A New Loan Program Helps West Bank Small Business

There is a growing faction that views disparity in income and a dearth of economic opportunities in the Middle East as much of a factor that fuels extremism and volatility as violence — and one that has just as much gravitas to push the seemingly intractable Israeli-Palestinian peace process forever off its shaky hinges. In tandem with the political process, this group sees bolstering economic progress as an important strategy to secure a viable, sustainable path to peace. And that road they contend is trod with entrepreneurship. Moreover, unlike the unpredictable peace process, this is an approach with both measurable and tangible results.

Israeli industrialist Stef Wertheimer, the founder of Iscar Industries has devoted much of his time and resources to establishing industrial parks that help Israeli and Arab entrepreneurs in some of the lowest income, underdeveloped areas in Israel. Last year, when I wrote about Wertheimer, his handful of industrial parks had helped 175 companies develop, employed 5,000 people, and in 2007 had produced collective sales of $750 million. When I spoke with him, his sixth park established outside of Istanbul, Turkey in 2003 had grown to 70 companies that employed 300 people.

The Middle East Investment Initiative (MEII), a Washington D.C.-based non-profit group is another strong proponent of using businesses to create sustainability and peace. Established in 2005, MEII was formed specifically to stimulate the region’s fragile economies. And for the past two years, MEII (along with its partners, OPIC, the Palestinian Investment Fund, and CHF International) has been the quiet force behind a $228 million loan guarantee program helping small and medium-sized business ventures in the West Bank.

That is the reason why Berl Bernhard, the organization’s chairman and James Pickup, its president, swung by BusinessWeek’s New York office today. On their way to the Middle East, the pair came in to discuss this program that has helped a number of Palestinian businesses get off the ground for the first time.