Jordan and Israel together have destroyed the post-Lebanon strategy of the Palestinian movement led by Yasser Arafat. King Hussein’s $1.2 billion five-year development plan for the Occupied Territories, unveiled in mid-July, provides the velvet glove to accompany Israel’s iron fist.
 
 The development plan is so far richer in rhetoric than in actual funds. If it wins the financial support of the US and others, it might provide a glittering distraction from the political repression and disinformation Israel and Jordan are both leveling against the PLO. Instead of appearing as a collaborator, Jordan uses the plan to dress in the garb of a generous friend. And by controlling funds flowing into the Occupied Territories, Jordan aims to establish political control over Palestinians in the West Bank and Gaza.
 
 The US has signaled willingness to fund the plan to some extent. In the summer of 1986, USAID gave Jordan $4.5 million for “West Bank development.” Hussein is lobbying the US to finance projects in the occupied territories via Amman rather than through voluntary organizations like American Near East Refugee Aid and Catholic Relief Services. (At the same time, Washington is pressing these agencies to conform more closely to US policy guidelines.) Such financial clout would allow Jordan to undermine King Hussein’s opponents and bankroll his supporters.
 
 Western and conservative Arab political leaders had voiced great hope for the partnership between Hussein and Arafat embodied in the Amman Accord of February 1985. Some PLO strategists saw the accord as a means of drawing Israel and the US into negotiations with the PLO. In fact, the US was using Hussein as a crowbar to further shatter Palestinian ranks. When it became clear that neither Israel nor the US would budge from its refusal to negotiate with the PLO, Hussein turned against Arafat and began to coordinate his policy more flagrantly with that of Israel. The entire Jordan-Israel approach aims to undermine PLO institutions and impose some form of “autonomy” on Palestinians living under occupation. The two governments, with US help, are promoting an “alternative leadership.”
 
 Jordan’s first moves were clumsy. It backed a “rebellion” against Arafat led by the discredited former Fatah intelligence chief, Abu Za‘im. Jordanian officials also tried to encourage West Bank residents to demonstrate in support of the king’s authority. When these moves failed, Jordan revoked the passports of PLO supporters in the Occupied Territories, and blacklisted and censored journalists sympathetic to the Palestinian cause.
 
 In May, the regime tried to blame the PLO for protests at Yarmouk University, in which Jordanian security forces killed a number of students conducting a peaceful sit-in over tuition increases.
 
 The most crushing blow against Arafat came in July, when Hussein closed the 25 offices of the Fatah organization in Amman. This move, which evoked accolades from Israel and the US, lessened Fatah’s direct contact with its West Bank supporters, and threw Fatah’s infrastructure in Jordan into disarray.
 
 Over the summer, Jordan also struck out at the East Jerusalem press. Minister of Occupied Territories Affairs Marwan Doudin warned West Bank residents that any papers published under occupation must be Israeli-controlled. One government official told me al-Fajr was financed by the CIA, though he could provide no documents to support his revelation. Both the US and Jordan are known to have approved of the closure of the Palestinian publications al-Mithaq and al-‘Ahd by the Israeli censor in August. Israel wanted to close al-Fajr as well, but was restrained by State Department officials who believed closing the paper would have alienated too wide a spectrum of Palestinian opinion. Any such US “regrets” did not prevent Israel from deporting Akram Haniyya, the editor of al-Sha‘b and a well-known critic of Hussein’s anti-PLO moves.
 
 The main responsibility for political repression has fallen to the Israelis, given their control over the territories. Under the infamous “Iron Fist” campaign, going back to August 1985, 130 people have been placed in administrative detention, at least 33 held to town arrest, and 40 expelled. Many of those detained are critics of Jordan’s break with Arafat. Several detainees are accused of distributing leaflets condemning the Israel-Jordan alliance. Some of those expelled to Jordan have been seized by authorities there.
 
 Hussein and Israeli policymakers continue to assemble their alternative leadership. Before taking office in September, the Israeli-appointed mayors of Hebron, al-Bira and Ramallah travelled to Amman, where Doudin reportedly ordered them to accept the positions. He also promised to provide development plan funds for their municipalities if they took the mayoral seats.
 
 Hussein and his ministers defend the development plan against charges that it is primarily political in its thrust. “It is designed to give hope,” Doudin told the press, “to give people a basis for remaining steadfast.” But Jordan’s plan is obviously not designed to relieve the stagnant economy and high unemployment that plague the territories. Unemployment there correlates with education; those with the highest education are most likely to be unemployed. Over 50 percent of funds are earmarked for housing and construction, a low-pay and low-skill sector which offers nothing to the college-educated unemployed. The plan does not, is not intended to, confront the division of labor created by Israeli occupation policy which perpetuates this unemployment.
 
 Agriculture and industry receive only 18 percent of funds, because both Israel and Jordan seek to maintain the existing division of labor. “The Israelis will not allow an expansion of agriculture or irrigation which will compete with their own, which is in bad shape,” Meron Benvenisti of the West Bank Data Project said.
 
 The plan channels funds into personal consumption -- house building -- and completely neglects construction of productive capacity in industry, an area where college graduates and others would be able to use and develop their skills. Moreover, emphasis on housing and construction will benefit Israeli firms; occupation authorities do not permit Palestinian firms to manufacture cement.
 
 For Israel, the West Bank and Gaza function as a market and labor pool. Sales to the Occupied Territories are listed as “exports” for balance of payments purposes, making them, at 10 percent of the total, Israel’s second largest export market. Over 35 percent of the territories’ active population works in Israel, in the lowest paid jobs. Any plan which undermined this system would not win Israeli cooperation.
 
 An upsurge in home construction could raise the wages of those Palestinians working in construction, spreading some gains to the wider population. More money in the family may enable members to remain in the territories rather than migrating to the Gulf or Jordan in search of work. Any cost to Israeli firms in terms of higher wages would be more than offset by the profits they would reap from the growth of new orders.
 
 The Palestinians are also hostage to Jordan’s economic designs. Economic recession in the Gulf combined with the loss of the Iraqi export market has crippled the Jordanian economy. Economists privately predict 35 percent unemployment within two years. There is little interest in Jordan for boosting production in the Occupied Territories which might compete with Jordanian production.
 
 Left to Israel and Jordan, any “economic” plan for the territories is not going to serve Palestinian needs. By targeting the personal consumption needs of the classes which it wants to coax or force into leadership positions, Jordan hopes to gain leverage over the Palestinian community. The plan facilitates this by providing cover for Jordan to control funds entering the territories.
 
 In mid-September, Israel announced that it would allow a branch of the Cairo-Amman Bank to open in Nablus. This is crucial to the plan’s implementation. The bank, backed by the Central Bank of Jordan and authorized to carry out transactions between the West Bank and Jordan, provides a mechanism for Jordan to channel funds to the Occupied Territories. Negotiations to allow the bank’s opening involved direct negotiations between Jordan and Israel.
 
 But behind this apparently well-coordinated assault on Palestinian institutions, contradictions loom large. Can Hussein’s West Bank ambitions to control the West Bank population be reconciled with Israel’s desire to annex much of the West Bank’s land? In Jordan, any “settlement” which smacked of co-administration would face rejection by Jordan’s large Palestinian population. Already, in an unprecedented move, several former cabinet ministers have publicly warned Hussein against dealing too directly with Israel.
 
 The question of funding remains crucial. As one Western aid worker on the West Bank said, referring to the sum Washington has so far committed, “Four million is a lot of baksheesh, but it’s not enough to run any programs.” Washington is most unlikely to provide the $1 billion over five years that Jordan is requesting. Jordan has pledged $200 million, but the regime is not of one mind on the virtues of such investments.
 
 One certainty is that these new designs will face the determined opposition of Palestinians -- especially camp dwellers, students, and workers for whom “steadfastness” is a way of life as well as a tactic of national self-preservation. These people stand to gain nothing from Jordan’s plan. They remain committed to their own state.
 
 They are discouraged by the disarray inside the PLO. They realize that with the end of the Hussein-Arafat accord the occupation will continue for the foreseeable future. But this discouragement is not resignation to occupation, as the recent confrontations between Palestinian students and Israeli troops in Birzeit and in Gaza testifies.