Monday, July 7, 2008

The Folly of Economic Prosperity through "Peace" with the Enemy

Many misguided citizens of our nation anxious to make "peace" and normalize relations with "Israel" have used a fallacious economic argument to make their case. The assertion is that if we come to a "peace" settlement and normalize ties with the Jewish state, we will find economic prosperity, as western nations will reward us with money and we will benefit from new economic relations with said nations. There are two erroneous assumptions with this theory. The first is the assumption that "Israel" is willing to open the door for the potential prosperity of our nation, and the second is that economic agreements with western nations is the way to economic prosperity.

In their blindness to reality and clear misguidedness of surrounding events, many proponents of the above-mentioned argument find it useful to cite to two prime examples of economic boom following normalization with "Israel." These two examples are Egypt and Jordan. The idea that Jordan and Egypt are exemplary models of economic success is based on superficial observations and a shallow understanding of economics. A simple visit to either of these countries presents one with a facade of economic prosperity. This facade is constructed by the presence of western retail stores, restaurants, and hotels and by the financial wealth of certain capitalists and entrepreneurs, who were able to achieve tremendous financial success. In reality, however, these manifestations merely show that rich people can be found anywhere and that western nations have no problem turning developing countries into consumers of their products. A closer look at the economies of both Egypt and Jordan gives a much more grim and dismal outlook.

Recent developments have exposed Jordan's major economic problems and its inability to eliminate or even reduce the increasing poverty rate in the country. Global price increases have hit Jordan especially hard, as it has proven to lack the ability to cope with this crisis, given that Jordan imports just about all its consumer products, including much of its food. A study on rural poverty in Jordan indicates that because of the arid nature of the land in Jordan, people are unable to produce enough crops to feed themselves. In a statement released on June 24, 2008, the Jordanian Muslim Brotherhood called on the government to declare certain extreme poverty areas as disaster zones. Poverty rates in those areas were astoundingly high, as these rates stood at 52.8% in southern Ghor, 62.5% in Wadi Araba, and a shocking 73.7% in Rweished. This means that these percentages of people in those areas are living on no more than $553 per year. Yusuf Mansur, in an article in Bitter Lemons, shows that high inflation, combined with the stagnant double-digit poverty and unemployment rates, is forming a dangerous tripod, and goes on to argue that "last year the average household consumed 20 percent more than it earned, not a sustainable phenomena."

Jordan's normalization with "Israel" has thus failed to pay off in the manner proposed by those supporting normalization. Even as early as 1998 Francesca Ciriaci, writing in the Jordan Times cited the "failure of the 1994 Israel-Jordan peace treaty to deliver many of the promised economic dividends" as a cause for the rise of the Muslim Brotherhood.

The situation in Egypt does not look any less grim, as price increases led to riots recently, due to the fact that such increase in the cost of food is unsustainable for a large portion of the Egyptian population. Add to this the fact that Egypt is a net importer of food, and Egypt's economic condition becomes even more fragile. Reports continue to show that poverty is rampant in Egypt's rural areas.

The idea that economic prosperity will come with a so-called "peace" agreement with the Jewish entity is a flawed one based more on the wishful desire to achieve success without having to struggle than on any reality-based findings. Economic prosperity can only be achieved with national unity and with organizing the national economy on a productivity basis. Turning our society into one that merely consumes western products is not a healthy development, and is bound to lead to the economic collapse of our different entities. In addition, basing our economies on services and on opening our markets to the invasion of foreign goods is not a wise or sustainable policy. Economies can only be built on increased productive capacities. If we are to achieve true economic success, we must focus on maximizing our productive potential by investing in industries, research institutions, and agricultural programs. Only with increased production can we hope to alleviate our citizens from the economic disasters they continue to experience. Therefore, rather than normalizing ties with the enemy, our priority should be on normalizing ties with each other, so that we may remove all obstacles to our natural economic life-cycle and realize our productive potential.

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