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Economic Peace-Building to Support Israeli-Palestinian Disengagement: A Discussion Paper

This paper builds on discussions of the proposal for a Monitoring Apparatus for Regional Stability (MARS) and recommendations for separate security and nation-building missions that meet both Israeli and Palestinian objectives. Economic development is not just a parallel track that must be addressed along with security concerns. The formal, informal, and illegal economies directly shape the resources available to support both violent resistance and legitimate governance. The central problem for third party intervention is to cultivate the right incentive structures to put the extremists out of business and bring the next generation into both the legitimate economy and support for legitimate government. Only a legitimate government with a reliable tax base can expect to monopolize force, but the effect of Israeli security actions the corruption Palestinian authorities over more than two decades has been to undermine both security and governance and force more and more economic activity into the informal and illegal sectors where it supports extremists. Defeating corruption and organized crime as part of the development process will enhance prospects for mutual security.