This is a summary of a paper that was recently published by the Peres Center for Peace and the Palestine Center for Strategic Studies.

'Economic peace' claims that economic welfare among the Palestinians will create hope, calm hostilities, weaken the tendency towards violence and create the "price of loss" – meaning decreasing the profitability of a confrontation, based on the fear of possibly losing economic assets already achieved, including an increase in revenues, increasing export, drawing investors and generally expanding investments in the area.

In the current situation, unemployment, deprivation and lack of hope for improvement, means that Palestinians see no benefit of peace and tend towards radicalism. Assymetry between Israeli and Palestinian quality of life breeds discontent. Netanyahu believes that economic stability will preceed a political solution.

However, there was economic prosperity in the Palestinian authority before both the first and second intifiadas, with GNP growing steadily.

Some examples of improving the economic relations between Israel and Palestine include building a joint Eilat-Aqaba airport, joint tourism projects and creating a Palestinian industrial zone.

So what state is the Palestinian economy currently in? According to the Palestinian Central Bureau of Statistics, from 2007 to 2008 the GDP grew healthily. Tourism in the West Bank increased greatly in the last few years, giving a boost to the economy. However, unemployment in the West Bank is approx 19%, and over 40% in Gaza. This has risen steeply since Palestinans were denied permits to work inside Israel. Between 1996 and 2000, around 30% of the Palestinian workforce was employed inside Israel.

It is in Israel's interest to begin employing Palestinians once again to help stabilise the Palestinian economy and to promote normalised relations between Israelis and Palestinians, as well as dealing with the problem of foreign workers settling in Israel.

Can improving the Palestinian economy be a path to lasting peace, or is this just a side issue necessary to support the political process?

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Thank you Viki for the report reference.

Can improving the Palestinian economy be a path to lasting peace, or is this just a side issue necessary to support the political process?

It is obvious that the Palestinian will better positioned if their economic will be better, but economic statistic never show the full human condition and many fear that this "economic peace" is a "golden cage" planed by Israelis.

for having real healthy economy Palestinians need freedom while Israel controls resources, trade path etc. any economic prosperity is not sustainable.

Palestine need capacities, and it needs a future, while we can see the WB prosperity as a good sign it can fade if the people of palestine will not see a respectful future for themselves.

At this stage and condition, the economic development of Palestine is essential as a stage and this why Netanyahu at this stage is good. he may think he put the Palestinian in a golden cage but what he is doing is enable them to develop capacities and build a state infrastructure.
This discussion is promoted today in the recommendations on
On this Netanyahu seems to have actually hit the nail on the head. Worldwide studies of conflict have shown time and time again that there is a very strong link between extremism and regional conflicts and economic welfare. World media begs the question of why extremism thrives across the globe but fails to note that 'extremist organizations' that have histories of violence (factions of Al Queda, the Muslim Brotherhood, Hizbullah, Hamas) are also some of the largest providers of social welfare in regions where no infrastructure exists. Though the economic past of the PA may be described as prosperous, it was never economic equality. And when it comes to determining overall social welfare of a people, economic equality matters just as much (if not more) than the numbers reflected by the GDP. The PA, no matter the millions it dealt with, failed to provide a decent living standard for all Palestinians. It's why the world should not have been surprised at the 2006 election of Hamas-- Fatah, rife with corruption, had failed for years to improve quality of life for Palestinians while Hamas was, quite literally, putting food on people's plates and roof's over their heads. When you cannot feed your children, not much else matters and the choice between the two is obviously no choice at all. Palestine is one example of many worldwide that failing to properly address issues of poverty and economic stability in regions with conflict issues is effectively pouring gasoline on a healthy fire.

Though it is certainly not the only issue that needs to be addressed, the reality is that though there can be a stable economy without a state, but there will never be a stable sovereign state without an economy. Developing and stabilizing the Palestinian economy with an eye toward economic equality can go a long way in creating a sovereign Palestine.

This is my first post and I do not intend to spam, but I think it is directly relevant to this topic: if anyone is interested, I encourage you to check out an organization I work with, lets any individual loan to a Palestinian microentrepreneur in the West Bank. We believe facilitating the success of entrepreneurs is giving Palestinians a sustainable tool to stabilizing their economy, no "golden cage" involved. And that in turn lends directly towards peace.

bringing information about is not spam. if you can bring more information about this activity it would be just grate.

The danger in "economic peace" is the idea that its all about money, while good economy which is sustainable is actually outcome of good society where people are educated, well fed, secure and happy. when people try to push the economy of a society as "money investment" it may end up that a few people got a lot and most people have less then what they need. statistically as in average you may think economy is good, but this is not sustainable and do not serve the human needs.

micro loans are good strategy, but we need to be careful and not ignore the difference between different cutures and a Palestinian mico loan program is not the same as Indian micro loan.

at the bottom of it, most people are not extremists, most people seek ways to live decent life. helping economy graw is helping the society (the Palestinian in this case) to build capacities to answer the needs of the people and in many ways capacities to provide the social services that Hizbula provides and Hamas provides in education and support of the poor.

in other words, economic development of Palestine should be element in the Palestinian social organization and less of Israel decision. Israel from its side must find ways to support these efforts and recognize that the long term security is more valuable for the short term risks that can be taken by Israel.
Neri, I agree. I do not think access to the free market determines economic equality amongst a whole population, let alone always results in better education, access to food, clothing, and basic human rights. An economically just and flourishing Palestinian economy can't solve the whole problem if Israel is still politicizing water access, for example. It is not the whole picture, but it is definitely an important component.

I also agree economic development should not be Israel's decision and on Israel's terms. This is the golden cage you spoke of, and falls prey to the same mode of thinking that help start this mess in the first place-- Moshe Dayan's idea of a "benevolent occupation." This is part of why I champion microloans-- instead of bags of food aid and emergency services, microloans enable Palestinians to develop their own sustainable economy. I see it as proverbially "teaching a man to fish," or more accurately, providing him with a loan for the fishing pole in the first place!

You are right, microloans in Palestine are not the same as microloans in India or anywhere else. This needs to be taken in to consideration if microloans want to be used on a grand scale as a method of economic development. Though with specific regards to, we partner with two local microfinance institutions in Ramallah who have been in the game of Palestinian microcredit for decades. They are local institutions staffed by locals, which I think is the only appropriate way to go about facilitating microcredit. Instead of barging in with the heavy hand of official "Western Development," just facilitates capital to these longstanding community institutions. If anyone has any other questions about what LFP does (or how), I would be happy to answer them via private message (or maybe a seperate thread in the near future-- I don't want to take over this one!).
Talia, can you provide me with links on those stats worldwide? or any major articles. in particular re the middle east? any evidence of a POSITIVE nature that where middle class grows violence decreases? we have loads of anecdotal evidence but would love persuasive proof.
Stats of...? I'm not sure which you mean: links between conflict and extremism? Or the link between a strong middle class/access to free market and decrease in violence? Mercy Corps' Action Centers have an excellent presentation using Afghanistan as a study. You can find it online here:

Not really something I can provide stats on, but if you are interested, I will dig out the old college readers and find some academic case studies relating to conflict and extremism in the Middle East. Though in general, if you look at theory of revolution and civil unrest, most (if not all) scholars tie a strong middle class (and/or relative economic prosperity) and the idea of cross-cutting social alliances with a decrease in violence and unrest. Likewise, it is places that lack these factors that are most likely to plunge in to violence and chaos (see the history of Afghanistan, Lebanon's civil wars, Jordan's internal conflict with Palestinian factions).
it is good if the kage wase gold and the wall wase made by selver -----but for how much time??it is time to say end occupation peace is not by weppons note weth tanks and solders
Please tell the PA, Hamas and Fatah and all "militants".
the UNARWA wase hellpeing palestinian refuigees for 60 years but that wasnot the salution look at them in this time they dednot know what to do in the next month
UNHCR seems to be more effective for all other refugees in comparable circumstances. .
UNRWA will stay until peaceagreement is made and refugee problem is solved in that agreement. UNRWA is doing fine job.



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