Israeli Prime Minister Benjamin Netanyahu is proposing Israel pursue "economic peace" with Palestinians instead of a final status agreement that would lead to a Palestinian state.

After becoming prime minister for a second time on March 31, 2009, one of the first tasks he undertook was the formation of a special administrative committee in charge of promoting economic peace with Palestinians. According Haaretz, this body would advance 25 economic initiatives in the occupied West Bank.

“We have to strengthen the moderate parts of the Palestinian economy by handling rapid economic growth with a stake for peace for the ordinary Palestinians,” Netanyahu said during his swearing-in ceremony.

Critics, among them Palestinians, argue that economic peace initiatives do not absolve Israel’s responsibility to reach a permanent and comprehensive peace with Palestinians - both economic and political.

ORIGIN OF THE IDEA

The notion of "economic peace" was originally advocated by Moshe Dayan (foreign minister from 1977 to 1980), who sought to satisfy Palestinian economic needs so that they would forfeit their political rights.

Economic incentives reduced violence during the 1970s when Israeli and Palestinian employment rates were comparable and Palestinian society was advancing socially. But the first Intifada exploded in the wake of growing economic and political disparities and a strengthened Palestinian political movement. The uprising culminated in the Madrid negotiations based on the formula of "land for peace," which led to the Oslo accords of 1994. 

The years of the first Intifada that exhibited Palestinians’ quest for political self determination culminated in the Madrid process and the signing of the Oslo accords in 1994. The purpose of this interim agreement was to provide a platform for Palestinians to progress towards an independent government and economy.

COMPREHENSIVE PEACE

Critics of the Oslo accords said that it left too many resources and important authorities in the hands of Israeli authorities to achieve peace and a strong economy. Since then, the expanding Israeli "closure" has stymied growth.

Netanyahu’s economic peace plan does not entail dismantling of outposts, checkpoints and other closure methods that have isolated the Palestinian economy. Further, without a long-term political solution for the Arab-Israel conflict, instability will continue to damage the economy.

Opposition parties like Kadima favor continuing a comprehensive peace process. Its leader, Tzipi Livni, has propagated a two-state solution. In a visit to Ramallah on March 3, 2009, US Secretary of State Hillary Clinton said that economic initiatives without a "political solution" would have no chance of success.