Does Opinion Conflict With Fact or is Economic Development the Future of Peace?

During the summer, I have been keeping up with the world by reading the Electronic Digest of the NY Times. Although it doesn't have the entire paper, it is a good start and works reasonably well on my Android-powered Droid.

First the bad news:
This morning, I saw a brief article about a statement made by Israeli Foreign Minister Avigdor Lieberman (I don't write that too often since those words are in themselves quite depressing).
While holding a joint news conference with Russia's foreign minister in Jerusalem, the Foreign Minister (less depressing to write it that way) said that he can't imagine a Palestinian state by the end of 2012: "I’m an optimistic person, but there is absolutely no chance of reaching a Palestinian state by 2012,” said the minister, Avigdor Lieberman. 'One can dream and imagine, but we are far from reaching understandings and an agreement.'"

On the surface, this is quite depressing but not surprising. Although the Israeli people did not directly elect Netanyahu or his coalition, they knew what they were getting and haven't pressured for a vote-of-no-confidence. It is interesting that this immigrant to Israel from the former Soviet Union whose electoral base are Soviet-born Jews made this statement with his Russian counterpart. To me, this shows the distance between Netanyahu and Lieberman's policies and those of the Obama administration.

Now for the good news:
In his column in the opinion section titled "The Real Palestinian Revolution," Thomas Friedman writes about the growth in the Palestinian economy and the success of the institution and economy-building efforts of Palestinian Prime Minister Salam Fayyad. While I am not a fan of the economic boycott component of his work, I think Fayyad is taking a page from Israel's success--the Yishuv built up political and economic institutions of a state before they were given political authority.
It seems that the Palestinian stock market index is the best performing one in the Arab world. More companies have been added recently and the economy is growing. According to Friedman (and he has a lot more contacts and experience about this than I do), previous Palestinian leaders did not want to build an economy or central institutions for fear of aiding the occupation. I am not sure it is only a result of this policy since apart from the Emirates, most of the Arab world has either wasted its oil wealth (GDP is stagnant or fallen over time, unemployment is very high and they have created unsustainable welfare states) or given the vast majority to the ruling elites.*

Are these conflicting statements? On one hand, they are but Thomas Friedman does not deny the lack of political progress. He just highlights the success of the Palestinian Authority on building the economy and creating a safe environment for business (their US and European-trained security forces are keeping the piece and encouraging business to open (a few Sundays ago there was a feature on Jericho in the NY Times travel section that provides color to Friedman's opinion).

Maybe the buck is supreme and peace will come through the economy. The one problem (which I learned this in an earlier column by Friedman that I can't locate) is that Israel's economy is also improving which decreases their need to make the concessions required for peace.

Hopefully, the political track will catch up to the economic track. If Friedman is right, the new jobs for Palestinians, competent national institutions, and success of the Palestinian Authority will allow Palestinians to believe that they have a real future for an independent state so they stop supporting Hamas. At the same time, the reduction in terrorism and increase in trade will strengthen Israel's center (does it even have a left any more?) and allow Israel's to elect a government that will bring it a secure and lasting peace.

Have a great summer. Keep reading and learning.
* I only found a few sources to back up these claims. In 2002, only two Arab countries had GDP per capita in the top 20 (above Israel): Qatar and UAE. Malta and Slovenia appear before the next Arab country Saudi Arabia. Additional sources include this piece from WRMEA (probably a pro-Israel think-tank), wiseGeek, and check out these economic fact sheets on Israel and Saudi Arabia as examples.

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