Use `stick' of aid cuts to promote peace

September 27, 2005|By Donald L. Losman

WASHINGTON -- Palestinian-Israeli peace is as illusive as ever, despite the recent Gaza withdrawal. Although the United States and Europe are launching a major aid initiative, success is most likely to be achieved via better-designed economic incentives.

Use of the economic carrot is hardly new. The United States helped cement the 1979 Israeli-Egyptian peace treaty with promises of substantial aid to both parties. In short, we "bought" a peace, and our annual $5 billion-plus in aid is one strong reason why it continues.

The more than $3 billion that Israel receives annually has given us a critical seat at its decision-making table. But this economic carrot can be even more effective if the economic stick is also used. Similarly, The Group of Eight summit in July decided to double international aid to the Palestinian Authority, raising it to $2 billion annually. Here, too, the stick must also be used or the goal of peace will remain elusive.

Israel will not be more accommodating to Palestinian desires unless terrorism is ended. Any Palestinian terrorist actions against Israelis anywhere must result in an immediate reduction of aid by some predetermined amount. And the visibility of this potential (and actual, if necessary) economic penalty must be very high. Continuing terrorism automatically will mean less aid. This will bring home the costs of terrorism to the average Palestinian, making it very transparent that those who attack the Israeli "enemy" will be simultaneously attacking the bread and butter of ordinary Palestinians.

But the PA can partially reduce such penalties by coming out with broadly distributed and totally unambiguous condemnations of terrorist actions. Israeli Prime Minister Ariel Sharon did exactly that in early August after the killing of four Israeli Arabs by an AWOL Israeli soldier, labeling it "a reprehensible act by a bloodthirsty Jewish terrorist." Without public statements condemning terrorism, such actions are portrayed as heroic deeds.

In short, good behavior must be economically rewarded; bad behavior must be punished.

Hate incitement must also be terminated. In May, for example, in a sermon televised on PA TV, a sheik on the public payroll preached that Jews were "behind all the civil strife in this world. ... We have ruled the world before, and ... we will rule ... again. ... The stones and trees will want the Muslims to finish off every Jew." This is hardly the way to prepare people to live with their neighbors. Again, financial penalties should be severe. Since about $1.5 billion in aid to the Palestinians is to fund salaries and pensions, withholding this money would be a major incentive for Palestinian leaders to muzzle hate-mongers.

Those same criteria apply to Israel. Terrorist actions by Israelis against Arabs must result in reductions in U.S. aid. Public statements of condemnation can partially reduce those deductions. Settlement activities deemed contrary to Israeli promises (and U.S. expectations) would also result in financial penalties, raising the cost to all Israelis of the actions undertaken for a few.

Palestinian-Israeli peace, of course, also requires support from the larger Arab world. Demonization of Israel and plaudits for "heroic" acts of Palestinian terrorism are widespread, further encouraging such behavior. Here, too, the economic stick can be employed. Egypt receives more than $2 billion in U.S. aid annually. While it has undertaken efforts to lessen Palestinian-Israeli tensions, the Egyptian media are actively engaged in hate generation.

Ihsan Al-Tarabulsi, a Lebanese writer living in the United States, concluded that "the Egyptian media and the Egyptian intellectual community are largely the primary causes of the plight of the Palestinians, through their emotional, unrealistic ... and sloganistic positions toward the Palestinian intifadas."

For example, in late 2002, Egyptian state television aired a 30-part miniseries, Horseman without a Horse, that portrayed a worldwide Jewish conspiracy to control the globe. Such hate generation on public television must end. The Egyptian government has shown little reluctance to muzzle those who criticize it. It needs to apply similar action against those who fan the fires of hatred. It can be made clear quietly to Egyptian President Hosni Mubarak that failing to do so will be costly. Similar pressures should be applied to other Arab leaderships.

Let's not delude ourselves into believing that people whose bellies are full but whose psyches are filled with hate will live peacefully with their neighbors. They will not. Positive economic incentives can relieve human suffering, but the economic stick is often a better means of changing behavior. We must be willing to use both tools.

Donald L. Losman teaches economics and Middle East courses at the Industrial College of the Armed Forces at the National Defense University. The views expressed are his own.

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