There is still a peace dividend to be had
By Dr. Fahed Fanek
Israel’s military offensive on Palestinian cities, towns, villages and refugee
camps may have buried the peace process for good.
Nevertheless, the fact that Israeli Prime Minister Ariel Sharon called for a regional
peace summit to be convened amounts to an acknowledgement that in the final analysis there
is no alternative to peace. And there is still an Arab initiative on the table which, if
accepted, could lead to peace not just between Israelis and Palestinians, but between
Israel and all the Arab states thus bringing the protracted conflict to an end.
An international conference on the Middle East may well be the only way out of the current
impasse. But it should not be Sharon who calls for it. The Arabs view him as a war
criminal, who represents the antithesis of peace.
The intensification of any crisis invariably brings a breakthrough closer. Israel has
appreciated, or ought to appreciate, that there is no military solution to the cause of
the Palestinian people. And the Palestinians appreciate, or ought to appreciate, that they
cannot defeat the Israeli occupation by force.
In others words, peace is a realistic prospect, and it is worth considering the challenges
it might pose.
Much has been written about the dangers and challenges posed by war, and about its
economic consequences. Such fears are understandable. But in the Middle East there are
also fears regarding the challenges peace could pose. They exist on both the Arab and
Israeli sides. Each is acutely wary of the potential peacetime strengths of the other.
Peace would alter an equation that has prevailed for over half a century. And change, by
its very nature, poses risks and challenges that make it necessary to reconsider many
givens and acclimatize to new developments.
It is not the purpose of this article to support or oppose a new-look peace process. That
is a political question that arouses controversies and disputes on both sides of the
divide.
The basic assumption here is that peace with Israel is possible. It has already been
achieved in the cases of Egypt and Jordan, and the Arab world is ready for peace once the
conditions are in place, as the pan-Arab peace initiative shows.
The business community in the Arab world must prepare for the eventuality. Arab
entrepreneurs need to be aware of the costs and benefits, of what to expect, and assess
the extent to which the risks which are inevitable when there is such a major
transformation in the rules governing inter-state relations are containable.
It seems a comprehensive Arab-Israeli peace that meets the necessary conditions and
specifications, and the lifting of the economic boycott of Israel it would entail, would
not pose a major threat to Arab economies.
That is evident from the practical experience of Jordan. Eight years after the signing of
the Wadi Araba Treaty with Israel, even its strongest Jordanian critics do not claim it
has damaged the kingdom economically. They only point out that Jordan has not reaped the
kind of peace dividend that it was promised and hoped for.
Before the signing of the Wadi Araba Treaty, we in Jordan used to demand that Israel
change from an expansionist enterprise into a normal country like Turkey or Cyprus. We
imagined that free trade with Israel would cripple Jordan’s nascent industries and
enable the Jewish state to dominate Arab markets. In other words, we thought Israel would
invade us economically instead of invading us militarily.
But after the treaty was signed, we saw Israel turn in on itself. It clamped restrictions
on the borders and crossings to prevent Jordanian goods from entering Israeli markets,
while Israeli goods failed to find markets in Jordan despite the absence of restrictions.
The peace that was achieved with Egypt and Jordan and could be achieved with Syria,
Lebanon and Palestine is a cold peace that means little more than an end to the state
of war and hostility. Jordan did attempt at the outset to make its peace with Israel warm,
but Israel’s own behavior helped chill it and reduce it to the minimal level.
One must point out in this context that economic considerations are not paramount in this
part of the world, in contrast to the contemporary international norm. While economics may
be the principal determinant of most countries’ foreign policy, this does not apply
in the Middle East, either to the Arabs or the Israelis. In the longest and deepest
ideological conflict of our times, economic incentives may be important but they are not
the decisive factor when fateful decisions are taken about the future of the Palestine
Question and the Arab-Israeli conflict.
On the other hand, the political cost of such decisions can be extremely high on both
sides. Both Arab and Israeli decision-makers would rather put up with the economic costs
especially if they are indirect and invisible than pay the political price, or be
accused of selling out the cause, abandoning rights or sacrificing principles.
This major exception to the global norm has to be taken into account when trying to
understand the logic of the Arab-Israeli conflict, and the importance attached to justice
and rights in the way the issues are tackled. There are some things for which material
incentives and economic bribes simply cannot compensate.
But this doesn’t imply that there is no economic dimension or that it is not
influential. It is extremely important, but it comes second to politics. The economic
consequences are also highly important, but they must be preconditioned on a political
settlement acceptable to both sides. Economic incentives can facilitate a solution and
help overcome some of the obstacles, but they can achieve nothing on their own in the
absence of a fair political agreement.
When considering the aftermath of such an agreement, a distinction must be drawn between
normal economic relations and economic integration.
The former means the abolition of boycott laws, so Israel becomes one of the foreign
countries that can export its goods to Arab markets on the same terms as other foreign
products, and can also invest in Arab states on the same terms, provided it opens its own
markets to Arab exports and investments.
Economic integration means granting the contracting parties reciprocal privileges, which
could take the form of a free trade area, a common market, a customs union or other
special arrangements.
It is neither practicable nor economically acceptable to go straight from a complete
economic boycott into a free trade area, common market or customs union. The normalization
of economic relations, which is inevitable after peace is concluded, should not require
either side to grant priority or favored treatment to the other at the expense of any
third party trading partners.
Jordan, for example, would be unlikely to agree to a Benelux-like three-way arrangement
with Israel and Palestine. Its commercial ties with other Arab countries particularly
with Iraq, the Gulf states, Lebanon, Syria, Libya and Tunisia are far more important to
the kingdom than normal relations with Israel.
Arab analysts have gone overboard highlighting the economic dangers and challenges posed
by peace, as though the dangers and challenges posed by war are not greater and graver.
Among the things they point to is the disparity between the two sides. They envisage
Israel, as an advanced industrial state, acquiring a neo-colonial role by flooding Arab
markets with surplus Israeli output, further strengthening it as an imperial outpost and
consolidating a Greater Israel. They warn of Israeli quality prevailing over Arab quantity
and other real or imagined risks.
But, generally speaking, one could say that while Arab-Israeli peace could certainly pose
political and national dangers, the economic consequences are less significant, less risky
and containable.
Then again, peace would open the door to solutions for a variety of chronic problems
namely fair sharing of water resources, a solution to the housing problem in the West Bank
and Gaza Strip, development taking precedence over the arms race, the free movement of
manpower and the return of all or some of the refugees and displaced persons. Dr. Fahed Fanek is one of Jordan’s leading economics and media
consultants. He wrote this commentary for The Daily Star
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