Why neoliberalism can’t build peace | Israel-Palestine conflict

Over the past year, United States President Donald Trump has pursued “peace-making” all across the world. A prominent feature of his efforts has been the belief that economic threats or rewards can resolve conflicts. Most recently, his administration has put forward economic development plans as part of peace mediation for Israel’s genocidal war on Gaza, the war in Ukraine and the conflict between Israel and Syria.

While some may see Trump’s “business” approach to “peace-making” as unique, it is not. The flawed conviction that economic development can resolve conflicts has been a regular feature of Western neoliberal peace initiatives in the Global South for the past few decades.

Occupied Palestine is a good example.

In the early 1990s, when the “peace process” was initiated, Israeli Foreign Minister Shimon Peres started advocating for “economic peace” as part of it. He sold his vision of the “New Middle East” as a new regional order that would guarantee security and economic development for all.

The project aimed to place Israel at the economic centre of the Arab world through regional infrastructure — transport, energy and industrial zones. Peres’s solution for the “Israeli-Palestinian conflict” was Palestinian economic integration. The Palestinians were promised jobs, investment, and improved living standards.

His argument was that economic development and cooperation would foster stability and mutual interest between Israelis and Palestinians. But that did not happen. Instead, as the occupation continued to entrench itself after the US-brokered Oslo Accords and the establishment of the Palestinian Authority (PA), anger in the Palestinian streets grew and eventually led to the outbreak of the second Intifada.

This neoliberal approach was tested again by the Quartet – consisting of the United Nations, the European Union, the US and Russia – and its envoy Tony Blair in 2007. By then, the Palestinian economy had collapsed, losing 40 percent of its gross domestic product (GDP) in eight years and plunging 65 percent of the population into poverty.

Blair’s “solution” was to propose 10 “quick impact” economic projects and fundraise for them in the West. This went hand-in-hand with the policies of then-Palestinian Prime Minister Salam Fayyad, in what came to be known as “Fayyadism”.

Fayyadism was sold to Palestinians as a pathway to statehood through institution-building and economic growth. Fayyad focused on generating short-term economic gains in the occupied West Bank while simultaneously rebuilding the Palestinian security apparatus to meet Israeli security demands.

This model of economic peace never addressed the root cause of Palestinian economic stagnation: the Israeli occupation. Even the World Bank warned that investment without a political settlement ending Israeli control would fail in the medium and long term. Yet the approach persisted.

There were Palestinians who benefitted from it, but they were not common Palestinians. They were a narrow elite: security officials who gained privileged access to financial institutions, contractors tied to Israeli markets, and a handful of large investors. For the wider population, living standards remained precarious.

Rather than preparing Palestinians for statehood, Fayyadism replaced liberation with management, sovereignty with security coordination, and collective rights with individual consumption.

This economic approach to conflict resolution merely gave Israel time to entrench its colonial enterprise by expanding its settlements on Palestinian land.

The latest economic plan for Gaza, presented by Trump’s adviser and son-in-law Jared Kushner, is unlikely to bring economic prosperity to the Palestinians either. The project reflects two deeply contradictory dynamics: it foregrounds opportunities for investment and profit for global and regional oligarchies while systematically ignoring the fundamental national and human rights of the Palestinian people.

Security is framed exclusively around the needs of the occupying power, while Palestinians are compartmentalised, securitised, and surveilled — reduced to a depoliticised labour force stripped of social and national identity.

This approach views people as individuals rather than as nations or historically established communities. Under this logic, individuals are expected to acquiesce to oppression and dispossession once they obtain jobs and improve their living standards.

These strategies are failing to build peace not just in Palestine.

In the Israeli-occupied Golan Heights, the US has proposed expanding the demilitarised zone and converting it into a joint economic zone, featuring a ski resort. The US approach seems designed not only to pressure Syria to relinquish its sovereign rights over the territory, but also to recast it as a security project in ways that primarily benefit Israel. Under this framework, the US would act as the security guarantor. Its close alliance with Israel, however, puts its impartiality and true intentions in doubt.

In Ukraine, the US has proposed a free economic zone in parts of the Donbas region, from which the Ukrainian army would have to withdraw. This would allow Moscow to expand its influence without direct military confrontation, creating a buffer zone favourable to Russian security interests.

The Donbas has historically been one of Ukraine’s industrial bases, and transforming it into a free economic zone would deprive Ukraine of a critical economic resource. There are also no guarantees that the Russian army would not simply advance after the Ukrainian withdrawal and take the whole region.

These neoliberal “solutions” to the conflicts in Gaza, the Donbas and the Golan Heights are doomed to fail just like the economically-driven peace initiatives of the 1990s and 2000s in occupied Palestine.

The main problem is that the US cannot really provide credible guarantees that the areas would remain stable, so investors can secure returns on their investments. That is because no solid political settlement would be in place, given the fact that these proposals ignore the political, cultural and most importantly, national interests of the people living in these regions. As a result, no serious or independent investor would commit capital to such an arrangement.

Nations are not made up of consumers or labourers; they are made up of people with a common identity and national aspirations.

Economic incentives should follow, not precede, a political resolution that secures the self-determination of indigenous peoples. Any conflict-resolution framework that ignores collective rights and international law is therefore bound to fail. Political settlements must prioritise these rights, a requirement that stands in direct opposition to the logic of neoliberalism.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.