Jerusalem24 – Economic peace plans for Israel and Palestine are everywhere—from the 2013 Kerry Plan to the 2019 Kushner Plan to reports from institutions like the World Bank and the International Monetary Fund calling for unhindered economic ties between the Palestinian and Israeli private sectors. These proposals fall under the “economic peace” umbrella, a flawed theory that assumes there is an economic solution to a political problem. In other words, there is a pervasive belief among so-called “experts” that economic incentives will keep Palestinians from demanding their right to self-determination.
The rhetoric of foreign diplomats is that the Israeli-Palestinian political conflict—that is, Israel’s occupation of the Palestinian territories—is hindering stronger economic ties between the two sides. If conflict suddenly disappeared, they argue, there should be full economic cooperation and open borders. In particular, the assumption is if two economies are in proximity and have open economic relations, there will be positive spillover effects in favor of the small economy (in this case, the Palestinian one) including, but not limited to, the transfer of technology and know-how. As a result, the two economies should start to converge.
However, the geographic proximity between Israel and Palestine has led to one of the worst versions of economic dependency imaginable. For decades, the Palestinian economy has been locked in a cycle of underdevelopment. It has been unable to develop a strong productive base in manufacturing or agriculture, its trade deficit has skyrocketed, and it has remained dependent on Israel’s labor and goods markets.
In this episode of Wake Up Palestine, Raja Khalidi, General Director of the Palestine Economic Policy Research Institute – MAS further explains what Economic Peace is, whether or not it can provide any solutions as well as the largest challenges for it.