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Two-State Solution Would Be $170B Windfall to Palestine — and Israel

Israel’s economy would gain $120 billion and the Palestinian economy some $50 billion over the next decade in a two-state solution, a study has found.

A peace agreement could also see Palestinian income rise by 36 percent and Israeli by 5 percent, according to the Rand Corp. study released Monday, which also said the Israeli economy could lose some $250 billion in economic opportunities in the event of a return to violence.

The Rand Corp., a U.S.-based nonprofit research organization, said it interviewed 200 officials in the Middle East and elsewhere during more than two years of research into the costs of the Israeli-Palestinian conflict.

The study also found that a unilateral withdrawal by Israel from the West Bank would impose large economic costs on Israelis unless the international community shoulders a substantial portion of the costs of relocating settlers; intangible factors, such as Israeli and Palestinian security and sovereignty aspirations, are critical considerations in understanding and resolving the impasse; and taking advantage of the economic opportunities of a two-state solution would require substantial investments from the public and private sectors of the international community and from Israel and the Palestinians.

“A two-state solution produces by far the best economic outcomes for both Israelis and Palestinians,” Charles Ries, a co-leader of the study and a Rand vice president, said in a statement.

The study also considered the effects of a coordinated, unilateral withdrawal from the West Bank by Israel; uncoordinated withdrawal where Palestinians do not cooperate with Israeli unilateral moves; and nonviolent resistance by Palestinians.

The implications of a unilateral withdrawal by Israel of West Bank settlers would depend on the amount of coordination. If Israel were able to coordinate with both the Palestinians and international community, the overall impact on the Israeli economy would be negligible and the Palestinian economy would gain nearly $8 billion over a 10-year period. With no coordination, Israel would lose up to $20 billion, according to the study.

Under nonviolent resistance, Palestinians would call for international pressure including boycotts, divestment and sanctions, which could cost Israel $80 billion and Palestinians $12 billion.

Rand used its costs of conflict calculator to figure the economic costs and benefits to Israel and the Palestinians.


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