Declining key sectors, such as TourismDeclining key sectors, such as Tourism

CausesCauses

Uncompetitive trade policies with international Uncompetitive trade policies with international marketsmarkets

Stigmatized location by international Stigmatized location by international organizationsorganizations

CausesCauses

Uncompetitive trade policies with international Uncompetitive trade policies with international marketsmarkets

Stigmatized location by international Stigmatized location by international organizationsorganizations


Target recruitmentTarget recruitment

Capital Improvement Program to Enhance Capital Improvement Program to Enhance “Jerusalem Brand” “Jerusalem Brand”

Regional co-marketing initiative for Tourism Regional co-marketing initiative for Tourism industryindustry


Target recruitmentTarget recruitment

Capital Improvement Program to Enhance Capital Improvement Program to Enhance “Jerusalem Brand” “Jerusalem Brand”

Regional co-marketing initiative for Tourism Regional co-marketing initiative for Tourism industryindustry

Business Development

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Examples of Project InitiativesExamples of Project Initiatives

SymptomsSymptoms

Declining key sectors, such as TourismDeclining key sectors, such as Tourism

SymptomsSymptoms

Declining key sectors, such as TourismDeclining key sectors, such as Tourism

CausesCauses

Lack of capital investment in Hotel room supplyLack of capital investment in Hotel room supply Reduced tourist activityReduced tourist activity Available incentive programs not geared to East Available incentive programs not geared to East

Jerusalem Hotels and ownersJerusalem Hotels and owners

CausesCauses

Lack of capital investment in Hotel room supplyLack of capital investment in Hotel room supply Reduced tourist activityReduced tourist activity Available incentive programs not geared to East Available incentive programs not geared to East

Jerusalem Hotels and ownersJerusalem Hotels and ownersInitiativesInitiatives

Rehabilitate hotel room to enhance Rehabilitate hotel room to enhance regional marketing and tourism regional marketing and tourism activityactivity


Rehabilitate hotel room to enhance Rehabilitate hotel room to enhance regional marketing and tourism regional marketing and tourism activityactivity

Key Industry Development

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Example: Example: Rehabilitate Hotel RoomsRehabilitate Hotel Rooms

ProposalProposal

Capital investment in underutilized Capital investment in underutilized hotel room supply in E. J.hotel room supply in E. J.

RationaleRationale

Shorten time to marketShorten time to market

reduce capital costreduce capital cost

PartnersPartners

Hotel owners and operators in E Hotel owners and operators in E JerusalemJerusalem

CostCost

$30M$30M

long term secured financinglong term secured financing

OutcomesOutcomes

1000 rooms1000 rooms

increased tourist penetration into E. increased tourist penetration into E. Jerusalem Jerusalem

increased overall capacity in increased overall capacity in JerusalemJerusalem

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What We Need…NowWhat We Need…Now

Consensus and international support for the Consensus and international support for the approach approach

Support the costs of establishing and operating the Support the costs of establishing and operating the Jerusalem Economic Development Forum for 3 Jerusalem Economic Development Forum for 3 yearsyears

Support the costs of identifying, recruiting, and Support the costs of identifying, recruiting, and hiring a professional economic development staffhiring a professional economic development staff

Intent to support and leverage others to support Intent to support and leverage others to support priority economic development programs and priority economic development programs and projects.projects.

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End

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SymptomsSymptoms No air access to East Jerusalem regionNo air access to East Jerusalem region Air Access needed for Tourism sector and Air Access needed for Tourism sector and

international businessinternational business No free access; all access controlled by No free access; all access controlled by

IsraelIsrael

SymptomsSymptoms No air access to East Jerusalem regionNo air access to East Jerusalem region Air Access needed for Tourism sector and Air Access needed for Tourism sector and

international businessinternational business No free access; all access controlled by No free access; all access controlled by

IsraelIsrael CausesCauses Difficulty securing air corridor around Difficulty securing air corridor around

JerusalemJerusalem May compete with B-G for international May compete with B-G for international

traveltravel

CausesCauses Difficulty securing air corridor around Difficulty securing air corridor around

JerusalemJerusalem May compete with B-G for international May compete with B-G for international

traveltravelInitiativesInitiatives

Evaluate the financial and security Evaluate the financial and security issues for opening the Qalandia Airport; issues for opening the Qalandia Airport; prepare and implement a plan for the prepare and implement a plan for the airportairport


Evaluate the financial and security Evaluate the financial and security issues for opening the Qalandia Airport; issues for opening the Qalandia Airport; prepare and implement a plan for the prepare and implement a plan for the airportairport

Access

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SymptomsSymptoms

Deteriorating business districtsDeteriorating business districts Limited services available to local residentsLimited services available to local residents Low quality public spacesLow quality public spaces

SymptomsSymptoms

Deteriorating business districtsDeteriorating business districts Limited services available to local residentsLimited services available to local residents Low quality public spacesLow quality public spaces

CausesCauses

Limited funding for public spacesLimited funding for public spaces No coordinated plans for neighborhoods No coordinated plans for neighborhoods Underperforming businesses in neighborhood Underperforming businesses in neighborhood

business districtsbusiness districts

CausesCauses

Limited funding for public spacesLimited funding for public spaces No coordinated plans for neighborhoods No coordinated plans for neighborhoods Underperforming businesses in neighborhood Underperforming businesses in neighborhood

business districtsbusiness districts InitiativesInitiatives

Identify plans for the redevelopment of Identify plans for the redevelopment of neighborhood business district throughout neighborhood business district throughout East Jerusalem, including public East Jerusalem, including public improvements, business development, and improvements, business development, and financing optionsfinancing options


Identify plans for the redevelopment of Identify plans for the redevelopment of neighborhood business district throughout neighborhood business district throughout East Jerusalem, including public East Jerusalem, including public improvements, business development, and improvements, business development, and financing optionsfinancing options

Business Districts

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SymptomsSymptoms

Little or no investment by International business Little or no investment by International business communitycommunity

Few relocations and/or expansionsFew relocations and/or expansions

SymptomsSymptoms

Little or no investment by International business Little or no investment by International business communitycommunity

Few relocations and/or expansionsFew relocations and/or expansions

CausesCauses

Jerusalem is stigmatized as “disputed” territory; Jerusalem is stigmatized as “disputed” territory; unclear what jurisdiction and benefits may applyunclear what jurisdiction and benefits may apply

Few high quality sites and buildings “ready to Few high quality sites and buildings “ready to go”go”

CausesCauses

Jerusalem is stigmatized as “disputed” territory; Jerusalem is stigmatized as “disputed” territory; unclear what jurisdiction and benefits may applyunclear what jurisdiction and benefits may apply

Few high quality sites and buildings “ready to Few high quality sites and buildings “ready to go”go”


Model for an International District in Model for an International District in JerusalemJerusalem

““Ready” sites and buildings to house Ready” sites and buildings to house business interested in East Jerusalem business interested in East Jerusalem locations locations


Model for an International District in Model for an International District in JerusalemJerusalem

““Ready” sites and buildings to house Ready” sites and buildings to house business interested in East Jerusalem business interested in East Jerusalem locations locations

International District

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Detail: Detail: International International DistrictDistrict

ProposalProposal

Create globally-competitive Create globally-competitive international business zones in the international business zones in the Jerusalem regionJerusalem region

RationaleRationale

International business require International business require “conflict free” development areas“conflict free” development areas

Create stable areas where Israelis, Create stable areas where Israelis, Palestinians, and International Palestinians, and International business can work togetherbusiness can work together

PartnersPartners

Jerusalem Development AuthorityJerusalem Development Authority

Palestine Investment FundPalestine Investment Fund

OutcomesOutcomes

Benchmarks for district performanceBenchmarks for district performance

Model of legal, financial, Model of legal, financial, infrastructure, development, and infrastructure, development, and governance issuesgovernance issues

Alternative implementation strategiesAlternative implementation strategies

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Request ¸

Legend

Jerusalem Governorate - J1 & J2

East Jerusalem - J1

Ethnicity

Arab

Jewish

West Jerusalem - J0

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