A tour group listens to a guide at the Armon HaNatziv Promenade in Jerusalem against the backdrop of the Old City, April 14, 2010. (Miriam Alster/Flash90)
A tour group listens to a guide at the Armon HaNatziv Promenade in Jerusalem against the backdrop of the Old City, April 14, 2010. (Miriam Alster/Flash90)
AnalysisJerusalem’s overall poverty rate is 46%, the worst in Israel

While those who aspire to run it posture and pontificate, Jerusalem is sinking

East Jerusalem is the largest Arab city in Israel, yet Israeli leaders seem content to let it fester in neglect, ensuring that the insolvent capital continues to decline

Haviv Rettig Gur is The Times of Israel's senior analyst.

Main image by Miriam Alster, Flash90

On October 30, Israelis go to the polls for local elections in 251 cities, towns and rural councils nationwide. For the first time, local elections will be an official holiday, raising expectations of a higher-than-average turnout.

No race is more closely watched than that for Jerusalem. Only in Jerusalem, 38 percent of residents are Arabs living in a twilight zone between Israel and the Palestinian Authority, claimed by both but not fully part of either. It is only in Jerusalem where secular and modern-Orthodox Jews mix daily and inevitably with the ultra-Orthodox, who make up over a third of Jewish residents.

The race to replace Mayor Nir Barkat reflects these social and cultural divides, with frontrunners Ze’ev Elkin, Moshe Lion and Ofer Berkovitch campaigning in no small part on the city’s identity politics, each claiming (in Elkin’s and Lion’s case) to unite more Jewish factions than the other, or (in Berkovitch’s) promising to “rescue” the city from ultra-Orthodox domination. One East Jerusalem man, Aziz Abu Sarah, even briefly flirted with a Palestinian run for city hall, and has been ruing it ever since.

These identity politics are more than rhetoric. They are fundamental to the lives of ordinary Jerusalemites. The fear of Jewish domination in Jerusalem is a basic tenet of Palestinian politics and identity, while most of Jerusalem’s Jews view the Palestinian 38% of the population through the prism of a long history of terrorism in the city, as unpredictably violent strangers across the ethnic and religious divide.

No one, not Jews and not Muslims, will ever take seriously the existence of a ‘line’ through the city that claims to limit their access or sense of ownership over the holy sites

The deep fractures that separate the residents of this divided capital make for excellent political fodder, and are more often than not embraced by the city’s politicians, who promise their constituents not integration and unification, but protection from the nefarious intentions of the other groups.

Palestinian apartment buildings seen near the walled security barrier surrounding the Shuafat refugee camp in East Jerusalem, on May 7, 2017. (Hadas Parush/Flash90)

Meanwhile, away from the limelight of political posturing and ceaseless declarations of love and devotion to the holy city — and needless to say, largely unmentioned in the election campaigns of the different camps — these fractures are leading to the slow but steady economic implosion of the capital.

Intertwined and apart

Arab East Jerusalem is the biggest Arab city in Israel, as Israel counts such things, and the biggest Palestinian city in the West Bank, as the Palestinians count them.

Jerusalem mayoral candidate Moshe Lion at the opening of his campaign headquarters in Jerusalem on August 14, 2018. (Yonatan Sindel/Flash90)

And it is increasingly intertwined with Jewish Jerusalem — if not socially and culturally then at least geographically as Jewish neighborhoods over the Green Line grow. Indeed, it is hard to say that the line has any meaning anymore in the city. About 40% of Jerusalem’s Jewish residents live across the Green Line, where they make up about 40% of all residents over the line.

As with geography, so with the touchstones of religious and national identity. The Old City and everything it contains, the sacred heart of the city for all sides, lies across the Green Line but within Israel’s self-declared borders. It includes the Western Wall itself, a technical “settlement” that is as much a center of Jewish identity for liberal American Jews as for the most hawkish of Israelis. This ensures that no one, not Jews and not Muslims, will ever take seriously the existence of a “line” through the city that claims to limit their access or sense of ownership over these sites.

Minister of Jerusalem Affairs, Ze’ev Elkin, speaks at the Jerusalem Center for Public and State Issues, on September 13, 2017. (Hadas Parush/Flash90)

And yet, another line crosses the city, dividing it more effectively than any border and more comprehensively than any security barrier. That is the line that separates relative Jewish prosperity from Arab poverty.

Jerusalem’s Arab inhabitants are not Israeli citizens — in part because Palestinian society views their accepting of Israeli citizenship as accepting Israeli claims of sovereignty over the city, and in part because Israel is not eager to accept them, even as it formally views itself as having annexed the area. Nevertheless, they have a form of permanent residency that, unlike West Bank Palestinians, allows them unimpeded access to the rest of Israel.

A municipality worker cleans garbage off the ground in the Muslim quarter of Jerusalem’s Old City on March 4, 2016. (Corinna Kern/Flash90)

And so it is all the more startling that their economic situation is in many ways so much worse than that of either Arab Israelis or West Bank Palestinians.

The figures are worrying.


According to the Jerusalem Institute for Policy Research, a think tank specializing in studying the city’s population, in 2016 just 22% of Jerusalem’s Arab women between the ages of 25 and 64 had a job. That figure is an almost exact mirror image to Jewish women in the same age bracket in the city, 80% of whom are employed.

Ofer Berkovitch, Jerusalem mayoral candidate and head of Hitorerut (Awakening) movement is seen at the opening of his election campaign in Jerusalem on September 2, 2018. (Yonatan Sindel/Flash90)

Arab women’s participation rate in the rest of Israel, meanwhile, is about 35%, or 60% higher than in East Jerusalem, and rising year after year.

The Palestinian Central Bureau of Statistics tells a similar story. Its figures, which count all women over 15 and so include many minors and elderly, count just 6.3% of Jerusalem’s Arab women as working in 2015.

What is significant here isn’t just that such a low workforce participation rate necessarily hinders East Jerusalem’s development – these women don’t pay taxes, and their families are poorer and more likely to remain poor – but that these figures are dramatically worse than those of women in the Palestinian Authority.

Jewish worshipers pray during the holiday of Sukkot (the Feast of the Tabernacles) at the Western Wall in the Old City of Jerusalem on September 26, 2018. (AFP Photo/AG/Ahmad Gharabli)

According to Palestinian CBS figures, women in Jenin, Tulkarem, Nablus, Ramallah and Bethlehem have workforce participation rates more than three times those of East Jerusalem’s, at 21.1%, 22.8%, 21.7%, 20.2% and 21% respectively.

No surprise, then, that East Jerusalem is poor.

The Israeli Central Bureau of Statistics divides the country’s urban areas into 1,616 statistical zones, each with a minimum of 2,000 inhabitants. The Arab neighborhood of Issawiya is ranked the 17th poorest zone in the list of over 1,600. Arab Silwan is even lower, at 13th.

Jerusalem’s Arabs are much more likely to be poor than Arabs elsewhere in Israel

According to Israel’s CBS, in 2016, 75% of Jerusalem’s Arab residents lived below the poverty line, compared to 29% of Jews and 52% for Arabs in the rest of Israel. Poverty in both halves of the city is growing as Jerusalem is left behind in Israel’s otherwise flourishing economy, but it is growing faster among the Arabs. Arab Jerusalem isn’t just failing to prosper; it is actively sinking.

These figures are completely out of step with the rest of Israel, and have transformed Jerusalem, Israel’s largest city, into an anomaly that is a growing drag on the rest of the economy. Jerusalem’s overall 46% poverty rate puts it at the top of the list of Israel’s poorest cities. The second poorest, Ashdod, has a rate of 18%.

Muslim worshippers pray near the Dome of the Rock and the Al-Aqsa Mosque, located on the Temple Mount compound in Jerusalem, during Friday prayers in the Muslim holy month of Ramadan on June 1, 2018. (AFP Photo/Ahmad Gharabli)

There are good reasons for this poverty among East Jerusalem’s Arabs, rooted in the political trap that has ensnared the Arab half of the city, and with it the rest of the city as well.

Right-wing Israeli political leaders have avoided investing in Arab East Jerusalem, fearing that such investments would increase the flow of Palestinians into the city. Left-wing leaders have done the same on the grounds that the Arab half would be given away in a future peace deal.

Meanwhile, East Jerusalem’s complicated situation suspended between the Israeli and Palestinian worlds means residents cannot take full advantage of their access to the Israeli economy.

For example, while most Arab women elsewhere in Israel learn usable Hebrew in school, most Arab schools in East Jerusalem teach from the Palestinian curriculum, which does not offer students the Hebrew they will need to find work in the western half of the city.

This language barrier contributes to a deeper culture gap. According to a recent survey by a Riyan employment center in the city’s northern Beit Hanina neighborhood, 75% of Arab women seeking work say they prefer to work in Arab areas because of a greater sense of personal safety. About 25% of Beit Hanina’s men say the same.

Optimists and pessimists

There is a debate among planning and finance officials in the municipality and various government agencies responsible for Jerusalem’s well-being about the significance of Arab poverty for the city’s overall situation. Put simply: How big of a drag is Arab East Jerusalem on the national economy?

Outgoing Jerusalem Mayor Nir Barkat visits Arab students in a newly opened elementary school in the Arab neighborhood of Umm Tuba, in East Jerusalem, on December 13, 2011. (photo credit: Kobi Gideon/Flash90)

One side argues that Israel’s neglect of East Jerusalem is the main reason the city as a whole has become an economic albatross, guzzling billions each year from the national budget: The state’s special “capital grant” to help balance the city’s budget now runs to some NIS 850 million (some $240 million) a year, and is not the only special contribution to help offset Jerusalem’s deficient tax base. That’s above and beyond the huge welfare costs that Jerusalem’s vast impoverished communities glean each year from the state budget. It is estimated that the city loses some NIS 700 million ($195 million) each year in property taxes because almost half its residents are poor enough to qualify for low-income tax breaks.

Arab neighborhoods receive less than 5% of the city’s welfare, culture and business development budgets — for 38% of the city’s population

That’s the optimistic view of Jerusalem’s situation, which argues that the city’s condition can be reversed through massive and sustained investment in infrastructure and education in its underdeveloped communities, primarily its Arab neighborhoods.

Then there are the pessimists. Arab East Jerusalem, they say, is not the primary cause of Jerusalem’s huge deficits. Arab Jerusalemites are too poor to contribute much in municipal taxes — Arab neighborhoods make up 38% of the population, but paid just 12.4% of the NIS 926 million in property taxes the city collected in 2017. But at the same time, the city invests in them relatively little. Since they don’t vote, refusing to recognize the legitimacy of the Israeli municipality, they are unrepresented each year when the city council haggles over the municipal budget. Arab neighborhoods thus receive less than 5% of the city’s welfare, culture and business development budgets — again, for 38% of the population — and only roughly 10% of the municipal transportation and sanitation budgets.

In this view, Jerusalem’s Arabs don’t contribute much to the public coffers, but neither do they receive much. In economic terms, they live in a closed system with little influence over the city’s vast and growing deficit. It is the poverty and poor planning over the years on the Jewish side that is responsible for the city’s fiscal deterioration, driven primarily by the financial drain represented by the large Haredi population — which votes in high numbers, enjoys large outlays from the city budget but pays relatively little in taxes — and the lack of large taxpaying industrial parks and commercial zones.

This is the pessimistic view, which posits that there is too much wrong with Jerusalem — with a culture of non-work that extends far beyond the Arab community, ethnic divides that stifle economic integration, and poor land use that prevents growth of the city’s commercial base — to be fixed with something as straightforward as investment in Arab neighborhoods.


It has become fashionable in recent years to take ever more strident public stands in “defense” of Jerusalem. Palestinian leaders increasingly peddle the conspiracy theory that Israel is planning to destroy the Al-Aqsa Mosque and Dome of the Rock shrine on the Temple Mount, while Israeli leaders seek to expand the Jewish presence in East Jerusalem and urge growing numbers of Israelis to visit the Temple Mount. At UNESCO, in mosques and synagogues and political party conferences, a rhetorical and economic war is being waged for control over the city’s identity.

Jerusalem’s would-be mayors have spent much of their campaigning promising relatively small things — to clean the streets, to build some public housing. There has been little mention of the fact that the country’s biggest city is also its biggest economic albatross, that its Palestinian half is the subject of endless political posturing about a “united” Jerusalem, but very little actual investment or concern

Last December, the Trump administration waded into the debate with its recognition of Jerusalem, or at least some unspecified portion of it, as Israel’s capital and its subsequent move of the US embassy to the city in May.

Yet there is something strangely innocent in all this posturing. Jerusalem has always been both a city and a symbol, a real place and an imagined one, a mental crucible into which are poured the passions and anxieties of countless religious and political narratives, but also simply a city, a mundane place where ordinary people try to live their lives in the shadow of so much grandstanding and violence.

Jerusalem’s would-be mayors have spent much of their recent campaigning promising relatively small things — to clean the streets, to build some public housing. There has been exceedingly little mention of the fact that the country’s biggest city is also its biggest economic albatross, that its Palestinian half is the subject of endless political posturing about a “united” Jerusalem, but very little actual investment or concern. The frontrunners have accused each other of not loving the city enough, of being “leftists” and “betraying” it — but avoided any serious debate about how they might stem the growing flight of working-age families to better-run and more fiscally sound municipalities outside the capital.

A view of East Jerusalem as the sun sets, August 8, 2016. (Zack Wajsgras/Flash90)

It is not unreasonable to argue that Jerusalem cannot really be divided, not for political reasons but for economic ones. If Jerusalem remains a solely Israeli capital, it will have to better integrate its disparate parts and massively develop its weaker communities if it hopes to ever become solvent and prosperous. Arabs must be able to find more and better work in Jewish Jerusalem — and in Arab Jerusalem too. Conversely, if the city is divided into two capitals, that of a Jewish state and that of a Palestinian one, that won’t change the underlying economic reality that its prosperity, its capacity to accommodate tourism and develop efficient infrastructure, its ability to ensure access for all religions to their many holy sites, will still require a unified urban space.

Meanwhile, Jerusalem’s municipal politics seem to focus on every issue except the gaping fiscal hole at the city’s heart. While vast and ever-growing transfers of taxpayer shekels are deployed like a band-aid to cover it up, the capital Israelis claim so fervently to love continues its quiet decline.

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