Photo Credit: Avi Ohayon / GPO
Israel Prime Minister Benjamin Netanyahu, US President Donald Trump shake hands at their meeting on the sidelines of the UN General Assembly, 2017

I call on the Arab countries to cooperate with the Palestinians and with us to advance an economic peace. An economic peace is not a substitute for a political peace, but an important element to achieving it. Together, we can undertake projects to overcome the scarcities of our region, like water desalination or to maximize its advantages, like developing solar energy, or laying gas and petroleum lines, and transportation links between Asia, Africa and Europe.

Address by PM Netanyahu at Bar-Ilan University, 14 Jun 2009

Two days ago, Trump�s chief negotiator Jason Greenblatt declared Trump had decided upon a new approach to the Israeli-Palestinian peace process:

�It is no secret that our approach to these discussions departs from some of the usual orthodoxy � for after years of well-meaning attempts to negotiate an end to this conflict, we have all learned some valuable lessons,� he said.

�Instead of working to impose a solution from the outside, we are giving the parties space to make their own decisions about their future.

Instead of laying blame for the conflict at the feet of one party or the other, we are focused on implementing existing agreements and unlocking new areas of cooperation which benefit both Palestinians and Israelis.�

President Donald Trump. Source: Wikipedia

This follows on the heels of Greenblatt’s visit in July, when he praised 2 Israeli-Palestinian agreements, increasing the water supply to the Palestinian Authority and the power supply to Jenin, as examples proving �cooperation between Israel and the Palestinians that will lead to economic improvement in the lives of the Palestinians.�


i24News news anchor Eylon A. Levy explained this “radical new” approach to peace:

But if this new approach to Israeli-Palestinian peace sounds familiar — it should.

Back in August 2009, things were looking up for the “West Bank”:

Prime Minister Netanyahu. Credit: Wikipedia

Netanyahu was not the only one looking to capitalize on the economic improvement.

On August 23, 2009, then-Prime Minister Salam Fayyad came out with his own plan for reform. The following year, in 2010, he announced a “one-year countdown to independence”.

According to Foreign Affairs, as opposed to “armed struggle” and peace negotiations, the Palestinian Prime Minister had come up with a third path:

Fayyad’s strategy is one of self-reliance and self-empowerment; his focus is on providing good government, economic opportunity, and law and order for the Palestinians — and security for Israel by extension — and so removing whatever pretexts may exist for Israel’s continued occupation of the Palestinian territories. Fayyad’s aim is to make the process of institution building transformative for Palestinians, thereby instilling a sense that statehood is inevitable.

Some gave Fayyad credit for the approach and called this strategy and its implementation “Fayyadism.”

former Prime Minister Salem Fayyad. Credit: Wikipedia

Not only was there debate over who deserved credit for the plan, there was disagreement over whether the plan had even begun to make a difference:

On July 9, 2009 – Haaretz reported “Palestinians Reject Netanyahu’s ‘Economic Peace’ Plan

Top PA officials refuse to meet Israelis over issue, worry Israel will use plan to avoid political process

Prior to the elections, Prime Minister Benjamin Netanyahu presented his program for “economic peace,” which he said would improved the quality of life for Palestinians in the West Bank. However, 100 days after having formed his coalition government, there is no practical progress on economic projects.

The main reason for this is the refusal of senior Palestinian Authority officials to cooperate with Netanyahu and Vice Premier Silvan Shalom, who has been assigned the task of promoting the “economic peace” initiative.

But what a difference a week makes:

Just a week later, July 16, 2009 – The New York Times reported: Signs of Hope Emerge in the West Bank

For the first time since the second Palestinian uprising broke out in late 2000, leading to terrorist bombings and fierce Israeli countermeasures, a sense of personal security and economic potential is spreading across the West Bank as the Palestinian Authority�s security forces enter their second year of consolidating order.

The International Monetary Fund is about to issue its first upbeat report in years for the West Bank, forecasting a 7 percent growth rate for 2009. Car sales in 2008 were double those of 2007. Construction on the first new Palestinian town in decades, for 40,000, will begin early next year north of Ramallah. In Jenin, a seven-story store called Herbawi Home Furnishings has opened, containing the latest espresso machines. Two weeks ago, the Israeli military shut its obtrusive nine-year-old checkpoint at the entrance to this city, part of a series of reductions in security measures.

Whether all this can last and lead to the consolidation of political power for the Fatah-dominated Palestinian Authority based in Ramallah, as the Obama administration hopes, remains unclear. But a recent opinion poll in the West Bank and Gaza by the Jerusalem Media and Communications Center, a Palestinian news agency, found that Fatah was seen as far more trustworthy than Hamas � 35 percent versus 19 percent � a significant shift from the organization�s poll in January, when Hamas appeared to be at least as trustworthy.

…The Israeli government of Prime Minister Benjamin Netanyahu says it shares the goal of helping Mr. Abbas, which is why it is seeking to improve West Bank economic conditions as a platform for moving to a political discussion.

Read that entire article and you’ll notice that Fayyad is not mentioned even once.

But the fact remains that in the US, Fayyad was given credit for the economic peace plan.

A Washington Post editorial in November 2009 exclaimed:

At the moment, the most promising idea comes from Mr. Abbas’s prime minister, Salam Fayyad, who has vowed to build the institutions of a Palestinian state within the next two years, with or without peace talks. Negotiations between the current Israeli and Palestinian leaders could provide indirect support for that initiative, even if there is little progress. But the administration would do well to refocus its efforts on supporting Mr. Fayyad.

Just as credit for the resurrection of the plan will go to Trump.

Note that one of the goals of the economic peace plan may have been to keep Hamas in check – a goal that Greenblatt echoes now in calling for the Palestinian Authority to assume control over Gaza.

But in the end, whether it was called Netanyahu’s economic peace plan or Fayyadism, the fact remains that the plan fell apart, leaving the question of whether it will work now.

What went wrong?

In July 2010, The Carnegie Endowment for International Peace came out with a report explaining why Fayyadism failed. The key conclusions were:

  • Government circumventing democracy. The unaccountable governing process that Fayyad has had to invent is not just postponing a democratic system�it is actively denying it.
  • Isolated successes do not create rule of law. The increasing number of cases seen and submitted to the courts indicates growing efficiency and confidence, but security services continue to act outside the law under the guise of cracking down on Hamas.
  • Lack of institution building. While Fayyad�s cabinet has managed to make a few existing institutions more effective and less corrupt, there has been regression in other governing bodies. Palestinian civil society is showing signs of decay as well. Ironically, there was more institution building and civil society development under Yasser Arafat than there has been since the West Bank-Gaza split in 2007.
  • Disillusionment increasing among Palestinians. Popular support for Fayyad is growing but he still has no organized base. And Palestinians are increasingly cynical about the prospects for long-term development.
  • Fatah is in disarray. The party remains bitterly divided. Party leaders recently forced Fayyad�s cabinet to cancel local elections when Fatah could not organize itself on time.

Have the Palestinian Authority and Fatah made any progress since then?

Is there more democracy?

Is the government less corrupt?

Are the Palestinian Arabs lets disillusioned or cynical?

Is Fatah, especially with Abbas aging with no clear successor, any less in disarray?

The peace movement PAX came out with a report Analysing Israel’s economic policy towards Palestine and the practical implications of Netanyahu’s economic peace which focused on 2 reasons for the failure of Netanyahu’s “economic peace”:

…However, there are several features to the Israel-Palestinian conflict that seriously hamper the applicability of the economic peace theory to this particular conflict. First, the theory asserts that economic integration reduces the probability of states to start a violent conflict, but does not necessarily apply to protracted conflicts. Second, the theory considers economic interdependence between states, and not a situation of asymmetric relations and dependence of one party on the other, such as exists in the Israeli-Palestinian conflict. [emphasis added]

Again, both reasons still apply today.

Whenever there is talk of renewing peace talks, there is criticism of trying again what has failed so many times before. Yet, regardless of the similarities to the previous “economic peace” plan, the concept itself is fairly new and for that reason alone — and because automatically restarting peace talks is being rejected — there is reason for patience, if not a bit of hope, that some progress can be made.

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Bennett Ruda has been blogging at since 2003. He also contributes to the Elder of Ziyon website. Bennet lives in Elizabeth, New Jersey, with his wife and two children