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Among the important implications of the 1967 War on the relations between Israelis and Palestinians, was the Israeli decision to grant admittance to Palestinian-workers to work in Israel. Within six years after the war, over a third of the Palestinian labor force, around 65 thousand people, had already worked inside Israel, mainly in construction and agriculture. These laborers were described by many as the "hewers of wood and drawers of water" of Israeli society for the coming two decades. The addition of massive, cheap Arab workforce to the Israeli labor market rekindled old Zionist concerns regarding Arab labor in the Jewish market. Scholars such as Anita Shapira (THE FUTILE STRUGGLE) and Nahum Karlinsky (CITRUS BLOSSOMS) have studied the various perspectives among the Jewish leadership of the YISHUV on Arab Labor, and analyzed the intertwined relations between labor, land the demography in mandatory Palestine. Other scholars such as Arie Arnon (THE PALESTINIAN ECONOMY) and Sara Roy (THE GAZA STRIP) examined Israeli policies towards Palestinian labor after 1967 using economic methodologies.
Based on recently declassified archival sources from the late 1960's, this paper examines for the first time how Israel developed its policy regarding the Palestinian workforce in the occupied territories. In accordance with this policy Israel admitted Palestinians to work in Israel but prevented the economic development of the territories. My main argument is that alongside obvious economic interests, the Israeli policy was mainly designed to achieve territorial and demographic objectives. These objectives were to strengthen the Israeli hold on the territories by creating dependency of Palestinian workers on Israeli work permits, to push educated and professional Palestinians to choose emigration from Palestine over a life of unemployment or manual labor, and to secure white-collar positions in the Israeli market for professional Israelis or future Jewish immigrants (mainly from the United States). As this is the first study to use these sources, it should contribute to the historical discussion on the relations between labor, land and demography in the Israeli-Palestinian conflict.