Israel: Munich or Helsinki

Israeli control over parts of the West Bank, as well as its influence over the movement of goods and people to and from the West Bank and Gaza, is an anomaly in the modern world. Official and unofficial opposition to Israel’s policies toward the Palestinians is growing, especially in Europe. But there is no indication that the status quo will change anytime soon. Why not?

One standard argument among Israelis is that Israel has tried every option and every option failed. Prime Ministers Ehud Barak and Ehud Olmert made serious offers and, in both instances, the Palestinians walked away from the table. After Camp David failed, the second intifada killed about 1,000 Israelis and wounded another 8,000. Israel’s population in 2002 was 6.57 million. If the same percentage of the American population in 2002 had been killed and wounded, the totals would have been about 43,000 dead and 344,000 wounded. Israel unilaterally withdrew from Lebanon and the Gaza strip and got rockets in return. If Hamas had eschewed attacks on Israel and focused on development, not only would the citizens of Gaza have avoided the consequences of three wars with Israel, they would be much more prosperous than they are today.

The Palestinian leadership has never regarded Israel’s peace offers as fully satisfactory, because they would not provide for a right of return, because territorial arrangements were suboptimal, and because any Palestinian state would have constrained sovereignty with regard to security. Moreover, for the rulers of the West Bank and Gaza, being the leaders of a revolutionary movement may be more attractive than being the rulers of a small, poor, hard-to-govern state.

There are, however, other reasons why peace has proven to be so elusive. Authorities in Israel and Palestine have very different views about the future. For Palestinians, the short and medium term does not look very attractive. But in the long term, Arab leaders believe that the majority of the population in the area that now comprises Israel, the West Bank, and Gaza will be Palestinian. Israel cannot remain, they believe, a Jewish state, and a one state solution would have an Arab majority. In the long term, therefore, Palestinian leaders are optimistic.

For Israelis, by contrast, the short and medium term looks more than acceptable. Israel’s international military position has improved dramatically. Two of its potential enemies—Syria and Iraq—have fallen apart. They no longer pose any kind of military threat. For the major Sunni states, Iran is a bigger threat than Israel. There is no reason to think that Israel’s chilly peace with Egypt and Jordan will be abandoned. Israel and Egypt both have their own reasons for opposing the Muslim Brotherhood and its offshoots, such as Hamas. Israel has also dealt very successfully with the terrorist threat. There have been a small number of random attacks in recent years but no major or sustained assaults within Israel. This despite the fact that about 20 percent of Israel’s citizens are Palestinian Arabs, that there are hundreds of thousands of Palestinians living in East Jerusalem who have residence permits (many have turned down the possibility of citizenship), and that thousands of Palestinians from the West Bank work in Israel. Intelligence, IDF forces on the West Bank, and the security barrier have worked. The streets of Tel Aviv and Jerusalem are jammed with people (and cars). Mehane Yehuda, Jerusalem’s main Jewish market, which has been attacked twice in the past is so crammed with people on Friday afternoon that it is difficult to make any forward, or backward, progress. The Israeli economy is doing well: Per capita income measured at purchasing power parity is above thirty-two thousand dollars. Israel’s GDP in 2013 was higher than that of Egypt, which has a population almost ten times greater, and four times greater than that of Jordan and Lebanon. Syria is a basket case.

For Israel there are two obvious challenges. The first is demographic. This is a long term problem. The population of the West Bank and Gaza increased from a little under 2 million in 1990 to 4.2 million in 2014 (World Bank, World Development Indicators). In the long term, the population in the area between the Jordan River and the Mediterranean Sea is likely to be more Arab than Jewish. The second is the domestic political characteristics of Israel’s regime. At least some Israelis, but certainly not all, fear the impact of the occupation on Israel’s democratic character. No occupying power can be completely benign, especially one whose citizens have been killed by individuals from the area that they are occupying.

Neither of these concerns will be enough to compel Israeli leaders to sign an agreement in the near term that would inherently carry mortal risks, if not an existential threat, to Israel’s existence as a Jewish state. And population dynamics are changing. The birth rate for ultra-Orthodox Jews is very high. The birth rate for some parts of the Arab population is declining, as incomes rise. The future of the West Bank’s relationship with Jordan, and Gaza’s with Egypt is uncertain. The futures of Jordan and Egypt are also unclear. Anti-semitism is growing in Europe, at least in part because of the large Muslim populations in many European countries. French Jews are buying up apartments in Israel. Some of the thousands of European citizens now fighting for ISIS will return to their home countries. Some will commit terrorist acts; some of those will target Jews. Antisemitism in Europe may be combatted, or Europeans may blame Jews for the terror in their own societies.

Most important, Prime Minister Netanyahu and many other Israelis believe that they are in a Munich moment. The Munich agreement of 1938 was a catastrophe for Europe. The agreement was concluded because the Prime Minister of the United Kingdom, Neville Chamberlain, believed that Nazi Germany was a status quo, rather than a revolutionary, power. Winston Churchill believed that Chamberlain was profoundly mistaken. Churchill was correct. Speaker Boehner gave Netanyahu a bust of Churchill after the Prime Minister’s speech to Congress. (Churchill and Netanyahu are the only two foreign leaders that have addressed Congress three times.)

Netanyahu is not wrong, certainly not obviously wrong. Iran and ISIS are committed to the destruction of Israel. Other Arab regimes in the past have harbored similar sentiments. If Munich is the right analogy, then Israel should maintain its military strength, do everything that it can to prevent Iran from getting a nuclear weapon, seed the West Bank with settlements (facts on the ground), make life uncomfortable for the Palestinians on the West Bank, maintain as much control as possible over the movement of goods and people into and out of Gaza, complete the security barrier, and never give up military control of the Jordan Valley. If this is a Munich moment Israel’s opponents will only be satisfied by the destruction of the State of Israel. Concessions will only make the opposition stronger. A geographically larger Israel is a safer Israel.

But what if the Munich analogy is wrong? Perhaps, for Israel, this is not a Munich moment, but a Helsinki moment. The Helsinki Accords of 1975 were understood in both the East and the West as ratifying the outcome of the Second World War, including boundary changes and the nature of existing regimes. The Accords listed ten fundamental principles. Principle VII stated that the signatories would have “respect for human rights and fundamental freedoms, including the freedom of thought, conscience, religion or belief.”

At the time, principle VII was generally viewed as a throwaway. The communist states routinely signed human rights accords that they never honored. But the provisions for human rights contributed to the undoing of the Soviet Union and the collapse of the communist empire in Europe. Helsinki watch groups formed in the East and the West. The Helsinki principles became a focal point for dissident groups in the eastern bloc and facilitated ties with activists in the West. Fourteen years after the accords were signed the Berlin Wall fell. Who could have known?

Israel’s normative position is weakening internationally. A 2013-14 survey of individuals in about 20 countries conducted by the PIPA program at the University of Maryland found that 50 percent of respondents thought that Israel’s influence on the world was mainly negative, a little worse than Russia’s, a little better than North Korea’s—not very good company. In a 2012 vote in the United Nations General Assembly granting Palestine observer status, 138 countries voted in favor, nine opposed, including the United States, Canada and Israel; Germany and the U.K. and 39 other states abstained. The Boycott, Divestment and Sanctions (BDS) movement is growing.

There are a number of explanations for Israel’s weakening normative position. Israel’s control over the West Bank and Gaza is associated by many with colonialism, and colonialism is the ultimate bad for most of the countries of Latin America, Asia, and Africa. Antisemitism has never disappeared from Europe or the Arab world. Muslim populations are growing across Europe and are close to or exceed five percent in Germany, Belgium, France, the U.K., the Netherlands, and Sweden. Important components of these communities do not share the values of tolerance associated with liberal democratic western Europe. Some observers in the West believe that the Palestinian situation fuels transnational terrorism.

This normative disenchantment with Israel has not had any significant impact on Israel’s security or economic vitality. Nevertheless, the situation is brittle. Israel’s internal security has depended in part on cooperation with the Palestinian Authority in the West Bank, but the PA’s position is weak. Elections are several years overdue. The PA has not served its own population well, as evidenced by the results of the 2006 elections–which Hamas won. Hamas has served the population of Gaza even less well. Palestinians resent Israeli settlements and control over the movement of goods and people. Even though most of the larger Israeli settlements are contiguous or close to the Green Line, there are smaller settlements scattered throughout the West Bank. Movement is difficult from the West Bank or Gaza into Israel, and even within the West Bank itself. There are many checkpoints. Goods moving through the Kerem Shalom crossing point between Israel and Gaza must be offloaded from trucks coming from Israel, placed on the ground, picked up by trucks that operate solely within the crossing point, driven into Gaza, placed on the ground and then picked up again by trucks from Gaza; and vice versa. These procedures were put in place after terrorists attacked the crossing point, but they are expensive and time consuming. The PA’s strategy of internationalizing the conflict could put additional pressure on Israel.

The erosion of Israel’s international normative legitimacy could lead to a black swan event. Black swan events are very low probability, impossible to predict, but highly consequential if they do occur, like the fall of the Berlin Wall and the disintegration of the Soviet Union.

It would thus be prudent for Israel to adopt measures that would strengthen its normative position, even accepting that such measures will have no impact on its hard line opponents.. The most obvious initiatives that Israel could take would be to adopt a forward leaning position with regard to the peace process, to ban additional settlements and to sharply limit the growth of existing ones, and to dismantle entirely illegal settlements on the West Bank. From a national interest point of view, such measures would make eminent sense. But the present government in Israel has little incentive to carry out such measures. A government comprised of different parties with different leaders might be able to take a different stance.

There is, however, something that Israel could do that even this government should find attractive: improve the situation of the residents of the West Bank and Gaza. This would not satisfy all of Israel’s normative challengers, who cannot be satisfied. It would, however, be consistent with Israel’s own normative commitments. It would make the lives of many individuals better. It would be noted by some of Israel’s external observers and denigrators and would provide Israel’s supporters with evidence that could be used to rebut it critics.

The population of the West Bank and Gaza increased from 2.0 million in 1990 (the earliest year for which figures are available from the World Bank) to 4.4 million in 2013. Israel’s Arab neighbors were never welcoming to Palestinians and these countries look even less attractive now than they were in the past. The demographic challenge for Israel is not going evaporate any time soon.

The life expectancy of the population of the West Bank and Gaza is comparable to that of Egypt and Jordan at about 73 years; Israel’s is higher at 82 years. While basic well-being, if life expectancy is a decent measure, is reasonable, the economic situation is poor. GDP per capita in 2011 international dollars at purchasing power parity was about $4,500 for the West Bank and Gaza (the World Bank does not provide separate figures for Gaza and the West Bank), $11,400 for Jordan, $10,731 for Egypt, and $30,900 for Israel. Economically, the inhabitants of the West Bank and Gaza are not doing well.

Absent the threat of terrorism the inhabitants of the West Bank would be doing much better, because they would have job opportunities in Israel itself. Israelis look back nostalgically on the 1980s, before the first intifada, when many Palestinians worked in Israel, when there was no barrier, and Israelis and Palestinians could sit together at restaurants on the Mediterranean. Those days are gone, maybe forever. Terrorism terrorizes and the presence of spoilers makes it evident that the attractiveness of having Palestinians work freely in Israel is not worth the cost to Israelis in terrorist attacks.

Nevertheless the poor economic situation of Palestinians is one factor that weakens Israel’s normative position in the world. Even observers who are not enamored by a perspective that frames Israel as a colonial power, cannot avoid noting that Palestinians are not doing well, not even doing well compared with Egyptians and Jordanians. In part this is a reflection of poor governance; Gaza and the West Bank are ruled by rent-seeking or ideologically motivated elites. The well being of their populations has not been their first concern. Israel’s policies, driven primarily by a well-founded fear of terrorist attacks have, however, made things worse.

A Palestinian population whose per capita income was higher than that of its Arab neighbors would make Israel less vulnerable to charges of colonialism and would strengthen Israel’s normative positon. It would make a Helsinki moment less likely even though it would not satisfy Israel’s external critics or the Palestinian population. Improved economic conditions for Palestinians living in the West Bank and Gaza is no panacea. Better living conditions would not end calls for a two-state solution. Better conditions would, however, make a black swan Helsinki moment less likely by peeling off some of Israel’s detractors.

There are measures that Israel could take that would improve the economic conditions of Palestinians, without increasing the likelihood of terrorist attacks. We are living increasingly in a world where goods and work move but people do not. This is the core of globalization. There are call centers in many countries around the world. American law firms are outsourcing work to India. Massive online courses (MOOC’s) are available to anyone with an internet connection.

Israel is a high-technology country. Forty-seven percent of the West Bank and Gaza population uses the internet, higher than Jordan and Egypt but, unsurprisingly, lower than Israel. Mobile cellular subscriptions at 74 per hundred people are lower on the West Bank and Gaza than in neighboring countries but still extensive. Labor costs are much lower in the West Bank and Gaza than they are in Israel. Goods can be moved much more safely across the Green Line than can people.

Given the current political stalemate, the continued growth in the Palestinian population, the disparity between incomes in the West Bank and Gaza and neighboring countries including Egypt and Jordan, the Israeli government should encourage policies that would increase economic prosperity in the West Bank and Gaza. Ideally such policies could be implemented around the barriers that might be imposed by the PA and Hamas. Electrical supplies could be made more reliable. Solar technology could give individuals more control over their own energy supply. Internet connections could be more secure and faster. Israeli companies could be given incentives for adopting policies that increased employment in the West Bank and Gaza. Technology could be used to facilitate the movement of goods between Israel, Gaza, and the West Bank. If such policies could be implemented, the greatest beneficiaries would be the people of Gaza and the West Bank, but Israel would also benefit economically. The attractiveness of BDS for Palestinians, would decline. Palestinian workers on the West Bank engaged with Israeli companies would be the biggest losers from the BDS movement.

Improving the economic situation of individuals in the West Bank and Gaza is a rare win-win opportunity in the Middle East. Israelis and Palestinians could be better off. The normative disenchantment with Israel might erode. This is not permanent solution but, at least for the time being, there is no permanent solution on offer. People may as well live better until one is.