A Look Backward and a Look Ahead
Policy Paper No. 16, 1997
Israel concluded a peace agreement with Egypt in 1979, with the Palestinians in 1993 and with the Kingdom of Jordan in 1994. Israel continues to pursue comprehensive peace agreements with the Palestinians, with Syria and Lebanon, and eventually with other Arab states. An examination of the past record is essential for the formulation of better, wiser and more effective policies.
Ms. Albright’s Address on US Middle East Policy
In a recent major policy address on the Middle East, US Secretary of State Madeleine Albright strongly emphasized the importance of suppressing Arab terrorism. She asserted that “until the parties (Arabs and Israelis) trust each other, and until the Israelis believe that the PA (the Palestine Authority led by Arafat) is making a 100% effort (to eradicate terrorism) it is impossible for peace to proceed... the Palestinian commitment to fight terror must be constant and absolute”. The PA must do “everything possible to create a moral atmosphere in which the advocacy of violence and terror withers away”. This vision of a peaceful Middle East is capped by a promise of unprecedented prosperity. “For Israelis... a bustling economy with Pacific Rim potential (i.e., emulating the highly successful East Asian economies), for Palestinians... full participants in a growing regional economy... to create a future for themselves of steadily increasing prosperity, dignity and hope. And for all the people of the region (the Middle East)... the promise of building a land that is bountiful and peaceful”.
What Can We Learn from the 1979 Egypt-Israel Peace Agreements?
Can policy makers base their recommendations on an assumption of mutual Arab-Israeli trust in the foreseeable future, without which, according to the American Secretary of State, peace cannot proceed? The historical record as well as current developments call for a healthy dose of
skepticism. The reality has been that the Camp David agreements are little more than a non-aggression pact from Israel’s point of view, (plus an opportunity for Israelis to see the pyramids and other historic sites).
Trade relations are minuscule, and the other aspects of “normalization” are hardly of any consequence. Instead of steady progress towards normalization there has been a mounting Arab campaign of hatred towards Israel, led by Egypt. A recent report in the New York Times (April 20, 1997, p. 6E), notes that 18 years after the Camp David peace agreements, Arab political cartoons, published by the government-controlled Egyptian press, (and other Arab media) depict Israel as “an amalgam of hook-nosed, long-bearded thugs worse than the Nazis, and wily plotters in an international Jewish quest for domination”. The report goes on to note that almost all the Egyptian professional organizations bar their members from taking part in “normalization” (professional conferences in Israel, and the like). More disturbing from the point of view of future Arab-Israeli relations is the reporter’s observation that these anti-Israeli and often anti-Semitic views, are echoed in “ordinary Egyptian conversation” even by the 20 million Egyptian youngsters born since the conclusion of the 1979 Camp David agreements. Mr. Mubarak’s assessment is that achieving peaceful, possibly cordial, relations between Arabs and Israelis is a matter of decades, at best, not years and certainly not months.
Peace and Prosperity
"Three years ago, during the memorable Oslo summer (of 1993) and during the year that followed... optimism was rife that Palestinians, Arab, Israeli and other entrepreneurs, would lead the process of massive economic development, on top of which it would be feasible to build healthy neighborly Israeli-Palestinian relations. Today it is clear that this... was but pie in the sky". (Pinchas Landau, of the
Jerusalem Post (August 17, 1996)).
Why Did So Many Err Regarding Mid-East Prosperity?
Many economists were unfamiliar with the economies of the Arab states and the innumerable internal political obstacles which hamper their economic development. The official Egyptian accounts show an improvement in the rate of economic growth in 1994-96, but it is far from sufficient to provide productive employment to all or most of the one half million annual new entrants into the labor force, let alone provide jobs for the millions who are currently unemployed and the many more millions who are underemployed. It is important to emphasize that the economic reforms of the early 1990s had no relation to the Egypt-Israel peace agreements of 1979. They reflect changes in internal economic policies.
The Oslo Agreements and their Aftermath
Expectations were high that the Oslo agreement of 1993 and the Israel-Jordan peace treaty of 1994, would be the harbingers of regional prosperity especially benefiting the Palestinians in the newly autonomous areas, the neighboring Arab countries, as well as opening up new markets and opportunities for Israelis. The ensuing disappointment was as great as the initial expectations. Instead of more, and more rewarding jobs, many Palestinians suffer from severe unemployment, falling incomes and lower living standards. The Palestinian economic crisis is a consequence
of both external and internal factors. After their expulsion from Kuwait (since 1990) the subsequent sharp reduction in workers’ remittances had a depressing effect especially on Palestinians. The complete cut off of Saudi and Kuwaiti financial support to the PLO, (as well as to Jordan) since 1990, has been a major depressant, adversely affecting the economic well-being of the Palestinians.
The Palestinian acts of terrorism in Israel made a bad situation worse. The number of work permits to Palestinians issued by Israel averaged 25 thousand in 1996 as compared with 116 thousand in 1992- the year before the Oslo agreements
– a precipitous decline. All the indications are that the gross domestic product of the PA areas has declined in the past few years. Much of the aid money from the rich industrialized countries has been “misappropriated” by the PA leadership. Aside from corruption, most of the PA budget is spent on salaries for the 78 thousand civil servants, of which 45 thousand are policemen. The policy concentrating power in the hands of the leader extends to the economic realm. In reality, the governance, or malgovernance of the PA, has been a deterrent to economic development. Corruption, gross inefficiency and poor governance mean a continuation of the sorry state of the Palestinian economy.
Jordan’s Economy Since the Peace Pact of 1994
Israel – Jordan relations have been correct since Jordan suppressed and then expelled the PLO in the early 1970s. In effect the treaty of 1994 changed the relationship from
De facto to De Jure peace. Officially there had been no trade between Israel and Jordan before the peace agreement, but unofficial reports stated that there were imports from Israel with the “made in Israel” label removed. Since 1994 trade is open, but its size is minuscule in Israeli terms and even in relation to Jordan’s economy. Clearly the increment in trade attributable to the peace treaty has been of very minor consequence. However, the large number of Israelis visiting Jordan since the treaty has had a significant impact on that sector of the economy. The improvement in economic performance since 1992 precedes the Jordan-Israel peace treaty of 1994. It was mainly due to the massive influx of Palestinians together with their skills and capital, plus significant foreign aid from Japan and European countries, in effect replacing Arab aid which had been cut off. The economic reforms adopted in the later 1980s contributed strongly to the major improvement in economic performance since 1992. The stimulus given to tourism by Israeli visitors was also a contributing factor. But, according to the official accounts, living standards (measured by real personal consumption per capita) fell by more than one half between 1987 and 1992, and have continued to fall between 1992 and 1996.
According to official estimates nearly one in three Jordanians lives below the poverty line and the unemployment rate is 15-20%. The gap between rich and poor is very wide and seems to be widening dangerously. All the professional organizations strongly oppose the “normalization” of relations with Israel.
The Arab Fear of Israel’s Economic Domination
By and large, the Arabs fear that the peace agreements will aid Israel in attaining economic domination of the Middle East. They fear, in particular, Israel’s level of technological know-how. Some Jordanian businessmen fear that the sheer size of the Israeli economy will overwhelm Jordan economically. Peace agreements
– if observed – are important in their own right. But the main solutions to the Arabs’ economic problems are internal, viz., radical changes in economic policies.
The huge income gap between Israel and its neighbours appears to be another major obstacle to “normalization”.
Israel’s Gains and Losses from the Peace Agreements
a. Looking Back at the Camp David Agreements
There has been peace, i.e., the absence of hostilities, between Israel and Egypt since the 1970s. However, the “normalization” measures included in the 1979 peace agreement have been thwarted or minimized by Egyptian hostility which appears to be as great today as it was before the peace treaty. From an economic point of view Egypt gained considerably from the entrance of Israeli tourists (150 thousand in 1996), while very few Egyptians (17 thousand in 1996) visited Israel, either because they cannot afford to or they fear the wrath of their colleagues. The Egyptian professional associations oppose relations with Israel.
Egypt gained considerably from Israel’s withdrawal from the Sinai Peninsula, especially in terms of oil. For Israel this was a considerable loss. Before the withdrawal in 1979 Israel was extracting about two million tons per annum (about 40 thousand barrels per day). There are those who believe that further Israeli exploration would have enabled Israel to become self-sufficient in oil within a few years. Because of the withdrawal from Sinai and because of the unusually high oil prices of that era, Israel’s annual oil imports skyrocketed from about $750 million in 1978 to over $2 billion in the early 1980s
– an extremely onerous burden for the economy and a major factor in accounting for the hyper-inflation and economic stagnation afflicting Israel in that era.
Under the peace agreement Israel purchases about two million tons of oil per year from Egypt at market prices. This amounts to about one fourth of Israel’s total oil imports. No favors are being granted. Israel could just as easily buy additional oil from other sources, at market prices. Furthermore, trade between Egypt and Israel is minuscule. The reasons are both economic and political. From an economic point of view Egypt has very little to offer Israel, (or to other buyers) in the way of manufactured goods. Egypt’s continued hostility towards Israel surely affects business relations. Israel paid a heavy price for the peace treaty with Egypt which De Facto turned out to be a non-aggression pact.
If, as we hope, the agreement with Egypt saves lives it is worth-while. Whether the agreement will be honoured when and if an Islamic regime takes over in Cairo is anybody’s guess.
b. The Oslo Agreements- Israel’s Gains and Losses
From a macro perspective Israel traded “land for peace”. It agreed to the establishment of a Palestinian Authority (PA) which would have, in effect, wide governmental powers in those areas evacuated by Israeli forces. Israel helped arm the “police force” and winked at its rapid growth to levels far exceeding those stipulated in the Oslo agreements.
Israel actively lobbied in Washington and in other capitals of the industrialized countries supporting the PA’s request for financial aid and was also a tax collector for the PA remitting customs duties it collected on goods destined for the PA, as well as other taxes. Some Saudi, Syrian and Egyptian officials have recently revived talk of an Arab Common Market, which will, of course, exclude Israel. Like talk of the Middle East Common Market this has so far proven empty. Many in Israel feel that the Oslo agreements turned out to be mostly one-sided giving the Palestinians a large measure of self-government, while Israel has not benefited from the blessings of peace.
Israel’s Gains from Its Agreement with Jordan
As before the agreement, so after: there were and still are infrequent infiltrations of terrorists into Israel through Jordan. But as before, so after, the Jordanian armed forces, often in cooperation with Israeli forces, most often succeed in thwarting the terrorists’ plans.
Territorial issues were very minor. Israel appears to be aiding Jordan in resolving
– or alleviating – its water shortages. In the absence of new supplies this policy means that Israeli farmers will be allocated smaller quantities of water for irrigation.
Israel’s gains from the treaty with Jordan are largely political and military. Professional bodies are generally opposed to the peace with Israel. By and large the Palestinians are more strongly opposed than other Jordanian citizens to relations with Israel. So long as the present royal family remains in control one can anticipate a continuation of Israel-Jordan peace. What happens under a hostile Islamic regime, when and if it arises, only the future will tell.
What lessons can we learn from the past experience of Arab-Israeli Peace Agreements?
Israel has sought “comprehensive” peace agreements including full “normalization” as soon as possible. Eighteen years after the conclusion of the treaty Egypt leads the Arabs in spewing out anti-Israel and anti-Semitic venom.
The late General Aharon Yariv favored a withdrawal over say 20 years or more, a step-by step approach to peace stretching out over a long transition period. Each Israeli withdrawal from the Sinai Peninsula would be contingent not only on the calendar but on the actions of the other side. This policy is relevant to further Arab-Israeli negotiations, in particular, with the Palestinians and Syrians.
The concept of “comprehensive” peace meant not only “normalization” with each of the Arab neighbors but the conclusion of full peace agreements with all the neighbors. But the problems
– economic, political, etc., are often quite different in each of the countries. It might be wiser to aim at something more limited with Syria, for example.
Syrian occupation has made a treaty with Lebanon much harder. Aside from the ideology of “Greater Syria” and the possible military-strategic advantages from this occupation, it derives very large economic benefits.
Peace and prosperity are each desirable in their own right, but in the Arab-Israeli context, at least, they are separate issues. Prosperity in Israel and in the Arab neighbors, and elsewhere, is dependent largely on their own internal economic policies. Peace will not necessarily bring prosperity and prosperity will not necessarily bring peace. With 97% of world markets open to Israel, it can succeed economically without any special economic arrangements with the neighboring countries. What Israel seeks from its neighbors is security from terrorist attacks- not economic cooperation or domination. Israel should be particularly wary of joint ventures with neighboring countries, which are by their very nature long term. Financial disputes might deteriorate into international disputes. Moreover, changes of government in autocratic states might mean radical changes in policy.
The Israeli-Palestinian conflict is by far the most difficult. The dispute is territorial, political, and cultural-religious. The close proximity of Jewish and Arab towns and villages is a source of friction and disputes. Unfortunately there is no movement in the direction of reducing Arab hatred. I believe that the guidelines for the negotiators should include a continued attempt to achieve maximum possible separation combined with superior military force. Israel should not involve itself in the economic affairs of the autonomy and should shun cooperative ventures. Until such time that the economy of the PA develops, the
US should pressure the Saudis and other Gulf countries to provide jobs for the Palestinians.
Summing up: the negotiators of Arab-Israeli peace should be guided by the following principles:
The goal of comprehensive peace agreements including “normalization” and encompassing all of Israel’s neighbors should be abandoned in favor of a selective case-by-case approach. Lebanon, when and if it is free to control its own destiny, might be a candidate for a comprehensive peace, but that is hardly relevant today. With Syria one should strive for an agreement mainly confined to military issues, i.e., non-aggression. Water issues would also have to be dealt with, but no attempt should be made to negotiate other economic agreements. The
US might offer the Syrians some economic inducements in return for what amounts to a non-aggression pact.
Stages should be a key operative term, with each stage lasting years, giving Israel the opportunity to examine the observance of the agreement by the other side.
Within the limitations of cost, and other possible constraints Israel should aim at maximum separation from the Palestinians in the Autonomy.
Finally, Israel cannot afford to let down its guard. As General Yariv used to say:
"We are living in a dangerous neighborhood." We pray for peace and tranquility.