Peace for sale

Monday the Wilson Center hosted Calculating the Costs of the Israeli-Palestinian Conflict, which was a presentation of a RAND Corporation study. Here is a link to the study. Ambassador Charles Ries (Vice President, International, RAND Corporation) and C. Ross Anthony (Senior Economist, RAND Corporation and Director, RAND Israeli-Palestinian Initiative) explained the methodology and key findings of the study. Lucy Kurtzer-Ellenbogen (Director, Arab-Israeli Programs U.S. Institute of Peace) and Aaron David Miller (Vice President for New Initiatives, the Wilson Center) provided their assessments of the significance and potential impact of the study.

The study examined the economic impact of five different trajectories for the conflict over a ten-year period:

1. A two-state solution based on the Clinton parameters.
2. A unilateral Israeli withdrawal from much of the West Bank coordinated with the Palestinians and the international community.
3. An uncoordinated unilateral Israeli withdrawal from part of the West Bank.
4. Nonviolent Palestinian resistance, through the internationalization of the conflict and nonviolent demonstrations.
5. A violent Palestinian uprising.

The study compared each of these trajectories to the status quo, in which current trends continue for the next 10 years, and considered the impact of each scenario on direct costs to both parties, as well as on missed economic opportunities because of the perpetuation of the conflict. The study did not model a one-state solution because of the uncertainty regarding the character of such a state.

A two-state solution would provide the greatest economic benefit to both sides. Conversely, a violent Palestinian uprising would be most harmful to both sides. Neither unilateral withdrawal scenario would have a significant economic impact on either side. Nonviolent Palestinian resistance would harm both sides economically, though not as much as a violent uprising.

A two-state solution would provide a greater benefit to Israel in absolute terms, but a greater proportional benefit to the Palestinians. Israel’s GDP would be $23 billion larger in 10 years over what it would have been if present trends continued. The GDP of the West Bank and Gaza would be $9.7 billion larger in 10 years over what it would have been if present trends continued. This translates to a 5% increase in Israel’s GDP but a nearly 50% increase in the GDP of the West Bank and Gaza. The study assumed that Israel’s security costs would not change in a two state solution, but that a decrease in uncertainty, an increase in trade with the Arab world and the Palestinians, an influx of Palestinian labor into Israel, and increased tourism would boost the economy. On the Palestinian side, increased tourism, freedom of movement, Palestinian labor in Israel, and trade are among the factors that would boost the economy.

By contrast, a violent uprising would pose heavy costs on Israel through an increase in instability, increased security costs as well as decreased trade, Palestinian labor in Israel, and tourism. Palestinians would suffer from decreased Palestinian labor in Israel, destruction of property, greater restrictions on movement, more prisoners in Israel, more barriers to trade and the dissolution of the Palestinian Authority. Israel’s GDP would be reduced by 10% relative to the baseline scenario and the GDP of the West Bank and Gaza would be reduced by approximately 45% relative to the baseline scenario.

The study’s authors did not recommend a path forward for Israelis and Palestinians and noted that the various intangible factors (conflicting national narratives, lack of leadership, lack of urgency, etc.) that have led to the current impasse in the conflict fall outside the purview of this study.

Lucy Kurtzer-Ellenbogen noted that this study presents the conflict as opportunity-based rather than rights-based, and allows groups advocating for a solution to the conflict to use data to support their case. Nonetheless, the impasse in the peace process is likely to persist because of mutual distrust. The recent election of a right wing, nationalist government in Israeli reinforces the Palestinian perception that the Israelis have not been negotiating in good faith. Operation Protective Edge reinforced the Israeli view that no Palestinian leader can guarantee an end to Palestinian land claims inside pre-1967 Israel.

Aaron David Miller noted that if it were possible to buy a solution to the conflict through economic inducements, this would have happened already. The issues of security, competing narratives, broken trust, and psychological trauma must be addressed before the two parties can look rationally at the opportunity costs. In addition, the leadership, urgency, and effective third-party mediator required to solve the conflict are missing. The good news is that the study got a lot of publicity and interest. The bad news is that nobody knows what to do about it.