Economic Development and Conflict Resolution: What Role Can It Play in Arab-Israeli Peacemaking?

On September 9, 2009, the Middle East Program of the Woodrow Wilson Center, together with the United States Agency for International Development (USAID), hosted a panel discussion with Shibley Telhami, Anwar Sadat Professor for Peace and Development, University of Maryland, College Park and Non-Resident Senior Fellow, Saban Center, Brookings Institution; David Makovsky, Ziegler Distinguished Fellow and Director, Project on the Middle East Peace Process, Washington Institute for Near East Policy; and Aaron David Miller, Public Policy Scholar, Woodrow Wilson Center, who chaired the meeting. Introductory remarks were given by Jane Nandy, Director, Office of Middle East Affairs, Middle East Bureau, USAID.

Nandy gave an overview of the West Bank-Gaza conflict while touching on its impact on neighboring countries in the region. She asserted that economic development is essential to creating the conditions necessary for internal politics and peace negotiations to succeed. She advocated an economic developmental approach similar to the one used in Bosnia, though she admitted the nature of the Bosnian conflict was rather different from that of the Arab-Israeli one. According to Nandy, the key areas of economic development are infrastructure, private sector, industry, humanitarian, health sector, service delivery, and civic development. She believes the current administration is committed to working alongside Palestinians in these developmental areas to "stimulate growth, improve trade, and enhance revenue."

Telhami discussed the role of economic aid and development in the West Bank-Gaza and clarified US objectives. As he views it, the devastation and destruction which has occurred in the last decade is an indication that it has significantly fallen behind neighboring countries, particular in state development. As evidence, Telhami cited the marked deterioration which followed the collapse of the Camp David Accords and the Second Intifada (2000). Telhami believes that strengthening Palestine's economy is vital to strengthening the state itself. However, he also conceded that economic development should not be viewed as a substitute for political change and the peace negotiation process. Like Nandy, Telhami believes Palestinian National Authority Prime Minister Salam Fayyad has done an exceptional job thus far of revamping the Palestinian domestic and regional agenda.

Makovsky views economic policy as a less contentious avenue for progress than politics. However, he also maintained that it is still unclear whether economic development can or will have an impact on the politics of the region. Makovsky believes the two-year state-building program put forward by Fayyad has potential. Moreover, it shows his seriousness and commitment to building the Palestinian state and its economy and improving the lives of its citizens. Makovsky stated that Fayyad is trying to redefine nationalism and the state in a profound way while also clarifying the Palestinian objective. He added, however, that nationalism "does not go very well with [Israeli] occupation." Still, in the end, Makovsky agreed with Telhami and Miller that economic development should not be regarded as a substitute for political change. He also stressed the importance of security, law enforcement, political transparency, and progress.

While not disputing the value of economic development in managing and even resolving conflict, Miller offered five points by way of perspective: first, it's a natural American tendency to look at resolving conflict from a material perspective; second; the West Bank/Gaza situation is made more complex by the fact that there's no precedent for a people negotiating its way out of an occupation and building institutions at the same time against the backdrop of ongoing violence; third, the Palestinian national movement isn't a coherent whole and is badly fractured which makes rational programmatic assistance much harder; fourth, the West Bank and Gaza isn't Europe or Japan after World War II, and, in many ways, is less conducive to rational economic planning; finally, the core of the conflict between Israelis and Palestinians is political and will require decisions that neither side now seems willing or able to take.

Drafted by Nader Mehran on behalf of the Middle East Program