The Magazine

The Way Forward for the Palestinians

It's economic development, not peace-processing.

Jul 1, 2002, Vol. 7, No. 41 • By DANIEL DORON
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The United States and the European Union, which financed Arafat's criminal regime, must now help Palestinian moderates create a law-abiding government that facilitates economic growth. Such moderates will make themselves known once they cease to be terrorized by Arafat and his gangs. Their task is not an easy one, but if Germany and Japan could do it after World War II, there is no reason the Palestinians, a hard-working and intelligent people, can't do it now.

Once a Palestinian entity ceases to pose a threat to Israel, Israel will be able to reduce drastically the number of closures it imposes on Palestinian cities and villages. These closures, designed to prevent terrorist attacks, have punished Arab workers seeking employment, pushing some into the lap of Hamas. With more resources available for peace, Israel could quickly develop and deploy sophisticated detection equipment that would make security precautions, which now can delay the flow of goods by weeks, less onerous. This alone would remove a major impediment to Palestinian economic activity.

While Israel bears no moral responsibility for the refugee problem that resulted from deadly Arab aggression against it, it should do all it can to restore these unfortunates to normal life, as it has for Jewish refugees from Arab lands. Israel should provide housing to displaced Arabs once the stiff opposition of the Palestinian Authority, which nursed and exploited the refugees' plight, is gone. Government-owned land near the "camps" should be provided with infrastructure, and refugee families invited to construct dwellings in their customary cooperative manner. They could also be offered low-interest building loans or compensation for lost property when appropriate.

A massive building program would provide jobs and income for Palestinian construction workers and contractors. It would prime the pump in related trades and services and jump-start a Palestinian economic upturn.

The Palestinian Arabs have a comparative advantage in labor intensive trades. Israel should open its markets to their products. Israeli farmers unable to compete with Arab farmers growing vegetables should be helped to move to the production of upscale products--exotic fruits, vegetables and flowers, speciality cheeses, and wines. Similar arrangements could be worked out in the construction materials, apparel, and footwear industries and other sectors where Arab competition displaced Israeli workers.

The Israeli government must also cut its high taxes and red tape, which inhibit Israeli and Arab entrepreneurs alike and discourage joint ventures. Israeli policy should facilitate the construction of Palestinian-Israeli industrial parks, like the one built near the Gaza Strip (but unused since the intifada) by the Israeli industrialist Stef Wertheimer. Constructed where Palestinian areas and Israel meet, such parks could alleviate the security and logistical problems involved in busing tens of thousands of Arab workers to Israel daily. They could also provide Arab entrepreneurs a modern infrastructure for manufacturing and other business.

Israel must keep its hands off the informal markets that have sprung up along the edges of Palestinian areas, which have been extremely popular with Israeli bargain-hunters. These markets, in a sort of commercial no man's land, should be encouraged to flourish, as they provide the best environment for peaceful relations.

Prolonged national conflicts are not susceptible to quick fixes. It took Europe centuries to overcome intractable national and religious conflicts. Economic cooperation and growth were essential to resolving them. New interests and benefits created by economic integration helped people transcend the old barriers and made some of them irrelevant. This can happen in the Middle East.

Economic development may be more arduous and less glamorous than peace processing, but it has proved its ability to moderate the Israeli-Palestinian conflict. This is no small accomplishment, considering the violence and mayhem unleashed when leaders have pursued a political settlement first.

Daniel Doron is the president of the Israel Center for Social and Economic Progress, a private think tank in Jerusalem.