Is a Palestinian State Viable Today?

Beyond the issue of bad faith and irresponsibility of Palestinian authorities in calling for a unilateral declaration of a Palestinian state is the question of whether such a state is politically and economically viable.  Politically, would it meet the four qualifications for statehood mentioned in the Montevideo Convention on the Rights and Duties of States signed on December 26, 1933: a permanent population; a defined territory; a government; and a capacity to enter into relations with other states?

Were a Palestinian state to be established today few of those qualifications would be met, and it is probable that it would become a "failed state." Consider the question of population. Over two million Palestinians live east of the 1947 armistice lines, another million in the Gaza Strip, and about a million in Israel with Israeli citizenship.  Over half of Jordan's population is Palestinian in origin. That hardly epitomizes a "permanent" population within a defined territory. Hundreds of thousands more are located in surrounding Arab countries.  

 Millions are registered as "refugees" in the camps run by UNRWA (the United Nations Relief and Works Organization). UNRWA defines a "refugee" as a person descended from those displaced in the 1948-49 war irrespective of current citizenship or place of birth. There are two other problematic factors. It is unclear what part of the diffused Palestinian population would want to live in a Palestinian state; certainly Israeli Arabs have no such desire. Also, the politically explosive issue of Palestinian insistence on the right of return for refugees makes demographic counting futile.

Palestinian geography is no more identifiable. In spite of constant references by political actors to the "1967 lines" as the defining borders, the territory of a Palestinian state still remains undefined.  The geography and borders can only result from good faith negotiations between Israel and appropriate Palestinian representatives.

The immediate problem is the nature of those representatives. Certainly, Hamas does not qualify, and negotiation is impossible if Hamas is included in any Palestinian governing entity. Since the Oslo Accords of 1993 the Palestinian Authority (PA) exists as a quasi-government, exercising authority in the West Bank and, for a time, in Gaza. However, no real infrastructure has been created, and full autonomy did not follow Oslo.  Instead, Yasser Arafat, as president of the PA, created both a mukabarat (secret services) which absorbed 60% of the PA's budget, and a corrupt and unaccountable regime.  Which largely remains today.  The PA does not have the monopoly of the legitimate use of physical force.  It was defeated politically and militarily by Hamas, which controls Gaza with its own security forces, provides some services for the population, but above all engages in militant aggression against Israeli civilians.  In essence there are two Palestinian "governments" in continuing conflict.

At present the fourth qualification, that of living in peace with Israeli neighbors, appears improbable.  Although Yasser Arafat, as part of the Oslo Accords, appeared to recognize the state of Israel, the Palestinian Covenant, containing the statement that the "partition of Palestine in 1947, and the establishment of the state of Israel are entirely illegal" has never been formally amended.  Even more starkly, the Hamas Charter advocates the destruction of Israel by jihad.  Hamas has tried to implement this by its constant attacks by rockets and missiles against Israeli civilians.

Equally important as the political problems is the economic outlook. Both the World Bank and the International Monetary Fund have issued optimistic, if misguided, reports in recent years, noting that if the PA maintains its performance in nation-building and in delivery of public services it is well positioned to establish a state in the near future. One can accept that the PA has strengthened some institutions and developed certain services in the territory it controls, and that the Palestinian economy has grown, a growth estimated at 9.3% in 2010.

But is the PA's economic performance record fundamentally sound? First, the growth stated is from a very low base established in the second intifada in 2000. It does not appear to be sustainable. It is still primarily confined to the non-tradable sector, in which the fastest growing parts are agriculture, hotels, and restaurants, and the payroll of the PA. Manufacturing output, in contrast, has fallen. Finally, the growth is largely the result of funds given by donors who are more reluctant to supply funds because of the extremism of Hamas.

Unemployment in the West Bank and Gaza is among the highest in the world It peaked in 2002 at about 30%; now it is 16.9% in the West Bank, and 37.4 % in Gaza. The situation is particularly serious for youth whose unemployment reached 25% in the West Bank and 52% in Gaza. GDP per capita has fluctuated widely but real wages have decreased in value. Paradoxically, Israel and its settlements are a major employer of Palestinian labor, now numbering about 80,000, who account for about ¼ of Palestinian payroll.  Equally, the main trading partner is Israel which accounts for 89% of Palestinian exports and 81% of imports. About one-fifth of the Palestinian population lives in poverty.

Because growth is largely donor-driven, a vibrant private economic sector is lacking. It is unlikely that outside funding, from the United States, the European Union, and Arab states, would be maintained at present levels, let alone increased, while Hamas is part of any Palestinian governing authority. In recent years Arab states have become less generous: in 2009 they gave the Palestinians $462 million, in 2010 $287, and so far in 2011 $78 million. Of the $971 million pledged to the Palestinians only $330 million has actually been given. Consequently, the PA is heavily in debt.

No doubt some improvement in the Palestinian economy would occur if Israel reduced restrictions on movement and access, imposed for security reasons. But such changes would do little to remedy the fundamental systemic problems of the Palestinians.  Would a Palestinian entity automatically become a "failed state" akin to Somalia, Chad, or Zimbabwe, where anarchy, civil war, and ethnic and religious strife prevail? If the fundamental issues concerning Israel are resolved and if Hamas is prepared to accept the state of Israel, both highly unlikely at the moment, a state of Palestine could be as viable as other struggling Arab states. But if the state is established under present conditions the outcome is likely to be less felicitous. To attempt to establish such a state now might well jeopardize the chances of its viability and success in the future.

Michael Curtis is a Distinguished Professor Emeritus of Political Science at Rutgers University.