By Michael B. Oren, Israel’s ambassador to the United States.

Wall Street Journal, August 13, 2009.

Imagine an annual economic growth rate of 7%, declining unemployment, a
thriving tourism industry, and a 24% hike in the average daily wage. Where in
today’s gloomy global market could one find such gleaming forecasts?
Singapore? Brazil? Guess again. The West Bank.

According to the International Monetary Fund (IMF), the West Bank economy is
flourishing. Devastated by the violence and corruption fomented by its former
leadership, the West Bank has rebounded and today represents a most
promising success story. Among the improvements of the last year cited by the
IMF and other financial observers are an 18% increase in the local stock
exchange, a 94% growth of tourism to Bethlehem-generating 6,000 new
jobs-and an 82% rise in trade with Israel.

Since 2008, more than 2,000 new companies have been registered with the
Palestinian Authority in the West Bank. Where heavy fighting once raged, there
are now state-of-the-art shopping malls.

Much of this revival is due to Palestinian initiative and to the responsible fiscal
policies of West Bank leaders-such as Prime Minister Salaam Fayyad-many of
whom are American-educated. But few of these improvements could have
happened without a vastly improved security environment.

More than 2,100 members of the Palestinian security forces, graduates of an
innovative program led by U.S. Gen. Keith Dayton, are patrolling seven major
West Bank cities. Another 500-man battalion will soon be deployed.
Encouraged by the restoration of law and order, the local population is
streaming to the new malls and movie theaters. Shipments of designer furniture
are arriving from China and Indonesia, and car imports are up more than 40%
since 2008.

Israel, too, has contributed to the West Bank’s financial boom. Tony Blair
recently stated that Israel had not been given sufficient credit for efforts such
as removing dozens of checkpoints and road blocks, withdrawing Israeli troops
from population centers, and facilitating transportation into both Israel and
Jordan. Long prohibited by terrorist threats from entering the West Bank, Israeli
Arabs are now allowed to shop in most Palestinian cities.

Further, several Israeli-Palestinian committees have achieved fruitful cooperation
in the areas of construction and agriculture. Such measures have stimulated the
Palestinian economy since 2008 resulting, for example, in a 200% increase in
agricultural exports and a nearly 1,000% increase in the number of trucks
importing produce into the West Bank from Israel.

The West Bank’s economic improvements contrast with the lack of diplomatic
progress on the creation of a Palestinian state. Negotiators focus on the “top
down” issues, grappling with legal and territorial problems. But the West Bank’s
population is building sovereignty from the bottom-up, forging the
law-enforcement, civil, and financial institutions that form the underpinnings of
any modern polity. The seeds of what Israeli Prime Minister Benjamin
Netanyahu has called “economic peace” are, in fact, already blossoming in the
commercial skyline of Ramallah.

The vitality of the West Bank also accentuates the backwardness and despair
prevailing in Gaza. In place of economic initiatives that might relieve the nearly
40% unemployment in the Gaza Strip, the radical Hamas government has
imposed draconian controls subject to Shariah law. Instead of investing in new
shopping centers and restaurants, Hamas has spent millions of dollars
restocking its supply of rockets and mortar shells. Rather than forge a
framework for peace, Hamas has wrought war and brought economic hardship
to civilians on both sides of the borders.

The people of Gaza will have to take notice of their West Bank counterparts and
wonder why they, too, cannot enjoy the same economic benefits and
opportunities. At the same time, Arab states that have pledged to assist the
Palestinian economy in the past, but which have yet to fulfill those promises,
may be persuaded of the prudence of investing in the West Bank. Israel, for its
part, will continue to remove obstacles to Palestinian development. If the West
Bank can serve as a model of prosperity, it may also become a prototype of peace.