The Cost of Enduring Middle East Conflict Is Prohibitive

Earlier this week, I had a stimulating conversation with the internationally-recognized Indian economist, Sundeep Waslekar, concerning his recent research on the high losses that enduring and widespread conflicts in the Middle East have cost the societies involved, in particular Israel and Palestine.  Dr. Waslekar called the overall costs "prohibitve."   His group, Strategic Foresight Group of Mumbai, has analyzed and added up the economic-financial, military, environmental, and human costs from 1991-2008 and the failure of peace-making and obtaining peace treaties has resulted in an opportunity cost of $12 trilllon (using 2006 U.S. dollar values). 

The Strategic Foresight Group's study applies to the Middle East what it calls "a cost of conflict methodology" previously used on the ongoing conflicts over Kashmir between Pakistan and India and civil war in Sri Lanka.  Direct costs include human deaths, military expenditures, financial loses due to boycott, and the destruction of physical infrastructure, as well as indirect costs such as migration, grief and alienation, humiliation, growth of extremism, lack of civil society, missed regional trade and investment opportunities, and lower GDP projections.  On this latter point, for instance, Dr. Waslekar said an average Israeli, Saudi, Palestinian, and Lebanese would have enjoyed double the income level he/she currently possesses, whereas an average Iraqi would have been four times richer.  Despite the frequent citation currently of the word "trillion," $12,000,000,000,000 represents a tragic loss of opportunity and hope for every individual in the Middle East.   Regarding the lack of trade berween Israel and the Arab states and Iran, except for minor commerce with Egypt, Jordan, Palestine, and Qatar, the situation defies human logic; the study low-keys this result, calling it "abnormal."  The reader is reminded that even China and Taiwan, Pakistan and India, and Turkey and Greek have robust trade relations.

Dr. Waslekar stressed to me the numerical and emotional costs of the ongoing conflict to the Palestinian and Israeli peoples.  From the second intifada through 2007, there were 4,546 Palestinian fatalities, 650 of them caused by the Hamas-Fatah fighting.  More than 11,000 Palestinians have been detained.  In 1998, 420,241 out of 3,000,000 Palestinians lived below the poverty line; it was 820,000 in 2005.  The study asserts, "The most devastating impact of conflict has been the breakdown of the Palestinian institutions," and says that the ideological split between Hamas asd Fatah "has led to territorial division of spheres of influence, dissolution of an elected government, difficulties in the electoral process, and lack of effective political authority."  Because of both the Israeli occupation and the power struggle within the two Palestinian entities the educational system has severely suffered, unemployment and joblessness are quite high; time wasted because of checkpoints amounts to 120 million man-hours.  Deaths due to delay in medical treatment came to 51 Palestinians between 2000-2007.

Israel has also paid a huge cost.  Economic opportunity has been lost as a result of Arab hostility.  "It has to look for distant sources for its energy needs, when Gaza has significant natural gas reserves and Gulf states are the main suppliers of oil to the world.  Its scope for tourism, trade and investments in the region has narrowed."   Millitary buildups and regional arms races have forced Israel to build a powerful, albeit expenses army.  Casualities in nine wars since 1948 and miscellaneous territorial attacks such as more than 47,000 Qassam rocket and missile attacks from Gaza into green-line Israel have numbered over 22,400.   Children killed, for instance, since the al-Aqsa initifida of September 29, 2000, until today are close to 90.  The resulting insecurity, mistrust, and fear of the people of Israel has been, as we all know, inhibtors of reco deathsnciliation, peace processes, and peace making.  

If peace were to break out, the study claims Israel's peace dividend would be an annualized $9.1 billion, amounting per household to $4,423 per year for five years.  The peace dividend for the new Palestine is not calculated.  However, both states would benefit from not only cheaper oil and gas imports and the free flow of goods, but vast amounts of Sinai groundwater would be exploited, resulting in a surge in agricultural production in Gaza, the Negev, and West Bank.  Ending the prohibitive costs of the Arab-Israeli conflict is reason alone to seek a two-state settlement in the shortest period of time possible.