Australia/Israel & Jewish Affairs Council

"Economic peace" and the two-state resolution

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Update from AIJAC

August 20, 2009
Number 08/09 #05


This Update leads with some pieces on the improving economic situation in the West Bank, and how this relates to Israeli PM Binyamin Netanyahu's idea for "economic peace" - accompanying peace talks with efforts to improve the concrete economic and security situation in the West Bank. It also includes a new argument about why a two-state resolution has not been reached so far.

First up, Michael Oren, the prominent historian who was recently appointed Israeli Ambassador to the US, details the improving economic situation in the West Bank, where economic growth is 7% per annum and wages are up 24%. He points out the role that Israeli policy and improving security has played in this situation. And he discusses hopes that Gazans will see the stunning contrast with their own lives and what Hamas rule has brought them. For the full piece, CLICK HERE.

Next up, American thinktanker and journalist Cliff May, who just visited Australia, argues that the economic peace model should appeal to the Obama Administration. May argues that almost all the normal ideas related to peacemaking have already been tried without success. He says the new administration, which prides itself on thinking "outside the box" should look at economic peace and its success so far as an approach which at least provides a "flicker of hope where now there is none". For his complete argument, CLICK HERE. Arguing that economic improvement in the West Bank will not help without curtailment of incitement there is Khaled Abu Toameh.

Finally, Saul Singer, columnist and long-time opinion editor of the Jerusalem Post, argues that the key to peace is to tell the truth - namely that the lack of peace is not based on a misunderstanding, but the conflict has a source - "Arab refusal to accept Jewish history, peoplehood or sovereignty anywhere in the Land of Israel."  He points to parallels with debates about the cold war -  and argues that the focus on confidence-building at the moment is being driven by the belief that the conflict is essentially a misunderstanding. He argues that making it clear to the refusers that rejectionism is recognised as the source of the conflict would do a lot more to end it than confidence-building measures -  which reinforce their belief that more pressure on Israel will eventuate and lead to an eventual victory. For his complete argument, CLICK HERE.

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West Bank Success Story

The Palestinians are flourishing economically. Unless they live in Gaza.

By MICHAEL B. OREN

WALL STREET JOURNAL
,  AUGUST 13, 2009, 7:15 P.M. ET


Imagine an annual economic growth rate of 7%, declining unemployment, a thriving tourism industry, and a 24% hike in the average daily wage. Where in today's gloomy global market could one find such gleaming forecasts? Singapore? Brazil? Guess again. The West Bank.

According to the International Monetary Fund (IMF), the West Bank economy is flourishing. Devastated by the violence and corruption fomented by its former leadership, the West Bank has rebounded and today represents a most promising success story. Among the improvements of the last year cited by the IMF and other financial observers are an 18% increase in the local stock exchange, a 94% growth of tourism to Bethlehem—generating 6,000 new jobs—and an 82% rise in trade with Israel.

Since 2008, more than 2,000 new companies have been registered with the Palestinian Authority in the West Bank. Where heavy fighting once raged, there are now state-of-the-art shopping malls.

Much of this revival is due to Palestinian initiative and to the responsible fiscal policies of West Bank leaders—such as Prime Minister Salaam Fayyad—many of whom are American-educated. But few of these improvements could have happened without a vastly improved security environment.

More than 2,100 members of the Palestinian security forces, graduates of an innovative program led by U.S. Gen. Keith Dayton, are patrolling seven major West Bank cities. Another 500-man battalion will soon be deployed. Encouraged by the restoration of law and order, the local population is streaming to the new malls and movie theaters. Shipments of designer furniture are arriving from China and Indonesia, and car imports are up more than 40% since 2008.

Israel, too, has contributed to the West Bank's financial boom. Tony Blair recently stated that Israel had not been given sufficient credit for efforts such as removing dozens of checkpoints and road blocks, withdrawing Israeli troops from population centers, and facilitating transportation into both Israel and Jordan. Long prohibited by terrorist threats from entering the West Bank, Israeli Arabs are now allowed to shop in most Palestinian cities.

Further, several Israeli-Palestinian committees have achieved fruitful cooperation in the areas of construction and agriculture. Such measures have stimulated the Palestinian economy since 2008 resulting, for example, in a 200% increase in agricultural exports and a nearly 1,000% increase in the number of trucks importing produce into the West Bank from Israel.

The West Bank's economic improvements contrast with the lack of diplomatic progress on the creation of a Palestinian state. Negotiators focus on the "top down" issues, grappling with legal and territorial problems. But the West Bank's population is building sovereignty from the bottom-up, forging the law-enforcement, civil, and financial institutions that form the underpinnings of any modern polity. The seeds of what Israeli Prime Minister Benjamin Netanyahu has called "economic peace" are, in fact, already blossoming in the commercial skyline of Ramallah.

The vitality of the West Bank also accentuates the backwardness and despair prevailing in Gaza. In place of economic initiatives that might relieve the nearly 40% unemployment in the Gaza Strip, the radical Hamas government has imposed draconian controls subject to Shariah law. Instead of investing in new shopping centers and restaurants, Hamas has spent millions of dollars restocking its supply of rockets and mortar shells. Rather than forge a framework for peace, Hamas has wrought war and brought economic hardship to civilians on both sides of the borders.

The people of Gaza will have to take notice of their West Bank counterparts and wonder why they, too, cannot enjoy the same economic benefits and opportunities. At the same time, Arab states that have pledged to assist the Palestinian economy in the past, but which have yet to fulfill those promises, may be persuaded of the prudence of investing in the West Bank. Israel, for its part, will continue to remove obstacles to Palestinian development. If the West Bank can serve as a model of prosperity, it may also become a prototype of peace.

Mr. Oren is Israel's ambassador to the United States.


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Flicker of hope vs. false premises


Clifford D. May

Washington TImes Saturday, August 8, 2009

When it comes to peace in the Middle East, we've tried just about everything and nothing has worked. And if you believe that, there's a bridge over the River Jordan I want to sell you.

The truth is that one American administration after another has embraced the same false premises and, from that starting point, set into motion a "peace process" that ineluctably fails. Afterward, they say: "We came so close!" Which is like saying: "The last time I jumped off the roof, I almost flew!"

Start with the assumption that the core issue in the conflict is the Israeli "occupation" of Palestinian territories and that the solution is therefore "land for peace." In 1967, Israel's Arab neighbors fought a war to wipe the Jewish state off the map. When they lost, Israel took control of Gaza (which had been Egyptian) and the West Bank (which had been Jordanian). Israelis were willing to relinquish those territories -- but they wanted a solid peace treaty in exchange. No Arab leader was willing to pay that price.

Four years ago this month, in exchange for nothing, Israel removed from Gaza every last Israeli -- including even those buried in the cemeteries. Palestinian leaders did not say: "If we can next disengage from the Israelis on the West Bank, the conflict is over." Instead, Hamas was soon launching thousands of missiles from Gaza at cities well inside Israel proper.

Move on to a second premise: that the primary goal of Palestinian leaders now is a Palestinian state that would live in peace with Israel. Seven years ago, President George W. Bush became the first American president to officially endorse the establishment of a Palestinian state -- as long as it would not become another terrorist-sponsoring state.

Hamas explicitly rejected that condition. Hamas demands that infidels leave the Middle East or, at the very least, submit to Islamic rule and Shariah law. But isn't that just where the bargaining begins? No, that's the third mistaken premise. For Hamas, Islamic supremacy is not a negotiating position; it's a religious conviction and therefore not open to compromise.

As for the more "moderate" Fatah movement, this week it held its Sixth General Assembly in Bethlehem. The path to peace with Israel was not its theme. One prominent Fatah politician, Muhammad Dahlan, recently said: "For the 1,000th time, I want to reaffirm that we are not asking Hamas to recognize Israel's right to exist. Rather we are asking Hamas not to do so, because Fatah never recognized Israel's right to exist."

A new administration ought to think outside the box. If President Obama were looking for new and improved approaches to peace processing, what options might be considered?

Israeli Prime Minister Benjamin Netanyahu thinks an "economic peace" could pave the way to a broader settlement. He recalls that the economy of the West Bank was among the fastest growing in the world after 1967 and before 1993 -- when Israeli leaders brought Yasser Arafat from exile and installed him as Palestinian strongman under the Oslo Accords. A precipitous economic decline followed. Violence increased as well.

In recent months, Mr. Netanyahu has removed military checkpoints in the West Bank and opened the Allenby Bridge across the Jordan River 24 hours a day to promote freer trade among Palestinians, Israelis and Jordanians. New shopping centers and industrial parks are being built and/or planned. The International Monetary Fund predicts the West Bank economy could grow by an enviable 7 percent this year.

"We are opening ties," Mr. Netanyahu said last week. But a durable peace, he added, must be based on "reciprocity, not unilateralism."

If Palestinians in the West Bank see their lives improving, will they stand up to the militant jihadists who have victimized them and who are only too eager to sacrifice their children in pursuit of Israel's annihilation? Probably not. But such an approach would represent real change and does offer a flicker of hope where now there is none. You'd think that would appeal to President Obama.

Clifford D. May is president of the Foundation for the Defense of Democracies, a policy institute focusing on terrorism.


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Interesting Times: The power of truth

Saul Singer

THE JERUSALEM POST, Aug. 13, 2009

The great debate of the last century was over the essence of the Cold War. As Joshua Muravchik writes in a seminal essay in the current World Affairs, Americans were divided over whether the nuclear standoff originated from Soviet belligerence or mutual distrust. America was either fighting a defensive war or the two superpowers were like "scorpions in a bottle," as Paul Warnke, Jimmy Carter's chief arms negotiator, put it.

Mikhail Gorbachev, Muravchik argues, dramatically ended that debate. "Virtually the moment Gorbachev ended Soviet global ambitions and hostility to the West, the Cold War ended. The Kremlin was able to call it off because the conflict had all along been its own doing."

In retrospect, it is obvious that it was the Soviet system that needed conflict with the West to distract from tyranny and economic failure at home. Not only was the conflict useful to the Soviet regime as a cover for crushing dissent, but foreign conquests could be used to exploit other countries and intimidate the West into providing trade benefits and other payoffs. The Soviets were the last colonialists.

NOW THE Obama team is faced with what seems to be a messier picture. There is an amorphous network of jihadi terrorists, epitomized by al-Qaida, working to attack and defeat America and its allies. There are countries like Pakistan, Saudi Arabia and Egypt, led by unpopular and rickety governments loosely allied with the US, and yet which are also breeding grounds for the jihadi network. There is the Arab-Israeli conflict, which the US seems determined to resolve, both for idealistic and strategic reasons. Finally and above all, there is the potential of a nuclear Iran, creating the first nuclearized terrorist regime.

The White House seems to be torn about how to address all this. On the one hand, President Barack Obama is all about "engagement" in order to transform the world from "multipolar" to "multipartner." On the other, as Roger Cohen summarized the new approach in The New York Times, "A sobered America is back in the realpolitik game. A favored phrase in the Iran team goes, 'It is what it is.'"

The seeming opposition between the idealist and realist schools, however, amounts to two sides of the same coin. In practical terms, both schools subscribe to a Warnke-style view of the conflict - that is, that both sides are more or less equally to blame.

Pushing for engagement is another way of saying that the the conflict with radical Islamists is a misunderstanding. The idealists may be more optimistic than the realists about the power of diplomacy, but the realists also do not see the conflict as having a source that can be addressed, but as an array of competing interests to be managed.

At the same time, the different parts of the conflict form a spectrum of engageability. On one end is al-Qaida, which all agree must be fought and cannot be engaged. Next comes Iran, which the Obama team claims is worth engaging, but even the White House seems to assume will not budge without the imposition of further sanctions. Finally comes the Arab-Israeli conflict, which in the Obama team's eyes is a full-blown misunderstanding of the scorpions-in-a-bottle variety.

To be fair, it is not just Obama who sees the Arab-Israeli conflict in symmetrical terms. Perhaps to different degrees, but Republican and Democratic administrations have seen the job of peacemaking as dragging the parties into a room and pressing them to do what they both understand to be in their interest. Alternatively, they believed that the parties were not ready for a deal, so all that could be done was wait for a more propitious moment for the eventual head-banging session.

The problem is that the Arab-Israeli conflict is not based on a misunderstanding. Arabs and Israelis are not interchangeable "scorpions in a bottle." The conflict has a source, and it is the refusal to acknowledge that source - rather than any failure to "engage" - that is the main reason for the failure of decades of peacemaking.

Under the conflict-as-misunderstanding model, the more one side takes "confidence-building measures," the more the other side will reciprocate. Israel has been going along with this idea for years, most dramatically by unilaterally withdrawing from Lebanon in 2000 and from Gaza in 2005. Yet instead of reciprocating, the Arab side became more belligerent, filling the respective vacuums with Hizbullah and Hamas.

This pattern has been especially evident over the past few weeks. In short order, Obama started a fight with Israel over settlements, gave a conciliatory speech to the Arab world in Cairo and Prime Minister Binyamin Netanyahu endorsed the two-state solution for the first time. All this should have produced a marked softening on the Arab side, according to the engagement theory.

Instead, even "moderates" like Egypt's Hosni Mubarak and Fatah's Mahmoud Abbas have come out swinging, the former saying that Arabs will never recognize Israel as a Jewish state and the latter claiming all of Jerusalem and talking about reviving terrorism.

There should be no mystery here. The pattern is clear: The more Israel is blamed or acts as if it is responsible for the conflict, the more radicalized the Arab side becomes.

The engagement school sometimes notices that Israeli concessions do not bring Arab reciprocation, but they think that they just need to push harder. The idea that pressing both sides is how you make peace has become so ingrained that no alternative is ever considered. Indeed, many seem to think that Israel needs to be pressed harder because it is the "occupier" and therefore the obstacle to a two-state solution.

There is, however, an alternative paradigm that has never been tried, either by Democrats or Republicans. The alternative is to recognize, intellectually and publicly, that the engine of the conflict is the Arab refusal to accept Jewish history, peoplehood or sovereignty anywhere in the Land of Israel.

The reason this is important is not as part of a childish blame game. It is important because the Arabs will not end the conflict that they started so long as they still have hopes that Israel will become delegitimized and will weaken and disappear. When these hopes are dashed by unmasking the true nature of the conflict, then eventually the Arab world will see that there is no alternative to making real peace with Israel.

This year is the 20th anniversary of the fall of the Berlin Wall. As late as a year before that inspiring day, it was unimaginable, let alone the evaporation of the Soviet Union. In retrospect, Ronald Reagan's breaking out of the engagement paradigm and instead calling on the "evil empire" to "tear down this wall" was not just telling the truth, but contributed directly to the Soviet downfall.

The Arab-Israeli conflict desperately needs such truth-telling. Someday, the United States and Europe will, for the first time without equivocation, call on the Arab states to lead the way toward ending their conflict with Israel. When that happens clearly and consistently enough, and provided that radical Islam's bid for an Iranian nuclear umbrella has been defeated, real peace could come more quickly than anyone now imagines.

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