The Economics of Peace

Diplomacy is crucial, certainly, but economic development may hold the key to lasting peace between Israelis and Palestinians. Last week's opening of Gaza's international airport and this week's conference in Washington on economic assistance for the Palestinians give new momentum to what must be a sustained, long-term effort.

The airport begins to remove a huge barrier to "growing" the economy of Gaza and the West Bank. It creates a transportation link to the outside world. But the areas inside the jurisdiction of Yasser Arafat's Palestinian Authority remain in virtual economic quarantine.

The reason, manifestly, is Israel's fear that less hermetically sealed borders could mean open doors for terrorists. Palestinian workers and products are thus blocked from the streams of commerce. One result is disastrous unemployment. Another, ironically, is the despair and anger that breed radicalism.

The hundreds of millions of dollars pledged by President Clinton and other leaders are part of the solution. Palestinian infrastructure can be improved, education enhanced, and industry germinated. For his part, Mr. Arafat will have to prove he can use the aid effectively, without graft.

Ultimately, however, the biggest contribution to Palestinian development will have to come from next door. Israel's business community, by and large, favors normalization with the Palestinians and the wider commercial normalization that could foster within the region. That vision needs larger scope.

The security partnership solidified by the Wye agreement will be stronger if joined to a vital economic partnership. The Palestinian Authority needs to be able to point to more projects like the Gaza airport - tangible proofs that peace does pay dividends in jobs and income. Then its security work will be seen as serving Palestinian ends, not just doing Israel's bidding.

The time to start building a mutually beneficial relationship between Israel and the Palestinian nation evolving on its doorstep is now. Mr. Clinton's visit to both Gaza and Israel later in the month should stress that.

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