16 November 2004
Palestine Solution
The lofty price of crude oil has made it possible for richly endowed countries in the Middle East to narrow some of their economic divergences that create political unrest, threatening the ruling elites. These royal families (or would-be dynasties) are consequently better able to maintain order in their societies, hopefully preventing terrorism as the method chosen by the underprivileged for expressing dissent. This may only be a successful strategy in the short-run. On the other hand, ruling regimes in Saudi Arabia, Kuwait, Egypt, Oman, Qatar, and the UAE do not have the luxury of taking the long view. They must first preserve their continued existence for the foreseeable future. Their best hope for survival may be to co-opt the common members of their societies with an expensive welfare state.
The West, China, India, and Japan are the largest consumers of the Arab countries’ hydrocarbon wealth. They are collectively paying for stability in those societies through elevated prices for oil and gas. An incontrovertible principle of international markets is “What goes up must come down.” When oil prices inevitably decline, will those societies fall again into chaos?
The control of potentially disruptive terrorism in the Arab and wider Muslim world may be worth the cost of permanently financing an artificially high oil price. Moreover, the other source of resentment that foists international terrorism, the Israeli/Palestinian conflict, may also be resolved by striking the same deal with the regimes that have been the most reliable financial backers of violent resistance to the Jewish state.
After all, the creation of Israel was supported by the West at the expense of the Arab residents of Palestine as a form of redemption for the horror of the holocaust. That position was adopted because the West did not wish to offer a homeland to European and Middle Eastern Jewish refugees in their own territories, at their own expense. The Arabs, of course, were never justly compensated for this expropriation. The violent resistance they resorted to now takes the form of terrorism.
The West must try to strike a deal with Arab regimes to finally repay that debt. A high price for the oil and gas exports of those regimes, or any Muslim regimes that participate in the deal, would be subsidized by Western importers, in proportion to their purchases. The revenue it generates for those regimes could be used by them as needed to preserve order in their societies, but only as long as they also include the Palestinian state in their welfare programs. In addition, they will have to impose order on that Palestinian state and satisfy the prerequisites of a peaceful outcome to the “Two State Solution.” Likewise, the West will have to tame West Bank expansionism by the Israelis.
Many details would have to be worked out in order to guarantee the oil subsidy tax revenue actually accrues to the oil producers who participate in the program. At first, though, there must be agreement that the Muslim, primarily Arab, world will impose order on Palestine, and the West will pay for it.
The lofty price of crude oil has made it possible for richly endowed countries in the Middle East to narrow some of their economic divergences that create political unrest, threatening the ruling elites. These royal families (or would-be dynasties) are consequently better able to maintain order in their societies, hopefully preventing terrorism as the method chosen by the underprivileged for expressing dissent. This may only be a successful strategy in the short-run. On the other hand, ruling regimes in Saudi Arabia, Kuwait, Egypt, Oman, Qatar, and the UAE do not have the luxury of taking the long view. They must first preserve their continued existence for the foreseeable future. Their best hope for survival may be to co-opt the common members of their societies with an expensive welfare state.
The West, China, India, and Japan are the largest consumers of the Arab countries’ hydrocarbon wealth. They are collectively paying for stability in those societies through elevated prices for oil and gas. An incontrovertible principle of international markets is “What goes up must come down.” When oil prices inevitably decline, will those societies fall again into chaos?
The control of potentially disruptive terrorism in the Arab and wider Muslim world may be worth the cost of permanently financing an artificially high oil price. Moreover, the other source of resentment that foists international terrorism, the Israeli/Palestinian conflict, may also be resolved by striking the same deal with the regimes that have been the most reliable financial backers of violent resistance to the Jewish state.
After all, the creation of Israel was supported by the West at the expense of the Arab residents of Palestine as a form of redemption for the horror of the holocaust. That position was adopted because the West did not wish to offer a homeland to European and Middle Eastern Jewish refugees in their own territories, at their own expense. The Arabs, of course, were never justly compensated for this expropriation. The violent resistance they resorted to now takes the form of terrorism.
The West must try to strike a deal with Arab regimes to finally repay that debt. A high price for the oil and gas exports of those regimes, or any Muslim regimes that participate in the deal, would be subsidized by Western importers, in proportion to their purchases. The revenue it generates for those regimes could be used by them as needed to preserve order in their societies, but only as long as they also include the Palestinian state in their welfare programs. In addition, they will have to impose order on that Palestinian state and satisfy the prerequisites of a peaceful outcome to the “Two State Solution.” Likewise, the West will have to tame West Bank expansionism by the Israelis.
Many details would have to be worked out in order to guarantee the oil subsidy tax revenue actually accrues to the oil producers who participate in the program. At first, though, there must be agreement that the Muslim, primarily Arab, world will impose order on Palestine, and the West will pay for it.
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