Economic and social stimulus in the region was first tried in 1967 following the Six-Day War. Israel facilitated unprecedented funds for Palestinian education, infrastructure and social services. More significantly, Palestinians were allowed access to the Israeli labor market, which directly led to a sharp increase in the Palestinian standard of living. From 1968 to 1990, GDP in the West Bank grew at an impressive annual rate of 7.4%, while in Gaza it grew by 5.4%. Palestinian unemployment went from double digits in 1968 to less than 1% in 1990. Most importantly, by the early 1990s Palestinian terror was at its lowest in decades.
Then on September 13, 1993 the "Oslo Process" began, one based on unilateral land concessions as a building block for peace. This process has largely resulted in tragedy and poverty. Thousands have lost their lives and thousands more lost their livelihood.
Now, as the financial crisis has spanned the globe, it is time to replace the flawed policy of “land concession first” with “economy first.”
Contrary to what many think, poverty is not the root of terrorism. Greater wealth will not make national or political grievances go away. In fact, according to Harvard Public Policy Professor Alberto Abadie, very little, if any, correlation exists between terrorism and poverty. Osama bin Laden was never economically deprived and neither were the September 11 bombers. Palestinian suicide attackers were not starving and most were not economically worse off than the rest of the Palestinian population. However, an economic approach can be a facilitating factor in getting a positive process under way.
For this process to work it will have to be transparent and economically viable, resting on fiscal logic and the competitive advantages of all concerned sides. It will not work if it is used as a money funnel to provide politicians with clout and middle-men with handouts.
No one can assure that the economic peace initiative will succeed. However, if this process will be based on the construction of confidence between the parties rather than corruption and carnage, it may indeed stand a chance.