Trump’s Sliced-and-diced Palestine Is a Recipe for Economic Failure

Of all the people who read all the way through “Peace to Prosperity,” the documenting outlining the Trump peace plan, probably only a few noticed a note on its map of the future State of Palestine. Hanging down by a line representing a connecting road from the Gaza Strip is a blue blob labeled a future “high-tech manufacturing industrial zone.”

– Haaretz Weekly Ep. 59

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Today that space is empty desert, which by itself is no reason why it couldn’t become a manufacturing zone (at least, there’s plenty of potential for solar power).

But a successful industrial zone doesn’t arise because planners –  or even worse, politicians – decide on it. Yes, they can build infrastructure, provide tax breaks and grant subsidies and cheap loans, but as Israel’s own experience amply demonstrates, that’s not nearly enough.

You need skilled entrepreneurs, a trained and disciplined workforce, and good government: you need not only to build infrastructure but to maintain it and provide an encouraging regulatory environment. If all these things could be created by planners with good intentions, the world would be suffering a lot less poverty and underdevelopment.

But for every Singapore and China there is, there are many more Bolivias and Senegals.

The Trump plan proposes a bunch of ways to get around that giant pothole on the road to Palestinian prosperity. First is by lavishing $50 billion over 10 years in grants and subsidized loans. Second is by giving Palestinians crash courses in governance and best-practice regulations as well as by upgrading schools and maybe a free-trade agreement with the United States.

That looks like all the ingredients Palestinian needs for the economic takeoff the Trump plan envisions — except that it was all done at the start of the Oslo process, too. What happened, however, is that the development money was mostly squandered and good-government programs had no serious impact on the way the Palestinian Authority rules.