“The two-state solution is over,” Palestinian negotiator Saeb Erekat told reporters, responding to Donald Trump’s recognition of Jerusalem as Israel’s capital. “Now is the time to transform the struggle for one state with equal rights for everyone living in historic Palestine, from the river to the sea.” As The New York Times subsequently reported, Erekat is hardly alone. The “over”-ness of “two states”—albeit with radical disagreements about the character of a hypothetical single state—has been claimed by ideological zealots, severe liberals, and exasperated peacemakers alike.
On the Palestinian side, one hears about the almost 700,000 Israeli settlers’ making annexation an established fact; on the Israeli side, about preventing recalcitrant Palestinian terrorists from firing missiles at Ben-Gurion Airport. For those of us living in Jerusalem, just speaking of two states, implying two capitals—but also, vaguely, some redivision of the city—invites skeptical, or pitying, stares from most Jews, as well as from Arabs, over a thousand of whom applied for Israeli citizenship in 2016.
The problem with “transforming the struggle” as Erekat suggests, however, is that every provisional argument against two states is an absolute argument against one. You can splice the word “solution” onto the words “one-state,” but this does not promise resolution of the conflict—certainly not in the way of South Africa, the model that seems to be in the back of many minds when a “one-state solution” is proposed (or, for that matter, when the term “apartheid” is thrown around). For all its trials, today’s South Africa emerged from a system of colonial racial enslavement in a country with a unifying language and a common, if tortured, history—white farm-owners, mine-owners, and industrialists lording it over black, native workers.
Colonial Zionist pioneers, in contrast, harmed native Palestinians by working toward Jewish cultural and economic self-sufficiency, and thus the methodical displacement of the Palestinian peasantry—which is why, at least since the Peel Commission in 1937, an arrangement like “partition” could be entertained. The Israeli occupation may be, in its own way, as cruel as apartheid. But comparable cruelty does not necessarily entail a similar political architecture. (I suspect Erekat knows this, but was hoping to shake Israelis out of their complacency.)
The justification for the two-state solution is rooted, after all, in two persistent truths: first, that two separate national communities, each with a different language, historical grievance, sense of identity in the wider world, and dominant religious culture, have been squeezed by tragic events into a single small space. Each wants “self-determination” (though anachronistic meanings for this term may be a part of the problem). Second, that a majority on each side prefers some form of compromise to a fight to the finish. Ideological rejectionists on each side number roughly a third of their respective populations—by no means a small number, to which I’ll return. But a constituency for peace remains and its numbers fall—as survey researchers Khalil Shikaki and Dahlia Scheindlin have shown—because moderate majorities “increasingly doubt its viability,” largely because they have grown jaded regarding the intentions of the other side, not because, in principle, they refuse the compromises two states would entail.
This point needs emphasis because rash talk about one state has been obscuring it. Palestinian youth have told Shikaki of their growing interest in pursuing full civil rights in a single state, but this is really a sign of gloom and no small measure of spite—“the conviction that extremists run Israel, and a certain alienation from the corruptions of the Palestinian Authority,” Shikaki told me. His latest polling, conducted at the time of Trump’s Jerusalem statement, shows a depressing spike in the number of young Palestinians preferring “armed struggle” over the status quo—though they know that Israel, a nuclear state, cannot be invaded and destroyed by regional neighbors, and have witnessed the horrors of civil war in Syria. Israelis, for their part, may indeed be complacent regarding the status quo, but most understand that—even if the occupation can be walled off—violent polarization means that their children and grandchildren will be patrolling hostile streets, while over a fifth of their own citizens, Arab citizens, grow inflamed on their side of the wall.
So, a two-state solution can be preempted by catastrophe, inertia, demagogy, venal leaders, weak leaders—or it can be pushed off to another generation. But it cannot just be “over.” In no conceivable peace process will civilians on either side, as if awakening to a revelation, abolish national affinities and seriously wish for a single state, with a single parliament. Such a state would notionally take the divided citizens of the Israeli state—which is democratic in many respects, but pampers rabbinic theocrats and nationalistic populists—and jam them together with residents of the Palestinian territories, also divided, with a majority too accustomed to authoritarian leaders, and who take the Islamic faith, clan loyalties, and regional Arabism for granted.
This single state would have an economy, and presumably a social safety net, that would have to accommodate both Israelis, whose average annual income is (as of 2016) more than $37,000, and Palestinians, whose income is under $3,000. Imagine a parliament trying to budget low-cost Palestinian housing by reducing funds for the Hebrew University’s Law School. It is far easier to imagine continued occupation, insurgency, or, in the case of an explosion of violence, Bosnian levels of civil strife and ethnic cleansing. “The status quo is preferred only by a small minority,” Scheindlin told me. “As attitudes move away from the two-state solution, it’s peace against war—so we’d better find an acceptable peace.”
None of which denies the need for “transformation.” The peacemaking of the Oslo Accords is stuck over the same linked problems that thwarted peacemaking during the previous generation: terrorism, settlements, Jerusalem, borders, the economy, and refugees. It seems vain to blame only leaders or “narratives” for the impasse, and not the way peacemakers have framed the peace that is notionally to be made. “One state” is a mirage. But so, now, is “two states”—unless this portends an overt structure of independence and interdependence: in effect, a confederation. No other arrangement can work. Talk of peace will seem implausible without a vivid sense of where two states must inescapably lead, and what confederation will look like.
To their credit, two-state advocates on the Israeli left and Palestinian secular center have insisted on democratic norms: individual dignity, the rights of civil society, national sovereignty deriving from the consent of the governed. But most also frame the solution as separation—a “dignified divorce,” as the writer Amos Oz put it. They elide demographic facts, or imminent dangers, that critics of two states reasonably believe, most ordinary people see, and extremists on both sides shrewdly traffic in—none of which would disappear if these same extremists were forced to the margins. These facts, or threats, include the compactness of the territory, the vulnerability of any agreement to subsequent terrorist assaults, and the need for continued cross-border jurisdictional integration for many state services, a common administration of (at least) municipal Jerusalem, a now common urban infrastructure, and a common business ecosystem.
Just consider the scale of the two states. From Beersheba in the south to the northern border with Lebanon, Israel and Palestine together constitute a territory and population roughly comparable to greater Los Angeles: perhaps 7,000 square miles, in which about 13 million people live—8.5 million citizens in Israel (about a fifth of whom are Arabs), and a little under 5 million residents of the West Bank and Gaza. (Except for the Red Sea tourist port of Eilat, most of what’s south of Beersheba is unpopulated, if picturesque, desert.) The parts of Israel and Palestine that are populated and urbanized are roughly equal in size: two arcs of cities and towns facing each other, completing an ellipse of roads and bridges. (Israel’s half also includes high-speed trains, and is far more developed.) The distance from Herzliya, Israel’s high-tech zone, to Nablus—one of Palestine’s two industrial centers, and home of its securities exchange—is about twenty-five miles, roughly the distance from Santa Monica to Long Beach. Palestinians claim that, in accepting the Green Line (the 1949 armistice line) as a border, they are resigning themselves to just 22 percent of historic Palestine. This is true but misleading, especially if it is meant to imply correspondingly reduced economic prospects (to which I shall also return).
Living cheek-by-jowl has important implications for the security environment. Ben-Gurion Airport is, indeed, about eight miles from the 1967 border; planes circling from the east virtually overfly it. Irrespective of settlements, Israeli security hawks are hardly wrong to infer that one shoulder-fired missile could impair Israeli international commerce and tourism for months—or that, when one third of Palestinian society supports Hamas, there would be no lack of candidates to fire one. Likewise, about a third of Israeli Jews suppose the whole Land of Israel to be their divine patrimony; in the dozen or so yeshivas established on the plaza facing the Western Wall—a few hundred yards from the Al-Aqsa Mosque and the Mosque of Omar—one often hears exhortations to clear the site and build a Third Temple. Jewish fanatics already killed a prime minister of Israel.
Peace, Spinoza famously said, is not the absence of violence but the presence of justice. But the presence of justice does not portend the absence of violence. Suppose 1 percent of each no-compromise third of their populations is inclined to ideological fanaticism; suppose only 1 percent of those would entertain an act of terror. That’s more than 2,000 Israelis and 1,500 Palestinians. The sides, in other words, exhibit what Nassim Nicholas Taleb (himself once a youth in war-torn Lebanon) has termed “fragility”: a system of interdependencies so dense that one rare terrorist act—a “black swan” event—will collapse any peace by pulling people away from a hopeful center to cynical extremes.
Indeed, if self-determination means national autonomy in security matters, it is a recipe for disintegration. Israeli and Palestinian governments would be seen, respectively, as accountable for the actions of people acting from their territories—“You’re sovereign, so you’re responsible.” They would make themselves hostage to extremists. Any sustainable solution would entail security cooperation—conspicuous security cooperation—making plain the two states’ reciprocal responsibility for the entire environment. The failure to prevent a terrorist atrocity, which will almost certainly come, must be seen as a joint failure, not one side’s bloody-minded effort to gain advantage over the other.
Yet security is only one jurisdiction where scale and demography force a high degree of collaboration—borders that are more or less permeable. The two states would be drilling into the same water table in the Judaean Hills, using the same desalination plants to preserve the Sea of Galilee and Dead Sea Basin, and managing sewage treatment from Jerusalem into the Jordan Valley. They would be sharing much of the same electrical grid and, more important, the distribution of limited telecommunications frequencies necessary for streaming mobile data. They would be sharing environmental regulations dealing with air quality and the management of public health risks, especially epidemiological risks. (“When there is plague in Qalqilya, there are patients in Kfar Saba,” General Yoav Mordechai, coordinator of Government Activities in the Territories, recently told the Globes business conference.) They would have to coordinate the extension of roads and bridges and train systems. They would need to coordinate forest-fire management (when fires broke out in the Carmel Mountains in 2010, and again in 2016, Palestinian Fire and Rescue sent mobile teams).
Such cautionary reasons for political integration portend inevitable—and promising—economic integration. Jerusalem draws about three and a half million tourists a year. This is far less than its potential—Prague gets seven million, Florence, nine. Four million more tourists a year would add, on a recurring basis, about $9 billion to the two states’ common GDP; indeed, tourism, especially from the Gulf, would become one the biggest drivers of Palestine’s economy, as well as boost incomes for Jerusalem’s Jewish neighborhoods, just under half of whose children (especially those of the Ultra-Orthodox community) are under the poverty line. But allowing tourists to move about freely is hardly just a matter of making checkpoints perfunctory.
The banking system would need to be highly integrated, so that tourists’ credit cards could operate everywhere—so that Israeli shekels and Palestinian cash (now mainly shekels and Jordanian dinars) could be accepted and parked in banks across the border. Sales tax collection would have to standardized, so that neither side’s retail stores and restaurants would race the other’s to the bottom. International hotel chains, tour guide, car rental, and insurance companies would expect to contract with, and meet the standards of, a single tourism agency for both states; they would expect unimpeded access to customers moving, say, from West Jerusalem to Jericho and Masada.
What’s true for tourism would be true in many other sectors. Right now, two thirds of Palestine’s imports come from Israel; four fifths of its exports go to Israel. In the event of peace, Israeli construction companies—also hauling, plumbing, logistics, food processing, and technical infrastructure companies—would be drawn into a huge building and training effort. There would have to be a common streamlined authority for forming partnerships and enforcing supplier contracts.
There would need to be common free-trade regulations complying with European Union and American regulations currently applied to Israel alone—and common tax-free investment zones to promote direct foreign investment. There would need to be cooperation on engineering and biopharmaceutical standards. There would need to be cooperation on immigration and labor standards, to keep the larger Israel-Palestine zone from becoming a magnet for impoverished laborers from the Nile Delta or sub-Saharan Africa.
The inference for action should be obvious. To defend, or even entertain, any two-state solution we must presuppose a collective security apparatus, shared government jurisdictions, and a common market (possibly including Jordan, where much of the Palestinian bourgeoisie lives). Each side wants, and deserves, freedom for cultural development, its own passport, its own special ties with people outside the state—a place in the sun. But an implausible image of separation—an idea of two states insufficiently sketched out—erodes the chance for people to look forward to anything other than stalemate, a situation that makes winners out of the extremists on both sides.
We hear much, in this context, about Jewish extremists, the settlers, as much for their encroachments on Israeli democracy as on Palestinian farmers. Many of them see themselves as a messianic vanguard and pour salt on longstanding Palestinian wounds. Grotesquely, they rally much of West Jerusalem to theocracy and treat Arab neighbors with contempt. (There are, as I have argued elsewhere, sound reasons to subject the settlements to an international boycott.) But settlers have also worked to interrupt Palestinian “territorial contiguity,” and so, presumably, to foil independent Palestinian economic prospects (the Likud rank-and-file recently voted to annex much of Area C, the roughly 62 percent of the West Bank where the settlements are, and which, owing to Oslo, was left under exclusive Israeli control). To assume they are succeeding in that mission is to attribute too much power to the settlers. We are no longer living in the period of the 1948-9 war, when about a million people on each side fought for hilltops to control the agricultural land in the valleys.
Roughly 70 percent of Palestinians live in cities; agriculture is under 5 percent of Palestinian GDP, and declining. The median age in Palestine is twenty-one. Olive oil and tangerine production cannot absorb this youthful population, over 25 percent of which is unemployed (in Gaza, unemployment is over 40 percent). For both sides—over 92 percent of Israelis live in cities, and perhaps three percent of GDP is agriculture—expansion depends more on urban entrepreneurship (and therefore also on elevators, trains, and parking garages) than on more exurban territory.
Which returns us to the settlements. Growing among alienated Arab towns and villages, with no local economic resources (other than a pool of desperate Arab laborers), most Jewish settlements would, with peace, be surrounded by expanding Palestinian urban centers. They would come to resemble ectopic pregnancies. More to the point, they would be unlikely to prove serious economic burdens on Palestinian cities—not, that is, if transportation corridors between Palestinian cities could be freed up, the Israeli market opened, and the repressive occupation that was installed to protect the settlements (and favor them with water, telecommunications, access roads, and so forth) removed by common agreement.
Drive to Nablus and you see a half-dozen big-box factories, much like those in Hebron, occupied by Palestinian contractors that employ—so veteran West Bank analyst Danny Rubinstein reckons—perhaps 150,000 Palestinian workers in Israeli traditional industries such as furniture manufacture, plastics, quarrying, paper-milling, and glass-making. The hilltop settlements surrounding Nablus are far less consequential to that city’s future growth than the reviled expressway, Route 5, that connects Tel Aviv to the settlement city, Ariel, where, in fact, shipping containers from Nablus factories change trucks. (By the same token, if one drives from the Israeli city of Afula to the Israeli city of Hadera, ones passes for virtually the road’s entire length through a series of Israeli-Arab rural towns in Wadi Ara. Nobody assumes that these Arab towns thwart either city’s economic development.) Rawabi, a planned-town north of Ramallah, has been strangled by occupation authorities refusing to build an access road through Area C. But Rawabi, like Israel’s Modiin, is building up, not out; and its future growth depends on a commercial and high-tech core, including branch-plants of global and Israeli software companies to employ some of Palestine’s thousands of computer-science graduates. (Israel’s Mellanox is already committed, Bashar Masri, Rawabi’s chief executive, told me.)
So, settlements disrupt free movement and fair terms of trade. If these market distortions ended, the importance of “territorial contiguity” will seem exaggerated. The half-billion-dollar Palestinian stone industry employs over 13,000 workers and exports about 65 percent of its products, including luxury polished marble, to Israel. (Its products are even found in San Diego’s airport.) To build a supermarket chain (like Palestine’s fledgling Bravo chain), along with its attendant food-processing and personal care companies, investors need to know that logistics systems will not be fouled up by checkpoints everywhere in Area C.
Palestine’s dominant telecom company, Paltel, has net assets of over a billion dollars and employs 3,000 people, but it is also being stifled. To compete on wide-bandwidth infrastructure, as Jawwal (Paltel’s mobile division) has tried to do, it must not be preempted by rival Israeli telecom operators using settlements as placement for transmission towers to which Jawwal has no access. With peace, Paltel and Israeli telecommunications companies could partner in the Gulf.
Israel and Palestine, in other words, now live in the same commercial network and—assuming an end to occupation—both sides would benefit greatly from an exchange of intellectual capital. Israeli “know-how,” its technologies and strategic investors, would prove extremely valuable for Palestinian entrepreneurs. Palestinian partners have “know-about” that would prove indispensable in bringing Israeli companies to Jordan, Egypt, Saudi Arabia, and the Emirates. Palestine’s private sector, by my estimation now worth $9 billion, could grow quickly owing to construction and consumer ventures, capable of competing in regional and even global markets. Israel’s economy has become an urban hub, not an agricultural fortress, as Erel Margalit, head of Jerusalem Venture Partners, puts it. Palestine’s economy will have to be the same.
Clearly, Israeli (and some Jordanian-Palestinian) companies will at first seize dominant positions in the region’s business ecosystem, as will global companies tentatively setting up operations in Palestine proper. But this initial economic asymmetry will not permanently disadvantage Palestinian entrepreneurs—not when wealth depends simply on learning how to make what the world needs. Unlike financial capital, intellectual capital gets shared between two parties and neither winds up with less. In this sense, at least, Nablus is luckier to be growing between Amman and Herzliya than, say, between Cairo and Benghazi.
Confederal relations had better not mean any false hope for affectionate ones. It is hard to remember a time when, on the surface, political attitudes have been warped by so much antagonism. But then, look at the joining of Upper and Lower Canada in 1867, Germany and France in the Steel and Coal Community in 1951, Belgian Flemings and Walloons in various arrangements—all of these began with populations that had emerged from vicious conflict. Nor are confederal institutions new to Israeli and Palestinian peacemakers, though these have never been acknowledged as such. As I write, the Israeli military and the Palestinian authority engage in “security cooperation,” which at times has included the PA’s cracking down on Hamas operatives in the West Bank and sharing intelligence, some provided by Israeli-controlled informants.
Two states must mean police cooperating on joint command and control. When Ehud Olmert and Mahmoud Abbas negotiated a solution for Jerusalem, they assumed a capital for each state, a Palestinian one in East Jerusalem and a Jewish one in the West, but a common municipal administration, and a new international committee, in which they would jointly participate, to act as custodian of the “Holy Basin,” in effect, the whole of the Old City. What are these—the municipality and the custodian—if not confederal institutions?
A truly dignified divorce, in other words, means joint custody where what’s held in common—often what’s most precious—cannot be divided. Jerusalem is an obvious case, but the city is also a working model for what a larger confederation might look like, including a solution to the conflict’s most vexing problems, the Palestinian right of return and the fate of settlements. Jerusalem’s Palestinian inhabitants are not citizens of Israel, but have legal residency rights in the city, where they pay taxes, and enjoy health and welfare benefits; tens of thousands work and shop in the Western part, especially in the Talpiot industrial and retail quarter, but also in hospitals, hotels, restaurants, and taxis. Thousands of settlers work in and around Jerusalem; residents of Maale Adumin live less than a ten-minute drive to the Hebrew University in Mount Scopus. Beneath the surface, on a personal level, relations between Jews and Arabs are often surprisingly cordial.
A larger quid pro quo suggests itself here, assuming that two states could adopt a confederal approach to residency. Many Palestinian families—in 2003, Shikaki put their number at about 10 percent of refugees in camps in Jordan, the West Bank, and Lebanon—not only claim lost property from 1948, but also say they would prefer residency in Israel over compensation. Correspondingly, many Israeli settlers are so attached to their homes in what they term “Judaea and Samaria” that they would rather become residents of Palestine than give them up. A confederal system modeled on greater Jerusalem, but without the repression mobilized by Likud governments, could allow an agreed number of Palestinians to return to Israel—a healing symbolic act—and become permanent residents but not citizens. Similarly, Israeli settlers determined to stay in their homes might become residents of Palestine, but remain citizens of Israel.
Talk of confederation, I know, sounds wistful in the current environment, with Donald Trump in the White House, Likud in power, and Hamas in Gaza. But any talk of peace does. What’s really naïve is to suppose that only bad faith or ideological fanaticism has caused the two-state solution to fall into disrepute. Perhaps a confederal solution will take another generation to be realized. But in the 1970s, it was the two-state solution that seemed fanciful. Shikaki and Scheindlin found that, just in the past year, support in Israel for a confederation quite like the one described here rose from 28 to 39 percent.
The most important means to confederation at this point are whatever can be done to open Palestinian cities to economic development, especially the free flow of talent and investment into West Bank and Gaza Strip cities—in support of which the American government has leverage, and to which only ideologically fanatic Israelis would object. Correspondingly, moderates on both sides should begin meeting again, but around a common agenda that fills in the gaps of a confederal framework. Ehud Barak, the former Labor prime minister, famously said, “We here, they there,” channeling the strategies of old Zionist pioneering. But we are here, and there, and so are they. That is something to build on.
Bernard Avishai teaches political economy at Dartmouth College and business at the Hebrew University of Jerusalem, and is the author of The Tragedy of Zionism, among other books. He was made a Guggenheim fellow in 1987.