The spoils of peace

During the recent President’s Conference in Jerusalem, two noted scientists, Professors Dan Ariely and Daniel Kahaneman pointed out a major problem regarding public attitudes towards a peace agreement: The public is much more afraid of the threats posed by any peace agreement that entails painful compromise than it believes that any tangible benefits will ever come from it.

As a result, those who object to any peace agreement only have to scare the public about what might happen and the public will readily lap it up. However supporters of peace demonstrating the potential benefits of any kind of agreement will encounter a very sceptical public that will discount the likelihood of any of those benefits ever materializing. This readiness to see threats as real and close but benefits as remote and unlikely is not a trait peculiar to Israelis, it’s what human beings are like everywhere.

Nevertheless, not to be discouraged, here are some of the more concrete benefits of peace, which naturally first and foremost relate to its huge economic potential.

Economically, Israel is in a difficult situation today. The value of imports and exports combined is more than 50% of the country’s GDP so the  foreign trade is a considerable factor in the economy. While the US is our largest single trading partner, its economy is only slowly picking up and not much growth can be expected from there in the near future. The European Union is in even a worse situation than the US and has only recently come to grips with the fact that austerity is not the way to go so there is not much potential there either. And Asia? Asia is slowly winding down being starved of European and US markets and the growth rates we used to see in China and India are a thing of the past. The question is not if economic growth rates are going down but by how much and for how long.

At the same time, Israeli economic policies are nothing to write home about either. Right now there is not a single economic measure in the pipeline that conceivably could create and foster growth. All economic steps considered by this government are growth inhibiting.

In a situation where the economies of all of Israel’s traditional trading partners are winding down, and its own economic policies do not spark growth, the economic impact of a regional peace agreement would provide a much needed boost on the background of the general slowdown. Just instituting diplomatic and economic relations with all the countries in the Organization of Islamic Cooperation (OIC,  57 members, population 1.4 Billion) would provide a major impact, all by itself. It would set the tone for major structural changes in the Arab economies around us that have long been overdue.

In many Arab countries the economy is dominated by industries involved in the exploitation of natural resources, activities that are not labor intensive. These countries will have an opportunity, as part of the peace process and with the help of regional economic cooperation agreements supported by the US, the EU and the UN, to develop and modernize their economy, revamp their agriculture and industrialize.  This way employment will be increased and a young and restless population will benefit from real economic renewal.

A lot of investment that hitherto would have gone to India and China whose economies are slowing down, will find its way to countries in the Arabian peninsula and North Africa to be put to use on agricultural and industrialization projects. Israel can, of course, be involved in these projects if the target countries will agree, an involvement that initially doesn’t have to be direct. But even if Israel is only involved tangentially in the beginning, its expertise and convenient location will eventually draw it into the economic reconstruction process with the benefits that would entail.

While the likelihood of these benefits materializing can be argued, as can the time needed for their full potential to be realized, it will be disingenious to discount these positive developments out of hand or even belittle them.

The more obvious benefit of a peace agreement for Israel is in the avoidance of the hugely negative economic impact of a failed agreement on the background of the world economic crisis. If Israel doesn’t go the way of an agreement now, it will create a very difficult situation for a vibrant economy that needs international markets and foreign investments. After 46 years, the world has become a lot less forgiving with regard to our refusal to end the occupation and the recent position taken by the European Union is just the beginning of the larger effort to delegitimize Israel’s position even more. This is an ongoing effort that will eventually have grave economic consequences if not dealt with resolutely and now. And dealing with it, in this context, means concluding a successful peace agreement, the sooner the better.

It is interesting to see that Israel finds itself in a similar situation as it found itself in the early nineties of the previous century: Then just like today, security costs were much too high to make it possible to deal adequately with both, security and the needs of a growing population. Yitzhak Rabin who realized that modern Israel could not develop properly with that large a defence burden, cut the defence budget to put money towards education and social services. He was able to do that because of the peace process that started in Oslo.

It is a sad sign of the times that the benefits of peace have to be demonstrated primarily in economic terms. It goes without saying that there is an intrinisic value to live in peace with your neighbors which needs no economic justification. It’s good to know however that  economically,  peace is not just a winner it may well be the only way to return to growth on a global scale.

The US effort to railroad Israel and the Palestinians into a structured and time limited process to reach an agreement has given us nine months of grace to contemplate what peace can do for us and our neighborhood. If this government is serious about peace it must lead the effort to let the public know what we would be missing out on. It’s one helluva lot.

About the Author
The author served in the Prime Minister’s Office as a member of the intelligence community, is a member of the Council for Peace and Security and was a candidate in Labor’s 2012 primary election for the Knesset list
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