These arent good times for the two-state solution. U.S. President Donald Trump has angered the Palestinians by declaring Jerusalem Israels capital and threatening to cut off aid. The ruling Likud party passed a resolution calling to effectively annex West Bank settlements. Trump adviser and son-in-law Jared Kushner is spending more time these days fending off Russia investigations than writing his Nobel acceptance speech for finessing the ultimate deal. Even the Palestine Liberation Organization is contemplating the alternative of a single state between the Jordan River and the Sea.
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The Palestinian version of that state sounds appealing to Western ears, that is, if you think that two peoples who have been at war for a century will suddenly learn to hash out their problems in parliament, op-eds and tweets. They picture a country where everyone has equal rights and shuns any definition of itself as Jewish or Arab.
But behind that lovely vision is the expectation that demographic trends would soon lead to a Palestinian majority. That would certainly be the case if the new state allows even a limited Palestinian right of return.
Even without it, a one state encompassing Israel, the West Bank and Gaza would be divided nearly 50-50 between Jews and Arabs, who speak different languages, have opposing ethnic and religious loyalties, and live different lifestyles.
On the other hand, the Israeli rights vision is positively ugly – a dystopian state where Palestinians are de facto or de jure second-class citizens. They certainly dont imagine a place where they have Palestinians as next door neighbors, bosses at work or occupying half the seats in the Knesset. If Netanyahu talks about the Palestinians getting a state-minus in a two-state solution, the rights vision if a vague form of occupation-plus.
That creeping feeling
Politically, the one-state solution is no solution at all: You have to have an incurably wonkish worldview to believe that all the dilemmas the new entity would face could be solved by policy options devoid of old hatreds and distrust, and cultural warfare.
Economically, too, the new state would be a nothing less than a Frankenstein made up of the body parts of Startup Nation and an aid-dependent, Third World economy.
Lets use the Israeli rights version of a single state, since the way things are going now, its strategy of creeping annexation seems far more likely to succeed than any negotiated agreement towards a single state. Lets throw Gaza into the pot, too, since the settlers seem to have a deep longing to right the historical injustice of disengagement. Anyhow, no-one else wants it.
What we would have is a $325 billion economy of about 13.1 million people and gross domestic income per capita of just under $26,000 (based on the 2016 World Bank figures).
On the surface, thats not bad – Israstine would rank about 50th globally for GNI per capita, not much below Spain. In aggregate, the economy would be slightly smaller than Denmark or Egypt.
But Israstines economy would face a challenging future. Even by the local benchmarks, poverty rates in the West Bank and Gaza are high; in the combined state, where the benchmark would be considerably higher, poverty rates would balloon. Income inequality in a country that encompasses high-tech engineers in Tel Aviv and subsistence farmers in the Hebron Hills would be astronomically high. Average levels of education and productivity would fall.
Israstines leaders would face immense challenges trying to correct any of that.
Israel already has a problem with high levels of poverty and too many people not working: The percentage of working age West Bank/Gaza Palestinians actually holding a job is just 46%, a third lower than Israels. That problem would become ever worse
As for the Palestinian one-state vision, presumably negotiated under some kind of international aegis, it would at least probably have the benefit of international aid. Unilateral annexation would almost certainly cut off or reduce the aid flow Palestinians now get, saddling the burden of paying for schools, heath and infrastructure on internal revenues.
In short, Israstine would have immense socio-economic challenges without the economic and tax base to address them.
The one-statists on the Israeli right dont think about these problems too hard. When they consider the future at all, they see things, economically at least, pretty much as they are now – a two-tiered economy with Jews on the top and Palestinians on the bottom. They feel the Europeans, UNWRA and the plethora of NGOs funding and operating school and hospitals and paying for Palestinian police officers and so on are enemies of Israel: the one-statistswould happily bid them a farewell. The one-statists never consider whos going to pick up the tab when the donors leave.
And it gets worse than that. Its hard to imagine an Israel that absorned an unwilling Palestinian population into a Jewish state being a welcome member of the world community.
The trade and investment inflows that are the lifeblood of the economy, especially the tech sector, would be threatened. A lot of Israels best and brightest might well pack up and leave, making Israels economic situation even more dire.
The one-state solution is a consequence of Palestinian despair and the Israel rights hubris, but its no solution at all.