After two years of waiting for Trump’s Deal of the Century, it now appears that what the U.S. president and Jared Kushner have in mind is more like the Bribe of the Century.
How many billions we’ll only know after Israel’s elections, when the plan is unveiled, but the Times quotes sources as saying the Palestinians alone will get $25 billion and the others as much as $40 billion.
On the rise of a future Palestinian state, Kushner remained vague. In an interview with Sky News on Wednesday, he declined to relate to that issue directly but implied that things like national borders were a frippery.
This is a little odd considering that his father-in-law and boss is a big fan of borders and walls.
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Anyway, this is what Kushner said: “The political plan, which is very detailed, is really about establishing borders and resolving final status issues. The goal of resolving these borders is really to eliminate the borders. If you can eliminate borders and have peace and less fear of terror, you could have freer flow of goods, freer flow of people and that would create a lot more opportunities.”
You might dismiss the deal as nothing more than a cynical quid pro quo: The Palestinians will give up their demand for a full-fledged state in exchange for spectacular amounts of aid. But, as Bibi may soon be telling a judge, accepting gifts from a rich friend doesn’t have to be a bribe.
And, to Kushner’s credit, the bare outlines of his plan revealed so far seem to be based in idealism about peace and prosperity walking hand in hand toward a glorious future, with prosperity leading the way.
He seems to envision a New Middle East with goods, people and information moving easily from country to country, along gleaming new highways and state-of-the-art telecommunications networks. A class of bold entrepreneurs will quickly emerge to provide jobs and services. In this consumer paradise, why would anyone in his right mind sign up to be an Islamic State, Hamas or Hezbollah fighter?
There’s a lot to be said for the endpoint. The problem is how to get there.
Let's make a deal
Let’s assume for the moment that the Gulf states are ready to fund the Deal of the Century and that Congress is ready to kick in an American contribution, which is reportedly how Kushner plans to pay for it all. And, let’s assume Hamas signs its death certificate by joining the effort and that Israel is truly cooperative.
Let’s also assume the Palestinians are actually talking to the Trump administration.
Even if all that happens, the bitter reality is that massive aid schemes don’t work. The Oslo aid plan was based on the same assumption as Kushner’s, namely that economic development would spur the peace process.
In the four years after the agreement was signed in 1993, when everyone thought peace was possible, governmental and private donors spent $4.4 billion on aid. They upped the amounts after the Second Intifada erupted, to more than $1 billion in 2002 alone.
At its peak, the money was equal to $315 per Palestinian per annum..
Needless to say, it didn’t bring peace or prosperity. Terror attacks continued thanks to Hamas; Israel voted the anti-Oslo Netanyahu into power; and the Second Intifada followed a few years later.
But even without those setbacks, the fundamental problem was that the Palestinian Authority and economy couldn’t effectively absorb all that money.
Much of it went down the drain through mismanagement and corruption. As the situation deteriorated, instead of investing in infrastructure and education to encourage economic development, as originally planned, the aid money went into keeping the PA up and running on a day-to-day basis and creating jobs by swelling by the bureaucracy, which grew six-fold from 1994 to 2002.
The basic mistake then and now was to think that the first thing you need for a capitalist economy to get started is capital.
But, as the long and troubled history of foreign aid shows, the first thing you need is an entrepreneurial class, reasonable rules and regulations, a supportive government and the right kind of workforce.
The temptation for policy makers is try to build these things from the top down because they imagine they can control all the variables and make them work. No capital? The government will provide it. No workers or entrepreneurs? Offer training classes and high-tech incubators. Corrupt government? Goad the locals into enacting best-practice rules and regulations.
Real economic development, like the kind China encouraged, happens from the bottom up. In the Palestinian context, that would mean Israel and the PA cooperating to create a friendly business environment with seamless access for Palestinians to the Israeli economy. Alas, that deal isn’t fated to happen in this century.