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RAND Corporation predicts a bleak future for Israel

The unsustainability of Israel's occupation is acknowledged almost universally, yet its permanence is the only reality known to most Jews and Palestinians. Its supposed temporary nature has not prevented Israel from becoming more entrenched in its occupation, thus making any future peace deal unviable.

This unbridgeable divide is reflected in the way that new generations of Israelis make increasingly greater demands on Palestinians, expecting even greater concessions, while Palestinians have reached a near consensus that they have made all the major historical concessions and there is nothing left for them to give other than to admit total submission and humiliation. No Palestinian will agree to that.

It's an impasse, it seems, without any political solution in spite of the never-ending pursuit of an illusory two-state solution. The supposed unsustainability of the status quo, upon which rest all political negotiations and huge expenditure of money and resources – on the back of persistent failure, it should be added – cannot conceal the primary reason for this; the status quo actually suits Israel and, as the occupying power, it will only end the situation of injustice and oppression if it views the impasse to be less appealing than a peaceful resolution.

It sounds counter-intuitive but the argument is increasingly harder to dispute, especially given that time after time new studies show the enormous cost of the Israeli occupation. It is, though, extremely difficult to quantify: how do you put a price on human life; account for human deprivation; count lost opportunities? How do you put a price on non-economic factors like religion that have a powerful influence on political decision-making?

Notwithstanding such difficulties, in its new report, The Costs of Israeli-Palestinian Conflict, the RAND Corporation makes the best possible estimate of the financial cost of occupation. The report, financed by the late David K Richards, an investment manager and philanthropist who funded unique research on what it would take to make an independent Palestinian state viable, should make uneasy reading for many players, above all those in Israel.

The detailed 273-page report states that, "Israel could face catastrophic consequences if it fails to end the mistreatment of Palestinians under its rule, whether in the occupied territories or in Israel itself." It examines the net costs and benefits to Israelis and Palestinians if the current impasse endures over the next ten years, relative to five alternative trajectories outlined in the report, which are: a two-state solution; coordinated unilateral withdrawal by Israel; uncoordinated unilateral withdrawal by Israel; nonviolent resistance; and violent uprising.

A noticeable omission from the list of scenarios is the one-state solution which the report admits is a "trend amongst some scholars" who believe that "we are marching toward a one-state solution unless Israel opts for unilateral withdrawal."

The reasons for omitting the scenario, the authors' stress, are the general lack of clarity of this outcome: "…exactly what are the one-state options and how a single state – even a federation – would operate has not been extensively examined." They point out that further "research is needed on how – and whether – a one-state solution could be structured in a way that preserves democratic principles."

The report also examines two broader questions. What noneconomic factors surrounding the conflict might influence the parties' assessments of the value of alternative trajectories? And what are the longer-term implications – beyond the next ten years – of the impasse for Israel, the West Bank and Gaza, and the international community?

It suggests that the two-state solution is the best possible scenario for both Israelis and Palestinians, though Palestinians will enjoy far greater economic growth than Israel relative to their current economic conditions.

In the best-case scenario, the combined ten-year benefit to Israel resulting from a two state solution is $123 billion, which is half of Israel's 2014 GDP. The equivalent figure for the Palestinians is $50 billion, nearly three times the size of their 2014 GDP.

Nonviolent resistance would cost Palestinians $12 billion over ten years and the Israelis $80 billion. Violent uprising, the worst of all possible scenarios, would cost Israel $250 billion (slightly less than its 2014 GDP) and the Palestinians $46 billion (more than three times their 2014 GDP).

Interestingly, the report imagines that security costs will rise for both parties in all scenarios. "In the short term, security costs are unlikely to fall significantly for either party under any scenario. But, under a two-state solution, Palestinian security expenditures would likely rise rapidly as the role of the Palestinian National Security Forces expands substantially both internally and externally. In uncoordinated withdrawal, nonviolent resistance, or a violent uprising, we expect both Israeli and Palestinian security costs to rise. Israel sees unchanged/increased security risks under any scenario. Any deviation from its current approach to security involves increased uncertainty and greater perceived security risk."

The cost implications for the international community in each scenario are assumed to be at current levels or higher. The US will continue to fund Israel and additional funding from the international community will be required in a two-state scenario to pay for the relocation of settlers, perhaps up to $30 billion.

The international community will also need to continue funding the PA at similar levels and new resources will need to be found in order to take advantage of economic opportunities that will arise from Israel's withdrawal from Area C, which takes up nearly 70 per cent of the West Bank.

Israel's position in a scenario characterised by a violent uprising will be compounded further through the possible collapse of the Palestinian Authority. In such a scenario, the RAND report estimates that the international community may actually have reduced expenditures. In this case, the flow of aid and direct support from the international community to the PA would slow considerably as Israel – the occupying power – will have to assume the cost of health, education and social affairs for the Palestinians in the absence of the authority.

So why has the occupation endured despite obvious economic benefits to all parties concerned if it is ended? The report offers some good insights: "Either the parties do not properly recognise the economic benefits of an agreement, or the economic benefits of an agreement have not been and may not be high enough to outweigh the imputed costs of other factors associated with the present trends, including the perceived costs of such intangible factors as distrust and fear of relinquishing some degree of security."

It offers a number of other barriers to resolving the impasse, including power imbalance; Israel, the country with by far the greater power, has a smaller economic incentive to diverge from the present path. Since the Israeli economy and the average per capita income are more than 15 times greater than in the Palestinian economy, absolute changes have a relatively small effect on individual Israelis. The opposite is true for the Palestinian economy. The potential percentage changes in income for the average Israeli are far smaller than changes for the average Palestinian.

Israel is by far the dominant force in all respects, because its economy is so much larger than that of the Palestinians. As such, Israel has larger absolute gains from peace or losses from violence, but in percentage terms, the effect on the average Israeli is much less.

Israel has learned how to manage security vis-à-vis the Palestinians at relatively low cost. This undesirable factor in maintaining the status quo has been compounded through international donors; the cost to both Israelis and Palestinians would be significantly higher were it not for donor aid that has, to some extent, insulated both parties from the total cost of the current situation and lessened incentives to pursue a final status agreement.

The picture of the conflict in ten years, as the authors admit, does not preclude a scenario or a combination of scenarios being played out now, which is clearly the case. Palestinians have been exercising non-violent and at times even violent resistance to Israeli occupation, most notably in the international arena where they have pushed for international recognition and membership of influential international bodies such as the International Criminal Court.

Israel has also taken unilateral steps, including the withdrawal of its settlers from Gaza in 2005 and maintaining a tight siege of the territory; unabated settlement construction in the occupied West Bank and Jerusalem; and construction of the illegal wall. All have fast-forwarded future scenarios.

These steps, the report acknowledges, fade future options and opportunities with parties becoming trapped in circumstances that may be quite far from the outcomes imagined at earlier stages of the conflict.

It's hard not to see how, even at this present moment, Israel's relentless expansionism and suppression of the Palestinians has not already pushed the country into a corner and made the two-state solution based on the parameters that the report itself is premised up on – Israeli withdrawal to the 1967 borders, return of up to 600,000 refuges, relocation of 100,000 settlers – an impossible and unviable option.

What's needed is for RAND and other international bodies to carry out similar detailed examination of alternative solutions like the one-state scenario, which has been avoided, it seems, at all costs. Is it because powerful research centres are swayed towards legitimising the fictitious road map and two-state solution?

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.

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