Economic Solutions to the Mideast Crisis

12.28.2005

Today’s WSJ features a front page story on the Mideast crisis and its economic underpinnings. The article talks about some of the economic impediments that people in Gaza and the West Bank face – mainly barriers to movement of goods and people – and the implications of these barriers. For example:

After 2000, when fighting between the two sides resumed, Israel sealed off Gaza, reducing the flow of people and goods across the border. It also limited the number of Gazans allowed to work in Israel. In battling Palestinian militants, the Israeli army destroyed roads and building. In some areas, donkeys replaced cars that couldn’t navigate the potholes. In such an unpredictable environment, commerce soured and the unemployment rate rocketed to over 30% [from about 10%].

There is much to be said about availability of economic opportunities and prospects for peace in the region and elsewhere. I remain a strong believer in the power of markets and helping Palestinians create a functional economy would do much more in terms of bringing long-term stability than billions of dollars in aid. More on economic and political reforms that must be implemented to jump-start the economy in Palestine is in this article by John Sullivan. Also, check out this roundtable on the prospects for economic cooperation and peace between Israel and Palestine (presentation by Hisham Awartani).