Is a Palestinian state a fantasy? Turning chaos into a country

A recent article by The Economist explores the complexities and challenges surrounding the idea of establishing a Palestinian state amid the ongoing conflict with Israel. Caliber.Az reprints the article.

In the diplomacy around the forever war between Israel and the Palestinians, it is customary to describe a Palestinian state as a necessity. Consider the latest Gaza ceasefire proposal, backed by America, and supported on June 10th by a resolution from 14 of the 15 countries on the un security council (Russia abstained). It outlines the global community’s “unwavering” commitment to a two-state solution “where two democratic States, Israel and Palestine, live side by side in peace”. It also insists that Gaza must be unified with the West Bank under the authority of the Palestinian Authority (PA). Most countries believe that Palestine should be recognised as a full-fledged state now, before any two-state peace deal. On May 10th, 143 countries at the un supported this idea, and on May 28th they were joined by Ireland, Norway and Spain.

Some visions for this new state are inspiring. Palestine Emerging, a study by 100 experts that was released in April, envisions Gaza and the West Bank by 2050 as a single entity of 13m people, up from around 5m today, connected by a railway, and with nature reserves and an airport. The devastation in Gaza creates a tabula rasa on which a new city will be built, with a seaport on an island with a causeway to the mainland. Palestine would prosper as a trading entrepot with its currency pegged to the dollar, underwritten by the Gulf states. Yet when you look away from the lofty blueprints, the gap between the dream and reality is crushingly large.

Palestinian statehood last appeared imminent a quarter of a century ago. The Oslo accords signed between Israel and the Palestinians in 1993 and 1994 created a semi-autonomous body, the pa, in Gaza and the West Bank. Had everything gone to plan a final settlement would have turned the pa into a sovereign state in 1999 with fixed borders. But the process unravelled amid a surge in bus-bombings and other terrorist attacks on Israeli and Palestinian civilians and a rapid expansion of Israeli settlements in the West Bank, which would form the core of the new Palestinian state. The assassination of Yitzhak Rabin, Israel’s prime minister, by a Jewish extremist, deprived the country of one of its most forceful advocates of peace.

When talks brokered by America over a two-state deal broke down in 2000, the second intifada (uprising) erupted, which burned until 2005 and saw the return of Israeli tanks to Palestinian cities. Then in 2007, almost two years after Israel had dismantled its settlements in Gaza and withdrawn its troops, Hamas took control of the coastal enclave. Yet the pa has limped on as a political mutant; partly a government and partly an instrument of Israeli occupation, with its remit limited to the West Bank. While many countries recognise Palestine as a state, the un Security Council has not. And without clear borders and a monopoly on violence it lacks some of the essential characteristics of one.

Since Oslo the Palestinian territories have changed a great deal. In some respects these changes make it a more plausible state than it was in the 1990s. For example, Palestinians spend 2.4 more years in education than they did two decades ago, making them one of the most literate populations in the Middle East. In the early 1990s Gaza and the West Bank scored 0.53 on the un’s Human Development Index (one is the highest), which is based on health, wealth and education. By 2022 it had climbed to 0.716, placing it ahead of Morocco. In May the pa marked thirty years in existence. Its tenacity in the face of adversity has heightened its aspirations. “The jacket [of Oslo] no longer fits us,” says Husam Zomlot, the Palestinian ambassador in London.

But 30 years after Oslo, the would-be state of Palestine faces three glaring problems: a faltering economy, fragmentation amid a lack of security and autocratic politics. Start with the economy. With a gdp of around $18.6bn in 2023 the Palestinian territories are the world’s 127th biggest economy, with income per person on a par with Iraq’s (30% of the global average). To be sure, there are islands of prosperity. In Ramallah, the seat of government, gated communities and shopping complexes abound and there has been plenty of housing construction.

And however flawed the pa may be, its economic performance far exceeds that of Hamas in its besieged enclave of Gaza. On the eve of Hamas’s attack on southern Israel on October 7th, incomes per person in the West Bank were five times higher than those in Gaza. Unemployment in the third quarter of 2023 was 13% in the West Bank, compared with 45% in Gaza.

Yet for all that, the economy is fragile and dominated by Israel. In a report before the October 7th attacks the imf described a “fiscal crisis” in which the pa was in arrears on bills. The Palestine territories also recorded a current account deficit of around 12% of gdp, with imports far exceeding formal exports.

Although the pa has improved its own tax collection, some 8% of its 15bn shekels ($4bn) of annual revenues comes from foreign aid and 67% comes from taxes that Israel gathers on its behalf. About 90% of exports go to Israel and more than 180,000 Palestinians, or around 23% of the West Bank’s workforce, were employed there before October 7th. After the Hamas attack Israel cancelled almost all of the work permits it had previously granted to Palestinians, suspended the transfer of tax revenues and tightly restricted movement out of and within the West Bank. “It’s the Palestinians’ worst economic crisis since 1967,” says Yitzhak Gal, an Israeli economist. To these immediate vulnerabilities should be added the potential costs of rebuilding Gaza—which the un reckons could be $40bn, though estimates vary—and of providing for its people. Much of this burden might be met by foreign donors. Even so, the pa’s finances would come under considerable strain if it were to assume responsibility for Gaza.

If the economic situation is tough, so is security. The pa has survived in part because Israel needs it. In 1987, when the Palestinians unleashed their first intifada, Israel had to send in large numbers of troops to suppress the unrest. For most of the past three decades, however, the Palestinians have largely policed themselves and maintained order in the West Bank.

Unsteady state

Yet if the status of a state is determined by whether it has defined borders and a monopoly on the use of force within them, then the pa may be further away from statehood than it was in the years after Oslo. The number of Israeli settlers living in the West Bank and East Jerusalem has risen from roughly 250,000 to about 695,000 today. Maps show the West Bank is far more densely peppered with settler outposts. Palestinians are cut off from East Jerusalem, their putative capital, and Gaza and are splintered by Oslo’s division of much of the West Bank into Areas A, B and C, denoting differing levels of control by Israel and the pa. “They’re increasingly fragmented into bantustans,” says Alon Cohen Lifshitz, the director of an Israeli planning watchdog, Bimkom, in reference to the nominally self-governing territories established during apartheid in South Africa.

Since the Hamas attacks in October, Israeli checkpoints have stifled movement around Palestinian cities. Journeys that should take half an hour can take three. Israel has suspended security co-ordination with the pa. And increasingly Israel treats Area A, in which the PA is supposed to have full control, like Area C, where Israel does. Israel regularly sends troops on raids into cities such as Ramallah and Jenin to suppress militant groups, including Hamas, that the pa has struggled to control. Palestinians say these raids are intended to weaken the pa’s hold and erode public confidence in it.

Then there are the pa’s autocratic politics. Superficially the political system is stable and has some legitimacy. “Of course partial occupation is better than full occupation,” says a Palestinian official. Many appreciate the prevailing sense of order that the pa brings. Yet there is a vast deficit of accountability and legitimacy. In November Mahmoud Abbas, the supine 88-year-old Palestinian president, will have ruled for 20 of the 30 years of the pa’s existence. Under Mr Abbas, Fatah, the main faction in the West Bank, abandoned the violent struggle of the second intifada. Yet Mr Abbas has turned a fledgling democracy into a dictatorship. Two years after an election in 2005 that confirmed him in power, he dismissed a Hamas-led government that had won the parliamentary election, dissolved parliament and thereafter repeatedly postponed all subsequent elections. Mr Abbas has purged his institutions of sceptics. He has repeatedly rejected proposals for a national unity government, which might reunify Gaza and the West Bank, for fear a deal with Hamas might cost him Western support. Detractors dub the pa “al-amila”, [Israel’s] agent.

Years of autocratic rule have entrenched cronyism. “Fatah has become a company,” says a journalist in Ramallah. Corruption compounds the erosion of public support. The pa pays its bills selectively and stuffs its administration with party cadres. Lamis al-Alami, a former education minister, says she sacked thousands of teachers who were political appointees. After she left office, she says, they resumed their posts.

Since the attacks of October 7th there have been changes. In March Mr Abbas appointed a new prime minister, Mohammad Mustafa, a former economic adviser. But America has backed away from trying to force Mr Abbas to surrender some of his powers to his prime minister and government, and the prospect of elections is remote. Mr Abbas and his Arab and Western backers are wary of democracy in the West Bank. A survey published on June 12th by psr, a Palestinian research body, found that only 8% of people in the West Bank say they are satisfied with the performance of Mr Abbas in the current war and 94% would like him to resign, while 41% of respondents say they support Hamas, a significantly higher share than before the war, compared with 17% who support Fatah.

The economic fragility, insecurity and political weakness of the pa suggest that it would only be able to play a limited role in Gaza if asked to take control immediately. It retains a presence in its hospitals and manages its birth and death registry. It has 37,000 employees on its payroll in Gaza, including 19,000 in the security forces, though most have stayed at home for almost two decades under orders not to co-operate with Hamas. The pa speaks of plans to train thousands of security personnel in Jordan and send them to Gaza. But neither Israel nor Hamas has included the pa in ceasefire negotiations or the provision of aid. When the pa attempted to distribute supplies independently of Hamas, six of its cadres were killed.

The central question for many Palestinians is not whether the pa can reimpose its rule in Gaza, but whether it is possible to change the status quo in the West Bank, in the face of the pa’s decline and Israeli intransigence. That intransigence reflects not just the rise of hard-right extremism, but also a deeper shift in Israel. Surveyed in May by Pew, a pollster, 26% of Israeli adults said that the Jewish state can peacefully coexist with a future Palestine state, down from 50% a decade ago.

For some Palestinians the status quo is a lesser evil than provoking their foes. “It’s not the time for resistance,” says a militant-turned-café-owner in the West Bank city of Nablus. “We’d just give the settlers an opportunity to destroy what we’ve built.” For others, though, the attractions of violence are rising. “If the consequence of peaceful resistance is continued occupation then we should reconsider our options,” says one of Ramallah’s biggest businessmen. “It’s the first time anyone forced Israel back from the border and 200 soldiers to surrender,” says an Abbas loyalist when describing the Hamas attack. The target of violence could be Israel, its settlers, or the pa. And there are alarming signals about the impulses of the electorate. A recent psr survey found that 62% of West Bankers favour armed struggle. Two-thirds of Palestinians thought the Hamas attacks of October 7th were “correct”, and 91% denied that Hamas committed atrocities against civilians.

Some inside Fatah have considered marching on Mr Abbas’s fortress in Ramallah to topple him. Jihadist notions of takfir, or excommunication, are gaining ground, says a former member of Islamic Jihad in Nablus. Some shabab, or young men, are swayed by the idea that the pa is an apostate regime, he says. They refuse to pay taxes and clash with the security forces. Small groups plot to attack Israel and its settlers directly.

If violence is one potential means for Palestinians to disrupt the status quo, another is diplomacy and, in particular, the calls for the immediate international recognition of a Palestinian state. Some three-quarters of the world’s countries have recognised Palestinian statehood, but not America and the major European powers. One argument for recognition is symbolism: countries hope that by signalling their support for two-states they can prevent extremists on both sides from killing a two-state settlement. What is less clear is whether recognition will have any real effects on the ground.

State of change

Michael Sfard, an Israeli lawyer, sees little changing. “Recognition of Palestine doesn’t end the occupation or change the validity of the Oslo accords,” he says. Yet others think it would have immediate consequences, including for settlers. “All nationalities including Israelis would have to apply to live in our state and abide by our laws. This can’t happen as a fait accompli,” says Mr Zomlot. “The resources—land, water, minerals—are taken from our state and must be taxed.” With clearer legal sovereignty, some Palestinians could seek to tap their own resources, like offshore gas, and sign defence pacts. Some argue a new state could go further and seek to seize control of the border crossings with its neighbours, Jordan and Egypt.

Yet the interconnectedness of Israel, its settlements and the West Bank, means a unilateral act of separation could be incendiary, and could provoke an Israeli response. “If the un [Security Council] recognises a Palestine state, the Oslo accords would be rendered irrelevant because they deal with something less than a state,” says Itzik Bam, a settler lawyer and ally of Bezalel Smotrich, Israel’s ultranationalist finance minister. “We’ll stop transferring tax money that we collect for you, cancel all your vip cards for freedom of movement and watch you collapse.”

As the brutal war in Gaza drags on, the prospect of a Palestinian state is at once more relevant than ever and more distant. Trust on both sides has been shattered by the Hamas attacks and Israeli response. There remains a slender path towards it that involves new leadership at the pa (or a successor organisation) and the rebuilding of its democratic credentials; a plan for what to do in Gaza when Israel’s invasion ends and for its reunification with the West Bank; and a new centrist government in Israel ready to negotiate an end to the conflict with the Palestinians. It will also take heavy external pressure on both sides to work towards an agreement in which Israel and the Palestinians would have to make compromises. The dream of establishing a democratic Palestinian state alongside Israel may indeed be a long shot. But the alternative, of never-ending Palestinian atrophy, is one that offers the region only misery, extremism and war.