A Palestinian Peace Dividend

By Jerry Nockles

The challenges facing the eighteenth Knesset, lead by Prime Minister Benjamin
Netanyahu, are real, immediate, and formidable: maintaining a large and potentially
brittle coalition, perceived threats from Hamas in the south, Hezbollah in the north
and a nuclear-armed Iran to the east, guiding the economy through the pernicious
effects of the global financial crisis, and the ever-present Palestinian problem. The
nature of Netanyahu’s coalition, balancing the inclusion of Yisrael Beiteinu’s Avigdor
Lieberman and Labor’s Ehud Barak, generated great interest in the Prime Minister’s
inaugural address to the Knesset on March 31, particularly in regard to the divisive
issue of managing the Palestinian problem.

Netanyahu stated his vision emphatically: “We have no desire to control another
people; we have no wish to rule over the Palestinians.” In addressing the more
delicate issue of a two-state solution however, Netanyahu was more equivocal;
“Palestinians will have all the authority needed to govern themselves, except those
which threaten the existence and security of the State of Israel”. Avoiding any
reference to a two-state solution, Netanyahu outlined his government’s three-track
peace plan – economic, security and political. Netanyahu hopes to strengthen the
Palestinian economy and, in so doing, engender a greater stake for peace in ordinary
Palestinians.

Whether Netanyahu’s economic peace is designed to progress the political track, or

sideline it, there can be little doubt that he is serious and in a hurry. The Prime
Minister’s ‘100 days team’ recommended an administrative body specifically charged
with developing economic peace policies. The team envisaged an entity comprising
administrators experienced in both economic development and the Palestinian issue
and headed by a senior bureaucrat or minister. Prior to forming a government,
Netanyahu had identified 25 initiatives suitable for engagement with the Palestinian
Authority and designed to develop the Palestinian economy.

The Palestinian Authority’s response was also rapid and unambiguous. Negotiator
Saeb Erekat claimed that Netanyahu’s economic approach was “closing the door to
any chance for peace”. Erekat’s fear is that rather than pursuing an end to the
occupation, Netanyahu seeks to “normalise and better manage it”, substituting a
viable Palestinian state with a series of disconnected cantons enjoying limited self
rule. This rejection of Netanyahu’s plan by the Palestinian leadership may not be so
readily echoed at the entrepreneurial and grass-root levels, particularly in the West
Bank. This of course depends on what is perceived by the term ‘economic peace’.

Netanyahu’s economic peace will first have to overcome a sceptical Palestinian

leadership. The key to eliminating scepticism will be a series of big, bold and
immediate initiatives by Netanyahu. The joint Israel-Palestine-Jordan ‘Valley of
Peace’ initiative provides a prototype of what cross-community programs might look
like. By expanding and accelerating existing and ‘pipeline’ projects, particularly those
related to water allocation, Israel could assist in developing not only Palestinian trust,
but vital foreign investment confidence as well.
The most significant constraint on local economic development in the West Bank is
the imposition of physical access restrictions by way of land and resource restrictions,
checkpoints and transport limitations. These restrictions have also long been a source
of humiliation amongst the Palestinian community. Removing the checkpoints and
opening economic zones would reduce the Israeli footprint in the West Bank and
represent a gradual lifting of the occupation. It would also deliver the greater return
in securing the trust of the Palestinian leadership and the approval of the Palestinian
street. Similarly, the facilitation of the Gaza Gas field development with British Gas
would provide both significant long term benefit and an immediate and powerful
gesture of good will.

The Quartet’s Middle East envoy, Tony Blair, understands the scepticism toward the
new government’s approach and suggests that Netanyahu’s opening could mean one
of two things – that economic peace is a substitute for a state, or that the state will be
built from the bottom up on a firm economic ground. Blair has stated his belief that it
is the latter. The newly appointed US Middle East envoy, George Mitchell, also
supports economic development in the occupied Palestinian territories, but not at the
expense of a two-state solution. Echoing his President’s words, he declared that the
“two-state solution … is the best and the only way to resolve this conflict”.

Notwithstanding their conviction to pursue a negotiated political solution

concurrently, Blair and Mitchell are well placed to appreciate the value of economic
development in pursuit of conflict resolution. Both men worked together to negotiate
the Good Friday Agreement for strife-torn Northern Ireland in 1998 which paved the
way for power-sharing and a coalition government.

Whilst the Israeli/Palestinian conflict might be regarded as sui-generis, a significant

number of factors which function to embitter and perpetuate the conflict, particularly
at the community level, are reflected in the Northern Ireland Troubles – a desire for
self-determination, paralysing sectarian division, third party involvement and
interference, and a bitter and pervasive mythology and collective memory. An
additional, though no less significant, factor is relative deprivation. In both the
Northern Ireland and Palestine conflicts we observe socially proximate, yet
economically disparate communities whose situation serves only to reinforce polarity
and segregation.

The European Union recognised that addressing inequality across sections of

Northern Irish society was paramount to building a durable peace. The EU’s PEACE
series of programs is aimed at reinforcing progress towards a peaceful and stable
society through the promotion of social and economic stability in Northern Ireland.
The fund, now in its third iteration, has delivered approximately €700 million in
projects since its inception in 1994.

Supporting projects and activities that facilitate relationships on a cross-community

level in an increasingly open West Bank could attract immediate international
support. Stimulating economic development in the Gaza Strip, however, is more
problematic, given an international refusal to deal with Hamas. There appears little
likelihood in the short term that Hamas will comply with the Quartet’s long-standing
mantra: recognise the state of Israel, renounce violence, and accept previous
agreements.

There is, however, some scope for compromise on both sides. In PA reconciliation
talks held in Egypt in March, Hamas and Fatah committed to holding presidential and
parliamentary elections by January 2010. President Obama has asked Congress for
amendments to US law to allow aid to flow to Gaza in the event of a unified
Palestinian government that contains, but is not controlled by, Hamas officials –
effectively allowing the United States to deal with Hamas individuals but not the
proscribed organisation itself.

Netanyahu and Obama are due to meet when the President visits Israel and the West
Bank in June. Obama will expect Netanyahu’s support for a two-state solution at that
time. Whilst Netanyahu’s economic peace does not address final status agreements, it
does seek to address the legacy of the conflict. It presents opportunities for both
Israel and the Palestinian people and through the pursuit of political, security and
economic tracks may well yield a modest Palestinian peace dividend.

Jerry Nockles is a researcher at the Centre for Arab and Islamic Studies, The
Australian National University, Canberra, Australia