The Costs And Gains of Ending The Israeli-Palestinian Conflict

The Costs And Gains of Ending The Israeli-Palestinian Conflict

Israeli soldiers clash with Palestinian stone throwers at a checkpoint outside Jerusalem. Credit: Ahmad Gharabli/ AFP
Israeli soldiers clash with Palestinian stone throwers at a checkpoint outside Jerusalem. Credit: Ahmad Gharabli/ AFP

The two-state solution is the most lucrative option for both Israelis and Palestinians, claims a report by nonprofit global policy think tank RAND Corporation called The Costs of the Israeli-Palestinian Conflict. The recently published research weighs up the costs and benefits of five possible outcomes of the ever-stalling ‘peace process’, against a continuation of present trends, over a 10-year period. The question remains, however, whether money is, or even should be, the biggest incentive or driver behind peace.

In conducting the study, which involved 200-odd interviews with officials from both sides, they set out to find out the net costs and benefits to Israelis and Palestinians if the current impasse endures until 2024. The study also presented the non-economic factors influencing Israeli and Palestinian opinions on the alternative trajectories and the longer-term implications of the continuing status quo for Israel, the Palestinian territories and the international community. Furthermore, they created an interactive calculator on their website with customizable scenarios to allow users to assess the effects of various factors, such as BDS, refugees and settlers, on the Israeli and Palestinian GDP.

The alternative outcomes considered by the study, in order of economic reward for both Israelis and Palestinians, are: a two-state solution, a coordinated unilateral withdrawal from a good portion of the West Bank, an uncoordinated unilateral withdrawal from a good portion of the West Bank, nonviolent resistance and violent uprising.

All manners of economic costs are taken into account when tallying up the outcome estimates, including direct costs (expenditures), such as security and settlement for Israel and labor permits in Israel for Palestinians, and opportunity costs (lost opportunities), such as tourism and trade for Israel and control of territory for Palestinians.

RAND concludes that “a peaceful resolution of the conflict is the best option economically for both Palestinians and Israelis, while a return to violence is very costly to both sides.”

Woman waves Palestinian flag as Israeli youths with Israeli flag walk by in Jerusalem. Credit:  Reuters
Woman waves Palestinian flag as Israeli youths with Israeli flag walk by in Jerusalem. Credit: Reuters

According to the study, both Israelis and Palestinians stand to gain the best economic outcome possible through achieving a two-state solution: $123 billion and $50 billion respectively over ten years, with the Palestinians’ average per capita income increasing by approximately 36 percent compared to 5 percent for the average Israeli. The biggest contributors to these financial gains are, for Israel, Arab world trade, Palestinian trade and more investment and economic activity due to increased stability. For Palestinians, trade also constitutes a primary source for financial gain.

The two-state solution scenario that RAND foresees, for the purposes of the research, is “based on an amalgam of the Clinton Parameters, the Olmert-Abbas package, and the track-two Geneva Initiative,” in which Israel withdraws to the pre-1967 borders, except for mutually agreed land swaps, and 100,000 West Bank settlers are relocated to Israel.

The scenario also assumes that all trade and travel restrictions on Palestinians are lifted and the international community pays for most of the settler relocation costs. Israeli security would be guaranteed by the international community, 600,000 Palestinian refugees would return to the West Bank and Gaza and Israeli-Arab trade relations would “rapidly increase” following a peace agreement. A lot of the monetary values, based on these assumptions, are conjecture.

And what about a one-state solution? While RAND is explicit in pointing out that their research is in no way a prediction of future events, and admits that “the reality that evolves is likely to be a mixture of some aspects of all the scenarios presented here,” they also opt to omit the one-state solution from their comparison because they don’t think it is feasible within the next 10 years.

“We seriously considered analyzing the one-state solution scenario but it just didn’t fit within the scope of this project,” said Jeffrey Hiday, Director of Media Relations at RAND. “Every scenario for our project entailed comparing two separate populations — but that would not have so obviously been the case if analyzing the one-state solution scenario. We would need to engage constitutional experts, for example. It’s something we would like to do, eventually, but couldn’t accommodate it with this particular project.”

Given the two-state solution’s track record since the 1970s, however, there is reason to question their logic. David Ha’iviri, a West Bank settler, is doubtful: “I don’t see anything other than the current status quo, more or less, happening in the next ten years.”

Some think support for the two-state solution is deeply unhelpful. Rabbi Shai Gluskin says, “For salvaging 2SS, the report adds intellectual capital. But I think 2SS is so far gone that reports that give it credit actually set us back.”

An Israeli activist waves his national flag at Israeli Arab demonstrators waving Palestinian flags. Credit: AFP
An Israeli activist waves his national flag at Israeli Arab demonstrators waving Palestinian flags. Credit: AFP

To its credit, RAND doesn’t deny that the two-state solution is problematic. Hiday says that, in any two-state solution, “the Palestinians would need to take over increased security responsibilities – more area and more functions.” The resources necessary to meet this need are not guaranteed. On top of this, since the financial gain for the average Israeli is much smaller than that for the average Palestinian, there is less of an incentive for the dominant player to pursue peace, especially given the perceived security risks it entails.

According to some Israelis and settlers like David, the risks are real: “As if there is any reason to trust that the Palestinian state could be structured in a way that preserves democratic principles,” he says.

On the Palestinian side, as well, there is long-standing opposition to the Jewish nation state of Israel. Mahmoud Abu Joora, a young Palestinian man from Bethlehem, says, “We believe that one day refugees originally from towns like Haifa and Jaffa will return there.”

As crucial as it is that the occupation ends, defining the conflict’s solution as withdrawing from the West Bank (and the rest will follow) is unhelpfully reductive. There is also the question of Jerusalem, right of return, an inevitable long-term struggle for civil and human rights, and the ongoing threat of renewed violence to consider.

No matter how large the potential financial gain is, the rights of the people, as well as their safety and wellbeing, should be priorities.

Peace, including that in the form of a two-state solution, must be the ultimate goal, economic gain or no economic gain. But in practice — and due to facts on the ground — negotiations, agreements and unilateral moves have all proven to be counterproductive.

“People who really care should be pushing for local dialogue,” says David Ha’ivri. “If we, the people who actually live here, can dialogue, we will eventually figure it out. Westerners pushing their plan of how we should resolve our problems is not going to help us solve them.”

Egypt Court Sentences Morsi to Life in Prison for Espionage
Queen Elizabeth II Honors Two Egyptians For Outstanding Contributions

Subscribe to our newsletter


Hayley is an independent journalist covering Middle East culture and politics. An English Language and Sociology graduate from University of Manchester, she now lives in Berlin and blogs at hayleyjpearce.com

More in Feature

Egypt’s Growing Side Gig Economy

Amina Abdel-Halim6 February 2023

Can Digital Remittances Improve Financial Security in Egypt?

Mirna Abdulaal2 February 2023

Mental Health and Living Abroad: A Hopeful Immigration Story

Mirna Abdulaal21 January 2023

The Humble Story of Opening a Food Truck: Bringing Mexican Cuisine to Egypt

Mirna Abdulaal3 January 2023

Between Divorce and Hardship: Stories From Egyptian Men Working in the Gulf

Marina Makary25 December 2022

Can Virtual Water Solve Egypt’s Water Scarcity?

Mirna Abdulaal22 December 2022

‘Cairo Says’: How an Instagram Account Became Egypt’s Slang Dictionary

Farah Rafik12 December 2022

This European Gallery Brings Arab Art from MENA to the World

Mirna Abdulaal10 December 2022