Peace Entrenched

Planning for a Palestinian State Should Not Await a Final Settlement

If Israelis and Palestinians agree to a peace settlement, then the difficult task of building a successful Palestinian state would be achievable and affordable, according to a series of RAND studies. However, a Palestinian state would require considerable and sustained support from the international community — particularly the United States, the European Union, the United Nations, the World Bank, and the International Monetary Fund.

From the air, the Arc and its offshoots would resemble an olive branch.

Researchers analyzed key challenges that would confront a Palestinian state on the morning after peace, developed policy alternatives to meet the challenges, and then estimated the investments needed. The challenges included internal security, water, health, education, and infrastructure.

To help a Palestinian state meet the challenges in these and other key areas, the new state was estimated to require at least $33 billion in gross public and private capital investment over the first ten years of statehood, according to a growth model used by the researchers. In estimating costs, the researchers considered the demographic, economic, and political factors at play.

The $33-billion estimate includes the cost of a rail and road infrastructure that would constitute the physical backbone of an economically prosperous and environmentally sustainable state. Building the transportation infrastructure would invite the parallel construction of infrastructures for water, energy, telecommunications, and open space for a linear chain of Palestinian cities and their offshoots. The researchers refer to the envisioned collection of infrastructures simply as “the Arc.” From the air, the Arc and its offshoots would resemble an olive branch.

Beyond its financial needs, a new Palestinian state will be more likely to succeed (1) the greater its territorial contiguity; (2) the more open its borders, allowing free movement of people and goods between Palestine and its neighbors; (3) the greater the security within Palestine and for its neighbors, including protection against political violence; and (4) the better its governance, including a commitment to democracy and the rule of law. If these conditions are met and wise policy choices are made, then the international investments outlined below could bear great fruit, according to recent spending precedents.

The $33-billion estimate was found to be comparable, on an annual per-capita basis, to the investments made by the international community in two of the most successful nation-building endeavors of the recent past: Bosnia and Kosovo (see Figure 1). Moreover, the RAND proposals outline a set of sorely needed priorities to help focus international and domestic activities.

Although the premise of the RAND studies was a peace settlement between Palestine and Israel coupled with Palestinian statehood, many of the recommendations could — and should — be implemented now. Doing so would not only improve the daily lives of Palestinians, it would also empower the current moderate Palestinian leadership and thereby improve the prospects for a negotiated settlement.

Internal Security: Prerequisite for Success

The success of a Palestinian state is inconceivable in the absence of peace and security for Palestinians and Israelis alike. These conditions must be established from the moment of independence. Unlike infrastructure or industry, security is not something that can be built gradually.

Successful arrangements for internal security range from protecting borders that surround a state to maintaining law and order within it. Even under the most favorable conditions, success will probably require extensive international assistance for several security agencies. The money would pay for everything from rebuilding courthouses and police stations to training personnel to supplying them with computers and other equipment (see Figure 2).

Water: Lacking in Supply and Efficiency

Rapid population growth will stretch the ability of a Palestinian state to provide water for homes, commerce, industry, and agriculture. Already, the supply of clean water is inadequate, and its current use is unsustainable. Current water and waste management practices are degrading streams, rivers, and aquifers.

Most water in the Palestinian territories, which consist of the West Bank and Gaza, comes from springs and wells fed by aquifers that are shared with Israel (see Figure 3). The amount of water that Palestinians and Israelis are extracting today from most of the region’s aquifers exceeds the replenishment rate (see Figure 4).

Increased efficiency could reduce the ten-year costs for water and sanitation by more than $1.1 billion.

A smart water strategy for a Palestinian state would be to simultaneously increase the water supply and use it more efficiently. Palestinians can increase their water supply by increasing groundwater use (accommodated by Israel’s reduction in use); increasing rainwater capture; and, when no other options exist, expanding costly desalination capabilities. Meanwhile, Palestinians can manage their water demand by investing in drip irrigation systems for crops; switching from water-intensive crops to less-water-intensive crops; installing water-efficiency devices in homes; recycling household wastewater from sinks and showers (“graywater”) to flush toilets, to water yards, and to wash cars; and improving the water and wastewater infrastructure.

Increased efficiency could reduce the ten-year costs for water and sanitation by more than $1.1 billion. Figure 5 shows that small investments in water efficiency could lead to large savings.