- Max Hyman
$173 billion dollars. This is the number a published research report from RAND from C. Ross Anthony, Daniel Egel, Charles P. Ries, and other credible researchers attributed to the amount that would be made off a two-state solution. For reference, that number would be the 53rd GDP in the world for any country. Alone. This study essentially estimated the net cost and benefits of five options/solutions to end the Israeli-Palestinian conflict - a two-state solution, coordinated unilateral withdrawal, uncoordinated unilateral withdrawal, nonviolent resistance, and violent uprising. It looked at current economic costs of the conflict, including those that can't really be put into words.
First, lets define those terms. A two-state solution, in this case, would mean the establishment of a sovereign Palestinian state alongside Israel based on Clinton parameters (94-96% of the West Bank, all of Gaza). Coordinated unilateral withdrawal would be a situation in which Israel coordinates with Palestine to relocate settlers in the West Bank. Uncoordinated, however, would be a situation in which Israel acts alone and pays most of the settler relocation costs. Nonviolent resistance would include legal efforts at the UN and elsewhere, trade restrictions, and demonstrations. Violent uprising, the scariest future, sees foreign terrorists alongside everyday Palestinians rising and organizing to fight and kill.
Researchers looked at both direct costs/benefits (budgetary costs at the governmental and household level) and opportunity costs (economic opportunities missed because of the conflict). For the first, researchers identified costs to Israelis for security, settlements, and Palestinian services and to Palestinians for destruction of infrastructure, territorial waters, Palestinian labor in Israel, freedom of movement, access to services, and prisoners in Israel. Regarding opportunities, however, the Israeli side is missing out because of instability, the BDS movement (sanctions supported by governments worldwide), tourism, Arab world trade, Palestinian trade, and Palestinian labor. The Palestinian side loses opportunities like the control of territory, access to water, barriers to trade, licensing, tourism and travel, and the dissolution of the PA.
The study found, by far, that a two-state solution provides the best economic outcomes for both sides. Billions upon billions for both sides to focus on their economies instead of killings could be saved. Israel would gain $123 billion and Palestine would gain $50 billion over ten years - but, this is far more proportionally for Palestinians (36% increase in average per capita income). The current GDP of Palestine is between 14 and 15 billion per year.
Meanwhile, current trends to return to violence would have horrible negative economic impacts, as expected. In fact, losses are far worse in this future than imaginable. Per capital GDP would fall by 46% in the West Bank and Gaza and 10% in Israel in just a few years. In most scenarios, values of economic opportunities is more larger than expected changes in direct costs. Withdrawal by Israel from the West Bank would be a huge economic hardship, requiring resettlement/movement of Israelis there. Taking into account security costs, the Two State Solution is the only solution that actually improves the situation, compared to the 4 others that either don't change or decrease GDP. Noneconomic factors pose substantial barriers to change, as well. Power imbalance and economic incentives, ongoing regional instability, perceived security risk, clash of historical narrative, lack of political consensus, and demographic trends help keep this conflict churning.