Rand Corp. examines costs, benefits to five Israeli-Palestinian scenarios

With relations between Israelis and Palestinians in deep crisis and bilateral talks going nowhere, the debate over the benefit of a peace agreement -- or the costs of failing to reach one -- has often been carried out in the abstract.

Now a project by the Rand Corp. seeks to translate terms such as “the price of war” and “both sides stand to gain from resolving the conflict” into absolute numbers and price tags.

“The Costs of the Israeli-Palestinian Conflict,” a study by the Santa Monica-based think tank, was produced by researchers with the help of economists and other experts from the United States, Europe, Israel and the Palestinian Authority.

Presented Monday at the Jerusalem Press Club and published on the think tank’s website, the study examined five possible scenarios ranging from a peace agreement to a violent uprising, and estimated their net cost and benefit over the next 10 years.

The trajectories examined are a two-state solution, unilateral Israeli withdrawal (coordinated or not) and Palestinian resistance (violent or not), and calculations considered factors such as direct costs of security or relocating settlers, the estimated cost of lost opportunities, the gain or loss to the gross domestic product of both sides. Also examined was the cost to the international community in each scenario.

The study finds the two-state solution to be the most economically beneficial to both sides, delivering a $123-billion boon to Israel and $50 billion to the Palestinians over 10 years. That would represent a 5.2% growth in GDP for Israelis and nearly 50% for Palestinians as trade, investment, employment and tourism increase overall.

The opposite scenario would be renewed violence in the Gaza Strip and the West Bank that could spread to involve others, such as the Lebanon-based Islamic group Hezbollah.

A violent Palestinian uprising could cost Israel as much as $250 billion in increased security expenditure and slash economic growth in half due in part to lost trade, employment and investment, as well as boycotts. Such a scenario would see the end of Palestinian employment in Israel, drive up prices and services including banking and healthcare and plunge Palestinian GDP down nearly 46%.

The team studied two options for a unilateral Israeli withdrawal from the West Bank -- one in coordination with the Palestinians and international community, the other uncoordinated. Both scenarios would involve removing varying numbers of settlements and relocating settlers inside Israel’s internationally recognized borders. While Israeli expenditure on settlements would decrease, the high cost of relocation could be detrimental to Israeli economy without help from the international community in case of a coordinated move.

An additional possibility examined was nonviolent resistance by Palestinians, in which calculations took into account the cost of Palestinian legal efforts at the United Nations and other international bodies, trade restrictions on Israel and ongoing popular protests.

Check out the interactive calculator on the Rand website, where one can choose any one of the five scenarios and adjust parameters such as the number of Israeli settlers or Palestinian refugees to be relocated, the defense budget, control of natural resources, banking, trade, services and other cost factors.

An abstract on the study website explained that the overarching goal of the project was to provide the parties with comprehensive information about the available choices, with hopes of promoting a discussion of policy based on facts.

Sobelman is a special correspondent.