Thinking Aloud: “The Costs of the Israeli-Palestinian Conflict”

June 9, 2015 by Darius 

The RAND Corporation released a new report this week on the economic implications of various outcomes of the Israel-Palestine issue.

The report analyzed the total costs and benefits over the next ten years of five possible routes the conflict can take: a two-state solution, unilateral Israeli withdrawal from the West Bank coordinated with the Palestinian Authority, unilateral Israeli withdrawal not coordinated with the PA, nonviolent Palestinian resistance to Israeli occupation, and a renewal of violence.

The study found, not surprisingly, that of the five possible paths, a two-state solution offers by far the best economic outcomes for both Israelis and Palestinians.  According to the report, Israel stands to gain $132 billion, or about 5% of per capita income, while Palestine stands to gain $50 billion, approximately 36% of per capita income.  Not surprisingly, a return to violence means the worst economic outcome for both Israel and Palestine.  In short, the more cooperation, the better the money for everyone involved.  Not exactly a news flash.

However, I felt the report contains several major flaws.  First of all, the economic projections, especially the benefits of a two-state solution, are contingent on major investment from all parties involved to reap the maximum economic benefit.  This investment should not be taken for granted.  Second, more importantly, the study failed to examine a one-state solution at all.  To me, this is another example of the US and others pretending that option doesn’t exist.  That makes for sloppy planning and bad policy.  A one-state solution remains the default outcome of the status quo.  That one state could take a variety of forms, but it seems only sensible for this sort of assessment to analyze the economic prospects of some of the possible one-state solutions.

You can read a summary of the report at  The full report is available for more money than I would care to spend. 🙂

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