by M.J. Rosenberg

Washington DC - Anyone who doubts the economic benefits peace can bring should take a look at Northern Ireland.

After decades of decline, Northern Ireland is the United Kingdom's fastest growing economy and one of the most solid in Europe. Belfast, recently a symbol of ethnic strife, is now booming with tourism and industry as Catholics and Protestants reap the rewards that inevitably followed the end of the seemingly endless civil war.

Peace, it's beautiful.

Except for one thing. The Good Friday Agreement which brought peace to Northern Ireland remains, in large part, unimplemented. Almost immediately following its signing in 1998, the two sides began squabbling over their respective obligations. It's not quite peace, yet it is quiet. Ultimately, a cessation of violence and creation of common economic interests may do more to create conditions for peace than all agreements previously signed or not; it's more like an advanced peace process.And that has been enough to improve lives not only in Northern Ireland but in the Irish Republic as well. The entire island, not long ago an economic backwater, is doing very well.

In Northern Ireland there is virtually no chance that the clock will turn back to terrorism and inter-communal strife because Irish Protestants and Catholics are both enjoying a huge peace dividend prior to formal peace. There is no way they would exchange that for the horrors of the bad old days.

The same logic can apply to Israelis and Palestinians.

That was the overarching message that came out of the 8th annual Milken Institute Global Conference which took place in Los Angeles earlier this month. Panellists included former Vice President Al Gore, Rupert Murdoch, General Wesley Clark and seven winners of the Nobel Prize. Not bad.

I heard Israelis, Palestinians, Americans, and non-Palestinian Arabs discuss how investment and economic development can both vastly improve life for Israelis and Palestinians but also accelerate progress toward President Bush's vision of "two states, Israel and Palestine, living side by side in peace and security�." And prosperity, the Milken panellists would add.

Dr. Glenn Yago, Director of Capital Studies at the Milken Institute, believes that one of the mistakes of the Oslo period was that Israelis and Palestinians "seemed to believe that economic security is very nice but you would have to wait for final status negotiations before putting it in place. We're saying that you don't have to wait." Economic security can buttress negotiations rather than be a product of them.

"Peace implies marriage of mutual interests but right now with the disengagement it seems to be more of a separation. So the goal right now is to set up a material basis for economic cooperation today that builds peace and cooperation in the future," Yago said.

He said that one of the most valuable sessions at the conference was the one on "privatizing the peace process." At that session "top people with deep financial experience discussed utilizing the latest financial tools to end the conflict and there was remarkable agreement on the economic and financial moves that should have started yesterday.

"One, create a leverage loan program to induce banks to lend to risky borrowers. The idea is to use the Palestine Investment Fund, donor country funds and philanthropies to work out a program for Palestinians[�] It's a way of jumpstarting a credit system which in turn jumpstarts development and investment.

"Two, increase financing for cross jurisdictional infrastructure projects (things that benefit both Israelis and Palestinians), for example, water treatment projects. Israel can do all the water purification projects it wants but most Palestinian communities are upstream. If they don't treat their water, Israel's efforts to treat its own water will fail. Also, transportation projects for trade and "border" crossings would contribute hugely to job creation and economic activity. Another obvious example is water treatment projects that feed into agricultural development. Treated waste water in Gaza could be used in the green houses that will be left behind after disengagement to develop the Palestinian agricultural sector.

"Three, build housing. Developing housing requires a transparent Palestinian capital market, a mortgage/finance system put in place and a platform for entrepreneurial finance. Anybody who owns their own home or business is less likely to try to blow up somebody else's or put their own at risk."

Beyond the obvious physical benefits of cleaner water and better housing for Palestinians, Dr. Yago pointed out that "all of these projects create jobs for Palestinians" which will do more to increase the quality of life for Palestinians and security for Israelis than almost anything else.

At another session, the RAND Corporation discussed their new report on utilizing foreign investment to create a viable Palestinian state. Its author Doug Suisman calls RAND's plan "The Arc," by which he refers to a system of infrastructure that will create an arc of development and prosperity throughout the West Bank, Gaza and Israel.

The report estimates that $41 billion in foreign investment will be needed to realise this plan over the next 10 years. That sounds huge but is identical to the $700 per capita that the international community spends to build peace in Bosnia.

Listening to Suisman discuss his findings I was struck with the understanding that the projects RAND envisions are absolutely essential if there is to be lasting peace. Even if Israelis and Palestinians reach a political agreement an exploding Palestinian population (Gaza has the highest birth rate in the world) living in poverty would still create enormous dangers for Israel. It simply will never have real security as an island of European-style prosperity surrounded by Bangladesh.

At the same time the RAND study was emphatic that a successful Palestinian state would require both territorial contiguity and internal security, The Milken Conference was, in essence, a global conference on interdependence. It became clear that all of us are in this together: Americans and Mexicans, Africans and Europeans, Latin Americans and Asians.

And, most obviously, Israelis and Palestinians. They share the same land, the same resources, and - it is clear - the same fate. That fate can be a curse or a blessing. The Milken Conference was dedicated to the proposition that it can be a blessing, for Israelis, for Palestinians and for the world.

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* M.J. Rosenberg, Director of Policy Analysis for Israel Policy Forum, is a long time Capitol Hill staffer and former editor of AIPAC's Near East Report.

Source: Israel Policy Forum Issue # 224, April 29, 2005 - the original article was edited with approval.

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Distributed by the Common Ground News Service.

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