The West Bank and Gaza: Give economics a chance
In the wake of this summer’s war between Israel and Hamas, it is evident that neither party achieved its military or political objectives. And while a cease-fire is currently in place, fundamental steps to resolve the conflict aren’t on the agenda. Given a history of costly and recurrent armed conflict, it is clear that both parties are in need of a paradigm shift.
Perhaps it is time to give economics a chance. Both Israelis and Palestinians would be well served by aggressive efforts in economic development of the West Bank and Gaza. This idea is not new. In 2013, U.S. Secretary of State John Kerry proposed a plan to invest $4 billion in the West Bank. Currently, a sparkling, privately developed Palestinian new town called Rawabi, replete with amphitheater, piazzas and multiplex theater, is about to open in the West Bank. Israeli social-impact entrepreneurs are seeking to bring venture capital and high-tech success to the West Bank. Discussions are also underway for an economic federation encompassing Israel, the Palestinian Authority and Jordan that would bolster trade, tourism, economic development and energy deployment for the benefit of all three parties.
A broad-based initiative for economic development of the West Bank and Gaza could take a page out of the post-World War II U.S. Marshall Plan playbook. The program provided $160 billion (2014 dollars) for the reconstruction of a war-ravaged Europe. The plan included a rebuilding of infrastructure and trade, amelioration of hunger and poverty, creation of economic opportunity and suppression of competing Soviet economic doctrines. The vanquished and disarmed Germany received substantial aid under the Marshall Plan.
In the wake of the Marshall Plan, Europe witnessed two decades of unprecedented economic growth. The vastly improved economic conditions also resulted in political stability, substantially diminished interest in communism and a rise in Western culture.
In the Palestinian application, the idea would be to direct concerted foreign investment for purposes of peaceful economic development of the West Bank and Gaza. At the outset, efforts should leverage the $2.7 billion just pledged by the international community for the postwar rebuilding of Gaza. Funding should bolster vocational and higher education to provide young Palestinians with technical job skills. Private investment and job creation could then proceed consistent with accretions to human capital. Subject to strict controls on weaponry and related supplies, roadblocks should be removed in the West Bank and a modern train system built to enable efficient movement of people and goods both within and between the West Bank and Gaza. Ultimately, a new port in Gaza could play a major role in connecting the West Bank, Gaza and Jordan to markets around the globe.
A critical component of the plan would be the dismantling of Palestinian refugee camps and the resettlement of their inhabitants. The refugees have too long been pawns in the political struggle. Since 1948, those camps have served to reinforce a cycle of abject poverty and to foment terror activity. In their place, industrial parks, education and health campuses, and other for-profit real estate should be developed. Foreign investors should be encouraged to build facilities in those parks. The refugees should benefit from returns to such development and from newfound employment opportunities.
As security threats fade, borders should be opened to allow trade, movement of population and creation of economic linkages. In this new environment, investment partnerships among Israelis and Palestinians could serve to rebuild grass-roots ties and leverage resources. Beyond economics, social benefits would include increased interaction and reduced demonization among conflict participants. As in Europe, the aim would not only be elevated economic activity, but also a change in fundamental culture. Growing economic opportunity could bring with it the creation of widespread and popular vested interests in entrepreneurship, individual advancement and prosperity, education, legal and human rights, and rejection of competing fundamentalist and confrontational leadership and ideologies.
Why would such an effort have a chance of success? The encouraging element of such a plan is the limited scale of the effort. In stark contrast to Europe, whose 1950 population was roughly 350 million, the population of the West Bank and Gaza currently numbers only about 4.5 million. That’s just one-quarter the population of the L.A. metro area. Similarly, the land area of the West Bank and Gaza is only half that of L.A. There is little doubt that a concerted global effort could significantly enhance economic opportunity among Palestinians. The scale and size of the Palestinian entity make the prospects of game-changing investment highly promising.
Foreign direct investment has the potential to materially improve the lives of Palestinians in a manner that could be a game-changer for conflict resolution. Investment in the Palestinian sector, however, should be limited to partners who are publicly and unequivocally committed to mutual recognition and peaceful conflict resolution.
This vision of economic advancement and hope for Palestinians in both the West Bank and Gaza should be presented to all Palestinians. For it to succeed, the Hamas rulers of Gaza, who engender substantial popular support in both Gaza and the West Bank, must accept this vision and act as partners in its implementation. Indeed, it is Hamas who can change the Palestinian vision from the destruction of Israel to the building of a prosperous Palestine. For Israel, the benefits of such a plan could become evident in trade, economic cooperation, creation of a Western-leaning, vested Palestinian middle class and reduced Palestinian support for radical rejectionist ideology.
Both Palestinians and Israelis have tried the stick. It doesn’t seem to work. It’s time to try the carrot.
Stuart A. Gabriel is professor of finance and Arden Realty Chair at UCLA Anderson School of Management. Rabbi Ed Feinstein is senior rabbi at Valley Beth Shalom in Encino.