Doron Baidatz’s cattle ranch in northern Israel has been trapped in the center of a Middle East standoff.

Baidatz typically sells all his cattle to Palestinians, but after Palestinian Prime Minister Mohammad Shtayyeh banned new beef imports in September, he was frozen out of his main market, and business has never been so bad. “We don’t remember any crisis like this,” said Baidatz, who also leads the Israeli Cattle Breeders’ Association.

After the publication of President Trump’s peace plan made the prospect of a Palestinian state even more remote, Israeli farmers’ prospects dimmed further. Palestinians have made it a national priority to divorce their economy from Israel’s and free it from the tight grip Israel maintains over it as an occupying force for more than half a century.

The feud over cattle has kicked off a series of escalating tit-for-tat trade restrictions that have led to a two-way halt in agricultural exports and the biggest trade showdown ever between the regional powerhouse and its tiny vassal economy.

“There were some incidents like this in the past, but it wasn’t coming to this kind of clash,” said David Brodet, who was Israel’s chief negotiator for the economic agreement the sides signed a year after their peace agreement in 1993.

The ban on cattle imports predated the unveiling of the Trump peace plan last month, but Palestinians strongly suspected the blueprint would adhere largely to Israel’s viewpoint, and they rejected it sight unseen, and then again, after their suspicions were confirmed. Among other things, the plan allows Israel to annex 30 percent of the West Bank – the heart of the Palestinians’ hoped-for state – and gives Israel sovereignty over all of contested Jerusalem.

“It is our right to import whatever we want and from anywhere we want,” Shtayyeh told his Cabinet after the ban began. “Israel does not have the right to dictate its economic or political will to us.”

With cattle farmers like Baidatz raising a ruckus in the weeks before Israel’s March 2 election, Israel started blocking Palestinian agricultural imports this month, leading the Palestinian Authority to bar Israeli produce. The Israeli government said it will remove its restrictions once the cattle ban is lifted.

Palestinian stores stocked with Israeli products are already raising their costs in response to the shortage. “It’s a political game and we pay for it,” said Bethlehem shopkeeper Fares, 46, who asked to withhold his last name while criticizing the government.

Palestinians have their own local breeder and also import from Hungary, Portugal, France and Australia.

The Palestinian economy is deeply dependent on Israel, and disengagement wouldn’t be easy. Israeli products, produced both on sovereign territory and in West Bank settlements, have free access to the Palestinian market, despite efforts in recent years to produce and import alternatives. Israeli products make up about two-thirds of goods imported by the West Bank-based Palestinian Authority, and about 90 percent of Palestinian exports go to Israel, according to a study by the Tony Blair Institute for Global Change.

The development of the Palestinian economy has also been hampered by Israeli restrictions on the movement of Palestinian people and goods, and the development of Palestinian businesses, imposed on security grounds. Better-paying jobs for tens of thousands of Palestinians permitted to work in Israel and West Bank settlements have created another important economic tether.

“I don’t see what tools they have to withstand the practical and economic implications,” said Ghaith al-Omari, a senior fellow at the Washington Institute for Near East Policy and a former adviser to Palestinian negotiators. “When bringing economic issues into the mix, the Palestinians back down.”

While certain Israeli businesses, like Baidatz’s ranch in Kfar Yehoshua, would smart from a boycott, Israel’s finances would not register much impact. Trade with the Palestinian Authority is dominated by goods with low added value.

Bader Rock, an economic policy adviser to the Blair Institute, said the trade feud was a risky business for both sides, especially when Palestinian outrage over the Trump peace plan has led to acts of violence.

“You don’t launch a trade war on your partner that you depend on when you don’t have an alternative, it’s not smart,” Rock said of the Palestinians. “On the Israeli side, you don’t launch a war on the Palestinian side now because of the timing. You don’t want to see a deterioration in the security situation.”


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