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15. Arab-Israeli Economic Relations and Relative Gains Concerns Maen F. Nsour This essay considers recent Arab analyses ofthe economic and political impact on the Arab states of an impetuous progression toward normal economic relations with Israel before reaching a comprehensive political settlement and ridding the region of the military buildup that threatens the national security ofall states in the region. In contrast to the common expectation that regional economic relations will contribute to, and be reinforced by, the ''peace process" (reflecting mainly the liberal approach to international relations ), the author situates the works under review within a post-Madrid "alarmist" literature (reflecting the realist school of thought) which warns that economic relations with Israel under the current political, economic, and military asymmetries will foster Israeli economic and political hegemony over the Arab world. Abdel-Fadil, Mahmoud, "Plans for the Middle Eastern Economic Arrangements : Prospects, Threats, and Methods ofConfrontation," in Center for Arab Unity Studies, The New Middle Eastern Challenges and the Arab World, Beirut: Center for Arab Unity Studies, 1994, 127-66. (Arabic) Abdullah, Ramadan, "Terminating the Arab Embargo on Israel: The Economic Consequences of the Settlement Process," Qira'at Si}asiyah 1:1 (Winter 1992), 160-67; and 1:2 (Spring 1992), 131-47. (Arabic) Hilal, Jamil, Israeli Economic Strategy for the Middle East, Beirut: Institute for Palestine Studies, 1995. (Arabic) 283 284 Maen F. Nsour Naqib, Fadle, The Israeli Economy Within the Zionist Project, Beirut: Institute for Palestine Studies, 1995. (Arabic) Saba, Elias, "The Economic Aspects ofthe New Middle Eastern Challenges," in Center for Arab Unity Studies, The New Middle Eastern Challenges and the Arab World, Beirut: Center for Arab Unity Studies, 1994, 167-83. (Arabic) Salame, Ghassan, "Preliminary Views on the Middle Eastern Market," in Center for Arab Unity Studies, The New Middle Eastern Challenges and the Arab World, Beirut: Center for Arab Unity Studies, 1994, 32-58. (Arabic) Introduction In the aftermath of the autumn 1991 Madrid Peace Conference, much ofthe literature on Middle East peace has propagated the notion that economic interdependence between Israel and the Arab states can enhance the economic welfare of states in the region, and at the same time reduce incentives to resort to force against one another to settle disputes. Interdependence and gains from economic relations , according to this line of thought, are the recipe for tranquillity in this beleaguered region. This argument finds its basis in Western Europe's evolution from a region of deadly conflicts to a zone of peaceful regional integration through the European Union. However, much of the literature in the Arab world, including the works reviewed in this essay, runs against the conventional wisdom in the "economics-of-peace" literature. These authors argue that Israel will attain higher relative gains as a result ofeconomic cooperation with the Arab states, which it can easily use to achieve further economic and military supremacy, to intimidate its rivals, and thus to influence their political and economic policies. Israel's perpetual quest for national security has encouraged the development of an economy at the service ofits military. Many Arabs perceive economic relations with Israel as an unwise and self-destructive policy, even if they realize some absolute gains. What counts most in this case of acute asymmetry and latent hostilities is relative gains: who is benefiting more, and what those who achieve higher relative gains will do with them. Arab-Israeli Economic Relations 285 Ifthe final settlements between Israel and the Arab states reflect the severe imbalance in political, military, and economic capabilities , then relative gains will continue to be a major concern and economic relations will continue to suffer. (see tables 1 and 2 for comparative economic and military indicators.) Regional security and the Arab world's economic welfare, prosperity, and political stability , according to these authors, will be achieved not through economic cooperation with Israel, but by concentrating on their collective internal political and economic policies that invigorate democracy and economic efficiency, thus achieving equity and social welfare. Arriving at an acceptable comprehensive political settlement that leads to mutual confidence between the Arab states and Israel is seen as an essential prerequisite for any economic cooperation scheme in the Middle East. However, more often than not, these authors express skepticism about the possibility of reaching what a number of them have called "a fair settlement acceptable to the future Arab generations" under prevailing global and regional conditions. Economics and Peace Ever since Israel and Egypt signed a peace treaty in 1979, a wave of literature has...

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