Economic Approaches to Peace: Why They Fail

In recent years, the strategy of economic development as a means of conflict resolution has gained traction in various global situations, particularly under initiatives led by high-profile figures like former U.S. President Donald Trump. This article delves into the effectiveness of such approaches, especially in contexts like the Israel-Palestine conflict, and examines historical precedents that suggest this tactic may be fundamentally flawed.

The “Business” Approach to Peace-Making

President Trump has been an advocate for what he describes as “peace-making” through economic incentives, hoping to resolve international conflicts by offering economic rewards or threats. This method was recently observed in discussions surrounding conflicts in Gaza, Ukraine, and between Israel and Syria. While many may view this approach as innovative, it echoes long-standing beliefs in Western neoliberal peace strategies carried out in the Global South over recent decades.

Historical Context: Economic Peace Initiatives

The Israeli-Palestinian conflict serves as a relevant case study. The idea of “economic peace” surfaced in the early 1990s with Israeli Foreign Minister Shimon Peres championing it as part of the peace process. He promoted a vision of a “New Middle East,” proposing that economic collaboration could lead to stability and improved living standards for both Israelis and Palestinians.

Peres’s plan sought to position Israel as the economic hub of the Arab world through initiatives focused on transportation, energy, and industrial zones. However, this strategy failed to address the ongoing occupation, leading to growing discontent among Palestinians. The result was a surge of anger that contributed to the second Intifada following the Oslo Accords.

The Consequences of Neoliberal Peace Strategies

Another attempt at an economic solution emerged in 2007 when the Quartet — comprising the United Nations, the European Union, the U.S., and Russia — alongside then-envoy Tony Blair, attempted to revive the Palestinian economy, which had significantly deteriorated. Blair suggested a series of “quick impact” projects, aiming to bring immediate economic relief to the Palestinians. This approach aligned with the policies of Salam Fayyad, who advocated for economic growth as a stepping stone to statehood.

Fayyadism, as it became known, was portrayed as a means to achieve Palestinian autonomy through economic development. However, it offered more benefits to a select few — mostly connected elites — rather than the broader Palestinian population, who saw little improvement in their living conditions.

This focus on economic management rather than genuine liberation ultimately reinforced existing structures of oppression, allowing Israel to expand its settlements while providing superficial solutions that failed to tackle the underlying issues of occupation.

Contemporary Applications and Their Pitfalls

The recent proposals for economic development in Gaza, introduced by Trump’s advisor Jared Kushner, are unlikely to succeed for similar reasons. These plans appear to favor the interests of global and regional elites while neglecting the core human and national rights of the Palestinian people. The focus on security mainly benefits the occupying powers and reduces Palestinians to a depoliticized labor force.

Additionally, proposals for the Israeli-occupied Golan Heights and the conflict in Ukraine reflect a similar pattern. In the Golan, plans to create a joint economic zone highlight the prioritization of Israeli security interests, while in Ukraine, a push for a free economic zone in the Donbas region could further diminish Ukraine’s economic resources, all on the premise of stability and investment without addressing the political realities on the ground.

The Core Challenge of Economic Solutions

The recurring issue with these neoliberal solutions is their failure to produce meaningful guarantees for stability. Economic investments cannot thrive in the absence of solid political settlements; without addressing cultural and national interests, such plans remain ineffective. Ultimately, nations are built upon shared identities and aspirations, not merely consumers or labor forces.

For genuine conflict resolution, economic incentives must be a follow-up to a political agreement that recognizes the self-determination of local populations. Any approach that disregards collective rights and international law is destined for failure. The road to peace must first prioritize these fundamental principles, a stance that often counters the prevailing neoliberal logic.