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June 5, 2019 2:41 pm

How Obama Blew the Chance for Economic Peace

avatar by Mitchell Bard


Israeli Prime Minister Benjamin Netanyahu shakes hands with Palestinian President Mahmoud Abbas during the funeral of former Israeli President Shimon Peres in Jerusalem, September 30, 2016. Photo: Amos Ben Gershom/Government Press Office (GPO)/Handout via REUTERS.

In 2009, Barack Obama had an unprecedented opportunity to advance the peace process between Israel and the Palestinians. For the first time, the Palestinians had a prime minister who was respected and admired by the Israelis, because he did not come from the same terrorist background as Yasser Arafat and Mahmoud Abbas. Unlike his ideological comrades who insisted on “liberating Palestine,” Salam Fayyad, with a Ph.D. in economics from the University of Texas, was interested in building the infrastructure for a future state, strengthening the West Bank economy, and improving the lives of the Palestinian people.

Prime Minister Benjamin Netanyahu was skeptical of peace initiatives after watching them fail because of Palestinian intransigence. In the late 1990s, he made the last major territorial concessions of the Oslo process. After withdrawing Israeli forces from Hebron and other parts of the West Bank, Palestinian terror attacks escalated and contributed to his first electoral defeat.

In a tripartite meeting with President Clinton and Arafat in Washington, Netanyahu’s successor, Ehud Barak, boldly proposed to withdraw from 97 percent of the West Bank, evacuate most settlements, and allow the Palestinians to establish a state. Arafat rejected the deal, reaffirming Netanyahu’s belief that the Palestinians would not accept a Palestinian state beside the Jewish state.

When Obama came into office, Netanyahu recognized the necessity of taking steps to ameliorate Palestinian grievances. He believed that Palestinians would have less incentive to engage in terror, and become more amenable to political compromise, if their lives improved.

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Rather than resume fruitless negotiations, he proposed focusing on improving the Palestinian economy — precisely what his Palestinian counterpart was interested in achieving. Whereas Israel had no partner for negotiations on the political issues, Netanyahu did have a potential ally to pursue “economic peace.”

Netanyahu said in November 2008: “It makes no sense at this point to talk about the most contractible issue. It’s Jerusalem or bust, or right of return or bust. That has led to failure and is likely to lead to failure again.” Hence, he concluded, “We must weave an economic peace alongside a political process.”

The Washington Institute’s Michael Singh wrote later, “Fayyad has been a godsend for the Palestinian economy, at once bolstering Western confidence and therefore spurring Western assistance, promulgating a credible plan for building Palestinian institutions, and even bucking up Palestinians’ hopes for establishing a state in the near future.”

Though well-intentioned, Obama’s misguided policies sabotaged those visions.

Obama was too focused on proving to the peoples of the Middle East that he was not George W. Bush, that he would not show favoritism towards Israel, and that he would reverse what some considered American hostility toward Muslims. He sent these messages with his first foreign policy address in Cairo, where he declared his interest in improving relations with the Muslim world, while refusing to visit Israel.

Had Obama embraced the policies of the two prime ministers, the lives of Palestinians could have improved and the conditions for peace enhanced. Instead, Obama rejected the idea of economic peace and launched his own ill-considered initiative aimed at coercing Israel to make dangerous territorial concessions without requiring anything from the Palestinians. The combination of alienating the Israelis with coercion, and disappointing the Palestinians with his inability to force Israel’s capitulation to their demands, resulted in both losing faith in Obama. And conditions worsened: Abbas refused to negotiate with Netanyahu for eight years, during which settlements expanded, Palestinian suffering and terrorism continued, and the prospects for peace became more remote than ever.

The promise of an economic peace initiative has disappeared. Fayyad is long gone; in fact, Trump vetoed a UN appointment of Fayyad to a job unrelated to the conflict with Israel. Netanyahu no longer talks about his economic plan, though he would likely jump at the opportunity to resuscitate it if Trump were interested. A first step in the “ultimate deal” is indeed headed in this direction, as the upcoming Bahrain “Peace to Prosperity” summit is supposed to focus on financial aid for the West Bank and Gaza.

The Palestinians have decided to shun the administration, and have unsuccessfully attempted to convince Arab leaders to avoid Bahrain. As usual, the Palestinians are doing everything they can to miss yet another opportunity to improve their lives.

Improving economic conditions in the territories is not a panacea. It cannot lead to a two-state solution right now, because the Palestinians show no signs of changing their irredentist positions. But this does not mean that taking this approach cannot benefit both sides.

Unfortunately, as columnist Bassam Tawil observed, “In the eyes of many Palestinians, the struggle against Israel should be paramount, even if they have to eat and drink that struggle instead of the food they could buy through engaging in economic initiatives. … The Palestinians are less invested in gaining economic stability than they are in hating Israel.”

Mitchell Bard is Executive Director of AICE and Jewish Virtual Library.

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