The End of the Two-State Solution and Upcoming Less-Discussed Disasters

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Padraig O’Malley, The Two-State Delusion: Israel and Palestine – A Tale of Two Narratives. New York: Viking, 2015. 493pp.
RAND, The Costs-of-Conflict Study Team, The Costs of the Israeli-Palestinian Conflict. Santa Monica, CA: 2015. 224pp.
Those of us attached to Israel/Palestine are painfully accustomed to the intractable problems that have doomed peace negotiations for more than twenty-five years – how to honor Palestinian refugees’ right of return, whether Israel should be defined by its 1967 borders, the removal of Israeli settlers from the West Bank, and the division of Jerusalem into functioning capitals of both Israel and Palestine, to name the most obvious.
Two new books by outsiders, one drawn largely from articles and interviews related to the peace processes, and the other an analysis of economic data, offer an overlapping view of the unequal daily lives of Israelis and Palestinians, and provide context for the violence and hostilities we too often read about or see in the news. Both authors view Yitzak Rabin as the last leader with the capacity and will to bring the two peoples to a two-state solution; and both conclude with dark assessments of any peaceable resolution in the near future. Both also suggest that the current instability in the Middle East, as well as the time-bombs of population growth, climate change and water scarcity will one-day force a solution, though neither Israelis nor Palestinians may have as much to say about its contours as they might hope.
The Two-State Delusion: Israel and Palestine – a Tale of Two Narratives investigates what Pradraig O’Malley describes as both Israelis’ and Palestinians’ attachment to “narcissistic victimization” – for Israelis, two thousand years of wandering and the unimaginable disaster of the Shoah prior to a return to their ancestral homeland and the founding of Israel; for Palestinians, their dispossession and humiliation during the Great Catastrophe of the Nakba in 1948, when they were driven from their homeland during the creation of the Jewish state. Instead of finding a common bond in their parallel narratives, O’Malley argues that preoccupation with their own suffering has made both sides demonize and fear the other, see their own society as morally justified, and take little responsibility for the destruction and suffering they cause.
Having helped resolve and studied conflicts in Ireland, South Africa and Iraq, O’Malley is skilled at investigating both sides of politically-charged conflicts. The Two-State Delusion presents the history behind the two narratives of victimization, details the twenty-two peace processes – Madrid (1991), Oslo I (1993), Oslo II (1995), Clinton’s Camp David and Annapolis (2000), and the seventeen other meetings since then, and analyzes the well-known conundrums that were not always even broached and have remained unresolved. In O’Malley’s view, the multiple peace negotiations have led to an “addiction to process” without, for example, making Israelis more prepared to accept a divided Jerusalem, or Palestinians more ready to acknowledge that most of the 1.4 million Palestinians living elsewhere will not be able to return to the farms and orchards of their forefathers.One decisive factor in the dramatic failure of the negotiations has been the “missing parity of esteem,” which O’Malley’s views as having been critical to other negotiations he has witnessed. This lack of parity is caused by Israel being an economic and military “powerhouse” and Palestine a “non-state actor” representing the West Bank, a financial ward of international donors, and Gaza, a “brain-dead” economy. As O’Malley writes, Gaza today can barely keep its head up:
Pummeled by wars in 2008-09, 2012, and 2014, crippled by the closure of the 1,400 tunnels that had been its economic lifeline, unable to pay its public servants, and with no outlet at the Rafah crossing, it is an impoverished enclave. Three quarters of Gazans are classified as refugees (p. 250).
As if matters needed to be worse, the PLO ceased to represent all Palestinians with Gaza’s 2007 election of Hamas, and since Israel has identified Hamas as a terrorist organization, for the past eight years Gaza has been left out of most negotiations. Ironically, O’Malley sees Hamas as more popular on the West Bank than it is in Gaza, and Fatah more popular in Gaza than it is in the West Bank. Moreover, as a West Bank Palestinian tells O’Malley, “To my regret . . . the level of distrust between Hamas and Fatah is bigger than the level of distrust between Israelis and Palestinians.”
For O’Malley, the mutual resentments, fears, and hatred passed on to new generations of Israelis and Palestinians by their schools, as well as the asymmetry and segregation of the two societies, leave little room for understanding or compromise. With the number of Palestinians working in Israel dramatically decreased since the first Intifada, and Israelis forbidden to travel in the West Bank other than to Jewish settlements, Israelis know Palestinians are poorer, but they know little about the life circumstances of their neighbor and are understandably more comfortable not “comprehending the impact of hundreds of checkpoints, arbitrary detention without trial,[or] the military presence in the West Bank that ‘rules’ as it sees fit . . .”
As conflict has followed conflict over decades, this conflict has become a catalyst for an ethos of hatred. O’Malley writes:
There is not even a glimmer of hope for a two-state solution here. The Palestinians know it, and the Jewish Israelis are moving inexorably to this truth as well. How could we possibly expect successful negotiations when Israelis and Palestinians teach their children the value of demonization, racism, and hatred? (p. 290).
O’Malley’s pessimistic assessment is echoed The Costs of the Israeli-Palestinian Conflict, even though the new RAND report describes its aim as offering “all parties comprehensive, reliable information about available choices and their expected costs and consequences” – in other words, enabling both Israelis and Palestinians to make the rational decisions that would, in the study team’s view, lead to a two-state solution. Indeed, three-quarters of RAND’s nearly 200-page study consists of a detailed analysis of the economic costs of the current situation of periodic violence over the next ten years, compared to five alternate scenarios: a two-state solution, coordinated unilateral withdrawal by Israel from the West Bank, uncoordinated unilateral withdrawal, nonviolent resistance by the Palestinians, and violent uprising. Unsurprisingly, the two-state solution provides economic benefits for both Israelis and Palestinians over the next ten years, compared to the other possible “choices.”
News of Israel’s military reactions to self-defeating Palestinian violence can make the RAND’s detailed graphs and assessments in the service of rational choices read as acts of futility. Moreover, while RAND’s analysis of a two-state solution, nonviolent resistance by the Palestinians, and violent uprising by Palestinians all seem sufficiently plausible eventualities to merit analyses, two possibilities analyzed by the researchers do not. Is there any chance of Israel withdrawing 60,000 settlers from the West Bank without the pressure of a deal creating two states? Even more, whatever would make Israel initiate an uncoordinated unilateral withdrawal of even some of its settlers (RAND assumes 30,000) from the West Bank?
Nevertheless, RAND offers stunning economic details about the current asymmetry of life in Israel, the West Bank, and Gaza. In 2014, for example, 7.6 million Israels produced goods and services (GDP) valued ten times higher than did the 2.3 million Palestinians in the West Bank, and twenty times higher than Gaza whose population was 1.6 million. Israeli per capital GDP was $35,000, compared to $3,500 in the West Bank and $1,800 in Gaza.
Israel’s extensive irrigation is thanks largely to the Jordan River (now a trickle) and aquifers on the West Bank, available through old water agreements between Israel and the West Bank, which limit the availability of water in the West Bank. In addition to curtailing agriculture in the West Bank, these water agreements force Palestinians to spend about $50 million per year on tank trucks delivering water and another $20 million to treat water-borne illnesses. In Gaza, about a quarter of all illness is assumed to be the result of poor water quality, and the UN has identified water as a significant cause of illness in children. (O’Malley adds to our knowledge of this disturbing issue with the fact that water consumption in Israel is three times that of the consumption in the West Bank, where it does not meet WHO standards, and that water is among the factors that will make Gaza unlivable by 2020. For O’Malley, these daily frustrations are a major cause of the violence Palestinians aim at Israel.)
Over decades of conflict, Israel has developed a growing array of strategies to protect itself from its Palestinian neighbors. As RAND notes, “Israel controls virtually all aspects of security because it believes that Palestinian security forces lack the capacity to address terrorism and did not do so in Gaza.” A security fence demarcating the West Bank in fact extends east of the Green Line in many areas, and over two hundred kilometers of protected roads allow Israelis to move throughout the West Bank without contact with Palestinians. Moreover, the West Bank has been divided into three sections, with section C, constituting 61 percent of the territory, controlled entirely by the Israel Defense Force (IDF). In addition, hundreds of checkpoints and roadblocks, many staffed at all times by the IDF, restrain Palestinian movement and curtail agriculture and business.
Although Israel has decreased the checkpoints from their highest number, O’Malley writes that Israel has been “deaf” to calls to ease restrictions on people and products, and plays the Palestinian economy “like an accordion” (p. 243).
Not surprisingly, the RAND report shows that Palestinians lose the most over the next ten years under conditions of violence: their gross domestic product falls by 46 percent, compared to Israel’s GDP falling by only 10 percent. While the economic effects of violent uprising to Palestinians include the destruction of Palestinian buildings and infrastructure (a loss of $750 million), as well as the loss of Palestinian labor in Israel (-$760 million), the primary direct costs of violent conflict for Israelis are in loss of Palestinian services (-$830 million) and increased security costs (-$340 million), much of the latter absorbed by the US. Israel suffers far lower costs to investment and economic activity from perceptions of instability (-$39 million), and from Palestinian labor in Israel (-$2.7 million).
RAND estimates the annual US support to Israel at $2.6 billion but notes that much of the total support remains hidden. In addition, the study team estimates that Israel receives private contributions of more than $1.65 billion. As the report argues, “Israel is maintaining the status quo at minimal cost,” and the country “has a smaller economic incentive than Palestinians to resolve the impasse.”
The cost of the status quo to both Israelis and Palestinians would be significantly higher were it not for the large amount of donor aid provided to both parties. . . . These donations have, to some extent, insulated both Israelis and Palestinians from the total cost of the impasse.
O’Malley broadens the point: “the United States believes it ‘owns’ the Israel-Palestine conflict.” Although the US has been unable to broker its imagined peace deals, it has made a firm imprint on every negotiation, and Israel’s strategic defense is influenced by US expertise and paid for in substantial part by American money.
Not surprisingly, Israel spends only 20 percent of government resources on defense and administration, compared to the West Bank, where over 50 percent of government resources are spent on defense and administration, most of this also enabled by international donors. Moreover, while Israel has the tax base to provide its citizens with a robust educational and social services sector, the Palestinian Authority subsidizes low productivity in the West Bank by employing a vast bureaucracy of some 500,000, which, not being fully supported by donors, has left the government in arrears.
Since the Palestinian economy starts so low (for this analysis, RAND includes the West Bank, Gaza and East Jerusalem), Israelis gain over three times more than Palestinians in a two-state solution–$123 billion versus $50 billion over ten years. But Palestinians gain more proportionately: their average per capita incomes increase by about 36 percent over what they would have been in 2024 under the current situation, compared to 5 percent for the average Israeli.
RAND assumes that approximately 600,000 Palestinian refugees will return as a result of a two-state solution. While this will require initial public and private investments of about $65 billion, much of it borne by the international community, the study assumes that the return of Palestinian refugees will expand the economy by about $ 2.7 billion.
O’Malley is less optimistic about the economy of a new Palestinian state. Citing a 2006 study by the Peres Center for Peace, he writes that Palestine would need to create over half a million jobs simply to keep its unemployment under its current rate of 25 percent (p. 261).
As with the repatriation costs of Palestinians in a two-state solution, RAND assumes that the $30 billion required to move 100,000 Israeli West Bank settlers living east of the Green Line will be borne by the international community. Since the $1.1 billion per year that RAND estimates Israel currently spends on security for West Bank settlers decreases in proportion to the number of settlers relocated, Israel will be left with a net gain of $180 million. RAND also assumes that the US will step in with alternate technology to replace the early warning systems Israel loses in the West Bank and the Jordan Valley.
Despite RAND’s obvious institutional effort in outlining the costs and benefits of the five possible alternatives for the next ten years, the study team’s conclusion provides a glimpse of the researchers’ own sense of futility:
Perhaps the parties do not properly recognize the economic benefits of an agreement, or the economic benefits of an agreement have not been and may not be high enough to outweigh the imputed costs of intangible factors, such as distrust, religion, and fear of relinquishing some degree of security. (p.145)
And what forces might change the current stalemate?
First is the general instability in the Middle East, including the debacles in Iraq and Syria and the rise of ISIS, which both RAND and O’Malley see as having taken international attention away from the Israel/Palestine stalemate. Though both books assume that the stalemate will simply continue out of the spotlight, new unknowns will certainly influence the situation.
Second is the demographic time-bomb. Families of Jewish settlers have five children, compared to only three children among Jews inside the Greenline, and 3.5 children among Palestinian families. Since the growing population of Jewish settlers in the West Bank will make it increasingly difficult to create a Palestinian State there, both O’Malley and RAND see Israel as needing to make a core policy choice: “whether to be a Jewish state with a predominantly Jewish population living side by side with a Palestinian state, a democratic state with a diverse citizenry that is treated equally, or a Jewish state comprised of all the lands between the Jordan River and the Mediterranean Sea . . . with preferential rights for Jews.” O’Malley, with typical bluntness, calls the third choice “an unmistakably apartheid state along the lines of the old South Africa.”
Although Jews constitute almost 80 percent of the population in Israel proper (6 million vs. 1.6 million Palestinians), they constitute only about half the population in greater Israel, including the West Bank and Gaza. By 2030, Palestinians will constitute a majority (56 percent) in this area of greater Israel between the Mediterranean Sea and the Jordan River. As O’Malley writes, “Time is on the side of the Palestinians.”
Third, the Middle East will be among the regions most affected by climate change, making the area hotter and drier. Though Israel has several desalination plants, desalination will not entirely solve the problem. How much water flows from the Jordan River and the West Bank aquifers to Israel and the sea, already a controversial issue, will only grow more contested as a diminishing water supply must serve a growing population. Over a century or more, the Mediterranean will rise by several feet, pushing back the coastline of both Israel and Gaza.
These are among the facts that make both O’Malley and the RAND study team express the view that the two sides may be marching toward a one-state solution. As O’Malley notes that, “officials in many Israeli and Palestinian circles are already planning for a bi-national state.” Nevertheless, the RAND study team offers examples of apparently intractable situations such as South Africa and the fall of the Berlin Wall, along with the wise reminder that “even gridlocked highways have exit ramps,” and O’Malley concludes with apparent frustration, “Nothing is etched in infinity. The Middle East is being reshaped, and neither Israel nor Palestine can escape indefinitely the repercussions of that reshaping. . . . History does not indulge illusions: it’s time to seek another way forward.”
Both O’Malley and the RAND study team offer a rich context for understanding the forces that will increasingly effect policy decisions in Israel and Palestine. Although both Israelis and Palestinians may remain too obsessed with the issues – borders, security, refugees, settlers, Jerusalem – that have divided them for decades to pay attention, there are several freight trains coming around the bend.

Carol Ascher‘s new novel, A Call from Spooner Street, is available in paperback and as an ebook. Two previous essays appeared in Tikkun: Ploughshares without Fear: Remembering Martin Buber (1878-1965), in October 2015, and Martin Buber’s creation of a Jewish school movement in Nazi Germany, in October 2014. For more of her work, see