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Middle East | Letter From Jerusalem
Profit as an Incentive for Israeli-Palestinian Peace
By JODI RUDOREN (1)
JUNE 8, 2015
New York Times
JERUSALEM — Supporters of a two-state solution to the Israeli-Palestinian conflict generally start with a moral argument: Both peoples deserve the rights of self-determination and sovereignty; one should not rule over the other. Lately, President Obama and liberal American Jewish leaders also frame their case in security terms, saying Israel cannot survive as a Jewish democracy without ending its occupation of Palestinian territories.
But how about $173 billion as incentive for a peace deal?
That is how much a new report by the RAND Corporation says the Israeli and Palestinian economies stand to gain over the next decade if an independent Palestine were to emerge tomorrow — admittedly a development that might require divine intervention. It translates to an average per capita income increase of $1,000 (36 percent) for every Palestinian in the West Bank and Gaza Strip, and $2,200 (5 percent) for each Israeli.
If that is not enough, RAND calculates the cost of four other possible situations, including another violent uprising by Palestinians, which it estimates would shrink the gross domestic product in the West Bank and Gaza by 46 percent and in Israel by 10 percent, or $4,330 less for each Israeli, $1,130 for each Palestinian.
“The point is to demonstrate that there is money on the table,” Charles P. Ries, a RAND vice president who was one of the leads on the report, explained in an interview. “There are big gains, and people don’t realize how big they are.”
RAND, whose policy analyses are often underpinned by economics, is hardly the first outfit to try to put a price tag on the conflict. The Adva Center in Israel last week published its own report about the state’s “self-imposed economic burden” that noted its relatively poor credit rating.
Stav Shaffir, a leftist Israeli member of Parliament, spent much of the past two years documenting government spending on West Bank settlements. Others have pointed to Israel’s military budget, which as a percentage of G.D.P. is nearly double that of the United States’ military budget. Secretary of State John Kerry had a high-powered team draw up a $4 billion economic growth plan alongside his failed peace initiative last year.
RAND’s two-year, $2 million, 228-page project focuses on such “opportunity costs” of the status quo versus increased trade and tourism, for example, in a two-state future; in fact, the researchers surprised themselves by predicting “no change” in security spending if that happened. They also did not expect a reduction in American government aid to Israel, which the report put at $118 billion since World War II, not including classified programs. (There is no parallel number for financial help to Palestinians; when asked, an economist on the RAND team said it was less than $10 billion.)
The report comes with an online calculator detailing its assumptions on five possible situations — including an Israeli withdrawal from some settlements and nonviolent Palestinian protests like the boycott and sanctions movement gaining steam — and allowing users to make their own.
Still, this is a conflict that has long defied the principle that people act in their financial best interest.
“It’s a mistake to think this can be dealt with as a mathematical equation that you solve and then you proceed to implement it,” said Manuel Trachtenberg, a renowned Israeli economist who was recently elected to Parliament. He declined to participate in RAND’s research.
“Money is infinitely divisible, you can have solutions or offers that can be resolved in terms of more or less,” Mr. Trachtenberg noted. “When it comes to rights, that’s much tougher, because that’s zero sum, there is no compromise.”
Samir Abdullah of the Palestinian Economic Policy Research Center called the RAND study “an academic exercise with good intentions,” but said the benefits of the two-state solution are “an issue that everyone knows.” Mr. Abdullah, one of 20 people RAND invited to take part in a workshop in Athens last year, said the critical question was what would be “the consequences of killing the two-state solution” and ending up instead with a single binational entity.
“Of course the road for that, it maybe passes through an apartheid regime that will cause both parties much, much suffering and much decline in the economy and isolation,” he said. “So the cost after that, the cost to make people ready for the one-state solution, it will be huge.”
Mr. Ries of RAND said the one-state solution would require “an entirely different approach,” which may be precisely the point.