Since 2021, a growing number of Israeli leaders have proposed new policies to manage their occupation of the West Bank, including East Jerusalem, and Gaza. These policies are rooted in the new concept of “shrinking the conflict,” an approach introduced by Israeli historian Micah Goodman in 2018 as a solution for reducing the growing rift between the so-called Israeli Left and the Israeli Right over what to do with the regime’s military occupation.
The approach, which is a revised version of Benjamin Netanyahu’s “economic peace” model, assumes that Israeli tools of oppression breed “unnecessary” daily frictions that increase the likelihood of Palestinian “waves of terror and violent clashes.” Therefore, Israel need not dismantle its occupation, but simply manage it differently—ostensibly less oppressively by granting Palestinians more freedom of movement within the West Bank and increasing their economic opportunities with Israel. In this way, the “shrinking the conflict” approach has altogether abandoned any serious discussion of the two-state solution and aims, instead, to entrench the Israeli regime’s military occupation in order to prevent the establishment of either a Palestinian state or a one-state reality.
This policy brief debunks Israel’s “shrinking the conflict” approach and the economic policies it entails. It argues that any proposals that fall short of total dismantlement of Israel’s systems of apartheid, occupation, and settler colonization would bring neither an improvement to Palestinians’ lives, nor their acceptance of the status quo.
The Israeli regime has long employed the economy to control and pacify Palestinians. The “shrinking the conflict” approach is designed to enable a review of the Paris Economic Protocol, including through joint economic collaboration between the Palestinians and Israeli regime. It also proposes additional economic facilities aimed at bringing about Palestinian political acquiescence. For example, Goodman supports gradually devoting additional lands in Area C for Palestinian-Israeli economic cooperation, including foreign investment and industrial parks that would remain under Israeli control.
Moreover, Goodman calls for the creation of “safe” logistic routes within the West Bank to ease the process of transferring Palestinian goods to Israeli markets—the so-called “Door-to-Door” policy—thus incentivizing more Palestinian merchants to strive to enter into economic agreements with the Israeli regime. He also calls for increasing and diversifying Palestinian laborers in 1948 territories, including from Gaza. While they may appear to benefit Palestinians, these two policies entrench Palestinian geographic and economic fragmentation, as well as economic dependence on Israel, in a state of perpetual de-development.
Fundamentally, the concept of “shrinking the conflict” presumes that a series of mainly economic Israeli policy shifts towards the West Bank and Gaza will eliminate the conditions that spur “clashes” between Palestinians and Israeli occupation forces. By supposedly alleviating the severity of Palestinians’ daily suffering, Israel’s military occupation thus becomes more manageable and sustainable. In other words, the question of Palestinian self-determination through statehood becomes obsolete, relieving Israeli leaders across the political spectrum of the perennial question of what to do with the Palestinians.
The approach hinges on a fallacy that Palestinians will be less likely to resist if they are made to believe that they can enjoy life under permanent settler-colonial occupation through fewer restrictions on mobility and more opportunities for economic collaboration with the Israeli regime. It is a distorted and racist assumption based on the long-standing Zionist misconception that Palestinians are an apolitical, violent mob — rather than a people demanding self-determination — that can be pacified if afforded so-called privileges.
Aspects of the “shrinking the conflict” approach have been invalidated with the victory of Netanyahu’s far right-wing coalition government in December 2022. On the one hand, the increased violent Israeli suppression of Palestinian resistance, especially in the northern West Bank, undermined the plan of eliminating the mechanisms that breed clashes. On the other hand, Netanyahu’s extremist coalition, which pushes for further Palestinian dispossession and displacement, is not likely to implement policies for supposedly “shrinking the conflict.” Nonetheless, it is likely that the economic measures put in place since 2021 will continue to shape Palestinian-Israeli economic relations in the coming years.
And while the new Israeli coalition government has yet to lay out its economic policies towards the West Bank and Gaza, its blatant commitment to deepening occupation will certainly worsen Palestinian suffering. Palestinians will never accept this reality, even if Israeli policymakers push for measures aimed at “improving” their lives through increased participation in the Israeli labor market or mobility within the West Bank. So long as Israeli settler colonialism, apartheid, and occupation persist, so, too, will Palestinian resistance.
