‘Economic Peace’ With Israel Won’t Help Palestinians
Last month, Gaza once again faced the full brunt of the Israeli war machine, which killed hundreds of Palestinians and injured thousands. The international community is responding, as it has in the past, by organizing a humanitarian mission for aid and reconstruction in the besieged Palestinian enclave. Although a humanitarian response is sorely needed in Gaza, failing to also address the political and economic realities Palestinians face will only entrench the untenable status quo of Israeli occupation and likely lead to further violence.
But doing so by promoting unconstrained economic relations between Israel and Palestine—as has become fashionable in Western capitals of late—is not the answer. Such an approach would only deepen the Palestinian economy’s dependency on Israel’s labor and goods markets. Rather than reinforcing the status quo, international players should work to build an independent Palestinian economy while pressuring Israel to end its occupation of the West Bank and East Jerusalem as well as its devastating siege on Gaza.
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.