Employment of Palestinians from the Occupied Territories in the Israeli Economy, 1967-1969

The article traces Israel’s shaping of its labor policies towards the Palestinians of the Occupied Territories in the aftermath of the Six Day War and shows how these policies were interconnected to issues of national-security, political-economy, and demography. Following the Six Day War, Israel attempted to balance two conflicting goals: stabilizing its new military regime in the Territories and promoting Arab emigration. While the first goal required a reduction of unemployment levels among Palestinians, the second was based on high unemployment rates. One year into Israeli rule in the Territories, Minister of Defense, Moshe Dayan proposed the formation of a new and effective means of control over the Palestinians: admitting them into Israel as workers and developing a relationship of dependency with them. While many in the government supported Dayan’s proposal, based mostly on economic considerations, opponents pointed to its inconsistencies with other national interests. The government debate on the subject led to a compromise: Israel would develop the Territories and increase employment opportunities there, while at the same time admitting Palestinian laborers into Israel. The policy was substantially more aligned to the demands of Dayan and his partners than to his opponents in the government. Nonetheless, it included important features suggested by Dayan’s opponents: protecting Jewish workers from Arab competition and insuring Israel’s demographic interests. The analysis of this process in the Israeli government sheds light on how its system of effective and stable control over the Palestinians was forged.