The Cost of the Israeli-Palestinian Conflict

End to the conflict would mean financial windfall for Israel and the Palestinians, but Jerusalem is a major stumbling block

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The American research institute Rand Corporation has released a study showing that a two-state solution would benefit Israel to the tune of USD $120 billion over ten years, while the Palestinians would rake in USD $50 billion over the same time.

But with both sides plunging repeatedly into violent conflict, they are forfeiting the enormous sum of USD $250 billion, considering the costs of conflict in addition to the lost economic growth.

According to Rand, Israel would be even more of a money magnet than it is today following a comprehensive peace agreement, but it must first agree to the division of the Holy Land. The same is true for the Palestinians.

In the study, the Rand researchers expressed confidence that the international community would foot the bill for implementing the two-state solution.

“We hope our analysis and tools can help Israelis, Palestinians and the international community understand more clearly how present trends are evolving and recognize the costs and benefits of alternatives to the current destructive cycle of action, reaction and inaction,” said C. Ross Anthony, co-leader of the study and director of RAND’s Israeli-Palestinian Initiative.

Of course, there are also other ways forward besides a comprehensive peace agreement, such as a unilateral Israeli withdrawal coordinated with the Palestinian Authority, an Israeli withdrawal minus such coordination (much like the Gaza pullout of 2005), and Palestinian non-violent resistance against the status quo.

But in the case of a unilateral Israeli withdrawal, the Jewish state would be crushed under an almost unbearable financial burden as some 500,000 Jews are uprooted from their homes (and that’t not counting the parts of Jerusalem that the Palestinians claim).

Palestinian non-violent resistance would increase economic pressure on Israel, as can already be seen in the international boycott campaign. As a result of current efforts on that front, Israel loses about USD $80 billion, while the Palestinians are out USD $12 billion, a far larger percentage of their GDP.

At the same time, the outcome sought by the Rand researchers looks like wishful thinking.

Israel could never relinquish Jerusalem without plunging itself into an intractable political-spiritual dilemma. Religiously-minded Jews would never sell their eternal capital even for the princely sum of USD $120 billion.

And the Palestinian Authority won’t end its incitement against the Jewish state without recovering all of what it deems “occupied territory.” Nor would the Palestinians consider letting the Jews have Jerusalem in order to get their payday.


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