The economic portion of Jared Kushner’s peace plan released over the weekend conjures up memories of old Miss America competitions. A young woman delivers an earnest speech about the importance of world peace and understanding, to great applause. After all, who’s going to object to such noble sentiments? But, let’s get real, what the audience and the judges really want to know is how she looks in a swimsuit.
The Kushner plan sounds nice (and even looks nice, like a website for a health plan or the HR department of a giant corporation replete with stock photos of attractive, smiling people).
But what we really want to know is how it will look like in a swimsuit. That is: we want to see the political element of the plan, which the Trump White House dares not reveal until after the Israeli elections, which are scheduled for September.
Still, it’s worth examining the bit of the "deal of the century" we have in hand, because unlike the umpteen other plans over the decades, Kushner puts economic incentives at the forefront.
He thinks (quite rightly) that no deal on borders and security arrangements stands a chance unless ordinary Palestinians benefit from it economically.
This much can be said in the plan's favor: money is not a problem. The "Peace to Prosperity" plan is billed as a $50 billion initiative, which has naturally raised the question of who’s going to foot the bill.
But we actually don't need to worry about that. The plan calls for only $13 billion in government funding, over several years, in the form of grants over a decade. So the financial outlay by governments – which ones, the plan doesn't say - won’t be challenging.
The remaining billions are supposed to come voluntarily from the private sector, inspired by the seed funding from government. That $50 billion is a round, aspirational number, like all the others appearing in the plan -- doubling Palestinian GDP, creating one million jobs, reducing poverty by 50% and a Palestinian university in the world’s top 150. They’re more akin to slogans dreamed up by White House PR men than targets developed by economists.
Okay, so maybe not exactly one million jobs and maybe a university that only gets into the top 500. Could it happen, given what we know about the Kushner plan? Here, there are two problems.
When McKinsey consultants dream
The first is the plan’s complete disconnect from reality. "Peace to Prosperity" portrays the West Bank, Gaza and the Middle East as a tabula rasa formed in the image envisioned by a McKinsey consultant armed with concessional financing and expert studies.
I’ll cite just one example – the first of the plan’s four core programs, which calls for opening the West Bank and Gaza to regional markets.
The idea is to spur investment in transportation and infrastructure, and remove barriers to the movement of goods between markets in the region, while improving cooperation between Egypt, Israel, Jordan, Lebanon and the Palestinians.
Of course, it makes perfectly good economic sense for countries to facilitate international trade (although as claims go, it’s a little rich to be coming from the trade-war-addicted Trump administration). But the reality is that these countries have a long history of erecting trade barriers between themselves. They're unlikely to suddenly bring them down for the sake of helping the Palestinians.
In any case, what kind of regional prosperity is there for the Palestinians to share in? Syria’s economy is a wasteland, Lebanon is teetering on the brink of bankruptcy and Jordan’s economy is being crushed by a flood of Syrian refugees, and relies on aid. Egypt’s economy has been picking up, but not in a way that would help Palestinians: it has attractions for investors, but as a market for exports, it has little promise.
The second problem could be summarized as “been there, done that and it didn’t work.”
The Kushner plan addresses some non-problems, such as human development.
The fact is that even taking into consideration Gaza’s dire state, Palestine ranks a middling 119 out of 189 countries on the United Nations Human Development index, with respectable figures for life expectancy and education. The focus on schools and hospitals smacks of PR, to show Palestinians the plan isn’t just about helping businesses.
To its credit, the plan also addresses serious problems like corruption and ineffective government by the Palestinian Authority. For that, "Peace for Prosperity" proposes to spend tens of millions on e-government and land reform and promotes squishy goals like improved transparency and more business-friendly regulations to boost the World Bank's Doing Business score for Palestine to a nice round 75 points or more (its score today is decimally unattractive 59.11).
Unfortunately, good-governance programs like this have existed in the West Bank and Gaza at least since the Oslo era. They’re a fixture of the global economic- development industry, but they achieve little against the power of vested interests and tried and true ways of doing things. Their importance may be overrated anyhow: China is notoriously corrupt and its government is hardly transparent, but that hasn’t held back economic development.
Maybe the political half of the Kushner plan will address some of these glaring problems in the economic half, but it’s hard to believe that his White House team is going to be able to go beyond the “been there, done that” ideas that have failed before. The White House PR team would disapprove, but it would be better to call the whole thing "Plan to Pffft."
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