The Israel and Palestine Land Settlement Problem, 1948-2005: An Analytical History

Author(s): Charles K. Rowley and Jennis Taylor

Source: Public Choice , Jul., 2006, Vol. 128, No. 1/2, The Political Economy of Terrorism
(Jul., 2006), pp. 77-90
Published by: Springer

Stable URL: http://www.jstor.com/stable/30026634

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Public Choice (2006) 128:77-90
DOI 10.1007/si 1127-006-9045-9
ORIGINAL ARTICLE

The Israel and Palestine land settlement prob

1948-2005: An analytical history

Charles K. Rowley 0 Jennis Taylor

Received: 10 June 2006 / Accepted: 10 June 2006

C Springer Science + Business Media B.V. 2006

Abstract This paper traces the history of the current conflict bet
from 1948-2005 C.E. It focuses on the frontier conflict betwee
conflict that has resulted in four major wars during the post-Seco
that has left Israel as the occupying power over a large swathe of
it by the United Nations in 1947. It outlines the nature of the ref
and neighboring Arab states, and defines the political problems pos
Palestine population growth, and by the 'right to return' claim by
reviews the political problems posed by religious extremism and th
in Israel and Palestine. It concludes with a brief discussion of the u
as the road map to peace disintegrates and outlines a preferred solu
of the advanced western nations.

Keywords Arab-Jew conflict - Land settlement conflicts - Road map to peace - Religious
extremism . Islamic fundamentalism - Terrorism - Armageddon - Right to return -
American-Israel public affairs committee (AIPAC)

'Tis our true policy to steer clear of permanent alliances with any portion of the foreign
world; so far as we are now at liberty to do it; for let me not be understood as capable
of patronizing infidelity to existing engagements. Harmony, liberal intercourse with all
nations, are recommended by policy, humanity and interest. But even our commercial
policy should hold an equal and impartial hand: neither seeking nor granting exclusive

C. K. Rowley (H)
Duncan Black Professor of Economics and Director of the Program in Economics, Politics and the Law
at George Mason University & General Director of The Locke Institute, Fairfax, Virginia 5188
Dungannon Road, Fairfax, Virginia 22030
e-mail: crowley@gmu.edu

J. Taylor
Research Associate, Program in Economics, Politics and the Law George Mason University, Fairfax,
Virginia 22030
e-mail: jennisjtaylor@yahoo.com

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 78 Public Choice (2006) 128:77-90

favors or preferences; consulting th

by gentle means the streams of com

George Washington's, Farewell A

1796.

1. Introduction

In this paper, we provide an analytic history of the Israeli-Arab conflict over the peri
1948-2005. We focus specifically on three issues, namely frontiers, refugees and relativ
population growth, and religion and politics. From this basis, we critically evaluate th
notion that there is any public choice-consistent road map for a peaceful solution to t
Israeli-Palestine conflict without a significant change in Middle Eastern policies on the part
both of the United States and Western Europe.
In our view, resolution of the Israeli and Palestine land settlement problem is a necessary
though not a sufficient, condition for abating the terrorist threat to citizens of the Unite
States and of Western Europe - and their properties - throughout the world. Without such
settlement, the war on terror is a flimsy shield, incapable of withstanding the whirlwind
Islamic fundamentalist terrorism so skillfully orchestrated by Osama bin Laden and al-Qaed
since the bipolar Cold War power structure disappeared in 1991 with the demise of the USS

2. The Israel and Palestine frontier conflict

By virtue of our national and intrinsic right and the strength of the resolution of the United
Nations General Assembly, we hereby declare the establishment of a Jewish state in Palestine,
which shall be known as the State of Israel. (David Ben Gurion reading from the Scroll
Independence on Friday 14 May 1948).
The Holy Land, so-called because it is holy to the world's three monotheistic faiths
Judaism, Christianity and Islam - must be defined geographically at the outset of this stud
Its heartland is the region known historically as Palestine, a name given to it by the Romans i
the second century CE. West to East, Palestine extends from the Mediterranean Sea coastlan
to the Sea of Galilee (Lake Kinneret), the Jordan River, and the Dead Sea. North to south,
extends from the source of the Jordan on the southern slopes of Mount Hermon to the Negev
desert where the Wadi Arabah terminates in the Gulf of Aqaba at Eilat.
At the time of Jesus (False Messiah, Son of God, or Prophet, according to one's faith
there existed no such named region. Instead, there was Galilee in the north, Samaria in th
center, and Judaea in the south, all governed by Rome. Because Holy Book narratives take
place not only in Palestine, but also on the plateau east of the Jordan River and the Sea o
Galilee, southward within the Negev and Arabian deserts, and west of the Negev Desert in
the Sinai Peninsula, the Holy Land today reflects this broader definition.
As such, it falls under the political jurisdiction of six entities. It includes all of Isra
and that part of the Occupied Territories governed by Israel, all of the fragmented territo
governed by the Palestinian Authority, the coast of southern Lebanon, southwestern Syr
western Jordan, and Egypt's Sinai Peninsula.

2.1. The November 1947 United Nations partition resolution

In November 1947, the General Assembly of the United Nations passed a resolution par
tioning Palestine into a Jewish state and an Arab state. Jerusalem was to be a United Natio
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 Public Choice (2006) 128:77-90 79

protectorate. The boundaries of th

Palestine.

It was not the Promised Land by any definition, because it excluded Judaea and Samaria, the
whole of the West Bank and, above all, Jerusalem itself (Johnson, 1987, 531). Nevertheless,
the Jewish leaders accepted the United Nation's resolution, even though they would have
found it difficult to run and to defend a state thus delimited. On the other hand, the Arab
nations rejected the resolution, even though it would have given them a Palestinian state
without further negotiation, and 'immediately sought the arbitration of force' (Johnson, 1987,
532).
The United Nations scheduled the partition to take effect in September 1948. The British
government, disgusted with the behavior of the three Jewish terrorist organizations (Haganah,
Irgun and Lefi) during the intervening period (Rowley & Taylor, 2006), announced its decision
to withdraw from Palestine on May 14, 1948, in order to allow Jews and Arabs to go native
in the Holy Land, to resolve their dispute without further cost to British assets. On that same
day, the Jewish settlers in Palestine acted unilaterally, in proclaiming Israel as an independent
country, and moved quickly to expand their borders beyond those delineated by the resolution
of the United Nations.

2.2. The 1948-9 Arab-Israeli war

Units of the Haganah and Irgun, together with the seasoned veterans of the Jewish Brigade
that volunteered to fight with the British in World War II, formed the core of a hastily mobilized
Israeli army, with the intent to seize the whole of Palestine. The combined Arab forces from
Transjordan (crack British-trained troops), Egypt, Syria, Iraq, and Lebanon (mostly under-
trained and under-motivated riff-raff) invaded Palestine in an attempt to drive the Israelis into
the Mediterranean Sea. By the end of 1948, the Israeli army was 100,000 strong, properly
equipped with arms provided by Russia, through Czechoslovakia, and by the French (in an
overt act of hostility towards Britain), and had established a military hegemony in Palestine
(Johnson 1987, 527).
The United Nations opened Armistice talks in Rhodes on January 12, 1949, that Israel
signed with Egypt (February 14), Lebanon (March 23), Transjordan (April 3) and Syria (July
20). Iraq refused to sign, and all five Arab nations remained in a state of war with Israel.
Under this settlement, Israel expanded its borders to encompass 80 per cent of Palestine.
It now controlled the entire eastern Mediterranean coast south of Lebanon (except for the
Gaza Strip), the northern (Galilean) and southern (Judaean) portions of the bordering hill
country, and the western portion of Jerusalem. It further controlled the Negev desert, from
the southern part of the Dead Sea westward to the Sinai Peninsula and southward to the Gulf
of Aqaba.
Samaria and the northern part of Judaea (later referred to as the West Bank), together
with almost the entire Jordan Valley, was in Jordanian hands. Egypt controlled the Gaza
Strip and the Sinai Peninsula, and Syria the Golan Heights. The spiritual heart of the Holy
Land, the Old City of Jerusalem, remained in Jordanian hands. Israel's borders, hence-
forth, were much more easily defended, albeit at the expense of the military occupation
by Israel of three-fifths of the Palestinian lands allocated to Arabs by the United Na-
tions.

The Armistice itself proved to be worthless, shredded by the Arabs almost immediately
following their signatures. Between 1949 and 1956, some 1,300 Israelis were murdered
during Arab raids, and Israel's retaliatory attacks became increasingly severe. On July 20,
1951, the only remaining moderate Arab leader, King Abdullah of Jordan, was assassinated
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 80 Public Choice (2006) 128:77-90

by Arab militants. On July 23, 195

in turn (February 25, 1954) to the
government overtly dedicated to Is

2.3. The 1956 Suez Canal war

Because Egypt had remained in a state of war with Israel since 1948, she had always refus
Israeli ships access to the Suez Canal, despite condemnation of the practice by the Un
Nations Security Council in September 1951. In February 1953, Stalin broke off relati
with Israel and embarked on a pro-Arab Middle Eastern policy, which continued after h
death/assassination. In September 1955, with the signature of the Egyptian-Czech ar
agreement, the Soviet bloc began to supply large quantities of modern weapons to the A
forces.

Buoyed by these events, Nasser set in motion a plan for the strangulation and extincti
of Israel. Early in 1956, he denied Israeli ships access to the Gulf of Aqaba by blockading
Straits of Tiran, Israel's only outlet to the Red Sea, thereby cutting off its access to petroleu
In April, he signed a military pact with Saudi Arabia and Yemen. In July, he seized the S
Canal from Great Britain and, on October 25, he formed a unified military command w
Jordan and Syria. On October 29, Israel launched a pre-emptive strike, with the support
Great Britain and France, and dropped Israeli paratroops to seize the Mitla Pass in Sinai.
During the brief war that followed, and in conjunction with Anglo-French troops land
simultaneously in the Canal Zone, Israel conquered the whole of Sinai and Gaza and open
up the sea route to Aqaba. The Eisenhower administration, reflecting pro-Arab sympath
and intent on demonstrating that there was room for only one Western Super-Power in
Middle East at the height of the Cold War, intervened to halt the invasion (Quandt, 2005)
Under pressure and threats from the United States, an inconclusive agreement was br
kered. Israel agreed to withdraw from the Sinai Peninsula and the Gaza Strip provided t
Egypt did not remilitarize, and on the condition that a United Nations Peacekeeping For
formed a protective cordon sanitaire throughout these regions. Britain and France pulled
of the Canal Zone, completely, leaving the United States as the only Western superpower
the Holy Land.

2.4. The six-day war, 1967

Between 1949 and 1967, the land settlement conflict between Israel and the Arabs remained
essentially frozen by Cold War politics. The 1949 armistice boundaries essentially held,
although the Arab nations consistently withheld recognition from the Jewish state.
The more militant Arab nations, notably Egypt and Syria, coupled harsh rhetoric with
support for guerrilla attacks against Israel. Egypt refused Israel the access to the Suez Canal,
moved troops into the Sinai, and demanded the withdrawal of the United Nations Peacekeep-
ing Force. Syria regularly poured artillery shells from the Golan Heights onto Israeli towns
and settlements in Galilee.
On the other hand, Arab nations such as Jordan and Lebanon were duplicitous with
respect to the land settlement issue, maintaining under-the-table contacts with the Israelis
(Quandt, 2005, 2). The interests of existing Arab regimes and the Palestinians were by no
means universally identical. The Egyptian President, Gamel Abdel Nasser, remained the
most reliable champion of the cause of the Palestinian Arabs.
Egged on by Palestinian radicals, in early June 1967, armies of Lebanon, Syria, Jordan and
Egypt massed on Israel's borders, preparing for yet another united effort to defeat their enemy.

SSpringer

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Public Choice (2006) 128:77-90 81

On June 5, Israel preempted the w

striking targets in Egypt, Jordan a
six days, Israel once again had se
territory west of the Jordan River
occupied the Golan Heights.
At this stage, all parties accepted
immediately occupied all the territo
to the East and to the North. A milli
the control of the Israeli military.

2.5. The October 1973 (Yom Kippu

On October 6, 1973, (The Jewish Da

Asad of Syria jointly launched a su
signaled by a massive Egyptian air
Suez Canal together with a large-sc
the assaults were effective, with Eg
the Syrians making inroads into the
was neutralized by Egyptian groun
During the first week of fighting,
the north and quickly drove the S
halted their advance on Damascus,
intervention, and partly to shift the
Israeli forces broke the Egyptian line
the USSR and the United States beg
By week three of the war, both Egy
invited Secretary of State Kissinger
Nations Security Council resolution
adopted by Egypt and Israel, but no
more land around Mount Hermon.
later. This time the cease-fire held. B
acknowledge the military superiorit
The frontiers thus established would
and would form the basis for protr
success, to establish a long-term p
trading land for peace is still cen
East.

3. Refugees, the 'right to return

growth

'Give me your tired, your poor,

Your huddled masses yearning to breathe free.
The wretched refuse of your teaming shore.
Send these, the homeless, tempest-tossed to me:
I lift my lamp beside the golden door.
Emma Lazarus, The New Colossus
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 82 Public Choice (2006) 128:77-90

Technically, a refugee is someon

refuge, especially in a foreign cou
and/or natural disaster. A registe
United Nations. Both Jews and Pale
1947 partition of Palestine. Jews, u
refugees. Many Palestinian Arabs re
them unemployed and still register

3.1. Jewish refugees

Much of the
time following the R
Christianity, Jews in Arabia lived
the Quran guaranteed that Jews, a
status. As such, they were allowed
long as they paid a special head tax
In succeeding centuries, as Islam spr
and eventually to southeastern Eur
piety of specific Muslim leaders. For
welcomed the revenue from the
ta
merchants, bankers and craftsmen
umma, Arabic, or Persian, or Turk
These Jews (the early Jewish refu
the Scriptures that required them t
countries. In the late fifteenth cen
Spain and Portugal by their Catholic
Arabic, also blended effortlessly, w
communities. Other Sephardic Jews
or Portuguese rule, they could live
they reverted to Judaism.
We have described the nature and
Palestine in some detail elsewhere
unwelcome influx of (primarily) As
century and 1948 met (understanda
Arabs and created a Middle Eastern
fifty years and that has become a fo
their attacks on Western interests.

Once Israel became a country in 1948, Arab countries vented their anger against Jews
residing in their lands. In some cases, Jews were simply expelled, taking with them only such
possessions as they can carry. In other cases, Jews left voluntarily because Arab countries
were no longer comfortable places in which to live (Drummond, 2004, 196).
In 1945, some 580,000 Jews lived in the Arab world. Between the outbreak of war on
May 15, 1948 and the end of 1967, the vast majority sought sanctuary in Israel: 252,000
from Morocco, 13,000 from Algeria, 46,000 from Tunisia, 34,000 from Libya, 38,000 from
Egypt, 4,000 from Lebanon, 4,500 from Syria, 4,000 from Aden, 125,000 from Iraq and
46,000 from the Yemen. Tunisia (1,500) and Morocco (5,700) are now the only two Arab
countries with sizeable Jewish populations. There are only 100 or fewer Jews in each other
Arab country.
The 'in-gathering' brought some 560,000 Jews into Israel from Arab lands. Israel views
these Jews as being no less displaced than the Palestinian Arabs who lost their homes as a
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 Public Choice (2006) 128:77-90 83

result of Israeli militancy during th

Israeli citizenship, there are no Je

3.2. Palestinian Arab refugees

Between 1947 and 1949, accordin

of mandatory Palestine fled from
70,000 to Transjordan, 100,000 to
190,000 to the Gaza Strip (Johns
Arabs remained within Israeli terr
The Palestinian Arabs left for fo
the mandatory administration had
into so doing by Arab radio broad
Stern Gang by massacre initiated
1948 (see Rowley & Taylor, 2006
Unlike Israel, Arab government
in camps, pending a re-conquest o
natural increase, the number of P
time. The numbers also increased
Palestinian Arabs fled from the West Bank into Jordan rather than remain under Israeli rule.

3.3. The right to return and relative Israeli - Palestinian population growth

Any peace settlement between Israel and the Palestinian Authority will have to resolve the
situation of the Palestinian refugees, and their descendants, who wish to return to the lands
occupied by Israel and who have not been accepted (or been offered) citizenship elsewhere.
This issue is not currently even on the negotiating table.
Yet, it is a truly significant political problem. What began as a displaced population of three
quarters of a million persons in 1949 has now reached more than six million, most of who
are consumed with the objective of returning to their homeland. Upwards of one and a half
million of these refugees remain wards of the United Nations, unsettled and largely jobless,
dependent on handouts from the United Nations Relief and Works Agency (UNRWA) for
accommodations and basic survival (Drummond, 2004, 49).
Even in 2006, one third of all Registered Refugees remain in UN camps. In the West Bank,
it is one quarter, and in Gaza, even after Israel's evacuation, it is 55 percent. In Jordan, where
all Palestinian Arabs have been offered citizenship, with some 600,000 accepting, still some
fifteen percent of Registered Refugees remain in camps. This is as telling an indictment of
the unwillingness of many Arabs refugees to take care of themselves, as it is of the failure of
their Arab neighbors to offer them an effective helping hand into self-sufficiency.
Not all Palestinians are refugees. Approximately 1.3 million Palestinian Arabs live in
Israel and are Israeli citizens. Of the 2.3 million Palestinians in the West Bank, two-thirds
are not refugees. They lived in the West Bank in 1948 and they continue to live there today,
albeit without the rights of Israeli citizens. The Gaza Strip, however, is different. Only 32
per cent of its 1.3 million people are native to Gaza. In Jordan, those who have accepted
Jordanian citizenship are not classed as refugees (Drummond, 2004, 51).
Clearly, if all Palestinian Arabs whose ancestors were driven out of Israel are allowed a
right of return, and choose to migrate back into Israel, they would become the new majority,
with Jews accounting only for a minority of the population. Under such circumstances,
a Jewish state could exist only by refusing any rights of citizenship to new Palestinian

- Springer

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 84 Public Choice (2006) 128:77-90

members of the State of Israel, ess

once white-dominated South Africa.

In truth, the situation is worse than that. Israeli Jews exhibit a low rate of procreation.
Although the Jewish population has been boosted through immigration, most recently from
countries of the former Soviet Union, the annual rate of Jewish population increase is still
only around 2.5 per cent. The rate of natural increase among Israel's Arab population, by
contrast, is 3.5 per cent. This guarantees that the Arab citizens of Israel will form an ever larger
proportion of the population unless Jewish couples significantly elevate their procreation rates
as a contribution to the survival of the motherland.
Jewish couples show no current signs of willingness to make this sacrifice. In the long-run,
therefore, Israel will inevitably transition into an Arab-majority country, whether or not the
'right-to-return' is endorsed, unless rising prosperity is allowed to reach Arab citizens in
order to abate their natural rate of population increase to Jewish rates. If Arabs continue to
be less productive than Jews (as historical experience suggests may be the case) this would
require an ever increasing rate of income redistribution from Jew to Arab within the State of
Israel.

4. Religion and the state

Give me that old time religion.

'Tis the old time religion.
It was good enough for Moses.
And it's good enough for me.

Makes me love everybody.

Makes me love everybody.
Makes me love everybody.
And it's good enough for me.
(Anonymous)

Although Judaism and Islam stem from similar roots, including the Prophet Moses,
(Rowley & Taylor, 2006), religion is a major source of conflict between Jews and Arabs and
a significant source of conflict in the Middle East. Let us briefly address the major sources
of contention between these two monotheistic religions, focusing attention on contentious
issues concerning divergent relationships between religion and the state.

4.1. Judaism and the state of Israel

The State of Israel was conceived by its Declaration of Independence not only as the rebirth
of Jewish sovereignty following a lapse of two thousand years, but also as the creation of a
progressive, pluralistic society. To the dismay of the religious minority, there was no mention
of God in the Declaration, only to the 'Rock of Israel', an ambiguous term that may be
interpreted both by the secularist majority and the religious minority as they respectively
choose.

Israel, from its inception, has never formally been a religious state. A large majority of
its citizens have always been secularist non-believers. In this respect, Israel differs sharply
from most Arab nations, a large majority of whose citizens express belief in the tenets of
Islam. Yet, the fundamental dispute between believing and non-believing Jews - concerning
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 Public Choice (2006) 128:77-90 85

the nature of individual and collect

conflict between religion and the s
Central to Judaism is the Torah, wh
Genesis, Exodus, Leviticus, Number
between the tenth and the sixth ce
on by Hebrews from one generation
Most importantly, these books are
of the Jews, a belief in a single Go
most probably constituted a source
acquired many of the ideas that eve
basis for Islam.

Although Judaism is a monotheistic religion, believers are by no means agreed about

the correct interpretation of the Holy Books, most particularly concerning the relationship
between religion and the state. At one extreme were located the followers of the religious
Zionist organization, Mizrahi, founded in 1902. Their slogan became, Eretz Israel le'am
Israel al pi torat Israel (The land of Israel for the people of Israel according to the Torah of
Israel). Mizrahi developed the ideology of religious Zionism, seeing in the return of the Jews
to the land of Israel an anticipation of the coming of the Messiah (Cohen, 1986, 39).
In this view, land held a religious significance and its rebuilding, even by sacrilegious
Marxists and radical Zionists was part of a divine plan leading to the End of Days. Jewish
secular nationalism was viewed as a form of self-delusion. Any Jewish nationalist, how-
ever secularist his intention, must, despite himself, affirm the divine. Ben Gurion and his
socialist Mapai party cynically used Mizrahi as a vehicle of convenience to promote politi-
cal cohesion during the early years of the State of Israel. An offshoot of Mizrahi, Ha'Poel
Ha-Mizrahi, consolidated this link with Mapai by emphasizing religion, nationalism and
the value of manual labor, and rapidly became the dominant force in the religious Zionist
camp.
Although Mizrahi and its offshoot represented orthodox parties of participation within the
Jewish nationalist movement, other religious elements that would later play important roles
in Israeli politics emerged as anti-Zionist parties of separation. The Agudat Israel (Union of
Israel) emphasized that the sovereign of the Jewish people is the Almighty, that the Torah
is the law that governs them, and that the Holy Land has been at all times destined for the
Jewish people.
However, this destiny does not imply that any effort should be made with secularists to
recreate a Jewish state in the Holy Land. Such an action, indeed, is equivalent to pushing the
hand of God. A labor offshoot of Agudat Israel, also emerged. With the advent of Hitler and
the subsequent birth of Israel, Agudat Israel and its labor offshoot, evolved from anti-Zionism
to non-Zionism.

So it came to pass that when Israel's first national elections took place in January 1949,
among the seventeen parties contesting the election, four were avowedly religious in character
and in aims, Mizrahi, Ha'Poel Ha'Mizrahi, Agudat Israel and Poalei Agudat Israel. Running
together as an electoral alliance known as the United Religious Front, they received a total of
16 out of 120 seats in Israel's parliament the Knesset. Setting a pattern, Ben Gurion's Mapai
party, with 46 seats relied on a parliamentary coalition including these religious parties and
the small Progressive Party, to form a government.
Religion would always thereafter play a significant role in the governance of Israel. Even
today, among the major political parties, Labor, albeit the most secular, assiduously courts
religious parties as present or future members of its governing coalition. Likud, itself a
moderately theocratic party, also courts more extremist religious parties. Kadima, now the
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 86 Public Choice (2006) 128:77-90

largest single party in the Knesset,

or Israeli, even if it forges a primar
The unexpectedly in t low turnout
Kadima with only 28 seats in the
Labor secured 20 seats, Gil, the pen
the three Arab-Israeli parties togeth
collapsed from 38 to 7 seats, Shas
national Union/National Religious
Party secured 6 seats.
If Kadima forges a Center-Left ma
at least one of the Arab-Israeli part
will restrict its flexibility in definin
in place prior to the 1967 war. Such
a lurch back to socialism in Israel. I
right parties, its flexibility in nego
Bank settlements, and certainly Eas
In this way, the theocratic minority
majority dogs in the multi-party, p

4.2. Islam and the Palestinians

Mohammed was born in the year 570 CE and was raised as a member of the powerful
Qurysh tribe that controlled the trade in Mecca. He married Khadija, the widow of a wealthy
merchant and used her money to engage in trade on his own behalf. While trading in Mecca
and elsewhere, he became acquainted with both the Jewish and the Christian faiths, learning
about Abraham, Moses and Jesus. Since he was completely illiterate, he must have committed
camp-fire stories to memory. Mohammed yearned for a God who would speak directly to the
Arabs, as the God of the Hebrews and the Christians once spoke to the people of Palestine
(Drummond, 2004, 166).
In his fortieth year, in the cave at the base of Mount Hira, Mohammed allegedly was visited
by the Angel Gabriel, who told him that there is only one God, and who gave him many other
messages that he must 'write'. Mohammed committed these messages to memory. His wife
assured him that it was Al-lah, the God of Mecca, who had spoken to him. Mohammed was
now convinced that Al-lah was the same as the God of the Jews and the Christians. Over the
next twenty years, Mohammed received his angelic visitor repeatedly in dreams and visions
and he narrated to scribes what God's messenger had told him.
Eventually, these writings were assembled as the Quran - The Book - a compact collection
of 114 individual Suras or revelations. The Quran refers to the principals, many of them
prophets, who appear in the Torah and in the Christian New Testament, Adam and Abraham,
Ishmael and Isaac, Jacob, Moses, David, Solomon, Mary and Jesus. They are viewed as the
forerunners of the final revelations that Mohammed received from Allah through Gabriel.
Mohammed saw himself as the final prophet of Allah, and the Quran as God's final revelation
to mankind.
Mohammed borrowed from the stories contained in Jewish and Christian Scripture, and
added elements based on his own experience, to provide his followers with a new and strict
code for living and self-worth. The Quran calls this faith Islam, which means submission.
To be a Muslim, a member of the body of Islam, one must say in Arabic, "I bear witness that
there is no God but Allah, and that Mohammed is his Messenger." This is the first pillar of
the faithful.

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 Public Choice (2006) 128:77-90 87

There are four other pillars of Is

in Mecca; to
t give to the poor; to
month of Ramadan; and to make
believer is physically able so to do
The Quran teaches that the One
gradually by the prophets. Moha
Jews and Christians have also be
from purity of worship. By claimin
blasphemers.
Nevertheless, Jews and Christians, as People of the Book, should be allowed to live in
Muslim lands, except for Arabia, and to freely practice their respective faiths. They should
live among Muslims as a protected class, a dhimmi, with a status less than that of followers of
Mohammed. All dhimmi must pay the ruler a head tax (Drummond, 2004, 169). Mohammed's
toleration of the Jews weakened after his flight from Mecca to Medina where he accused the
Jews of opening the gates of the city to his enemies.
For this act, Mohammed ordered that all the male Jews in Medina should be slain, that their
children should be sold into slavery and that no Jews should be allowed to live in Arabia.
The Quranic revelations that appear in the Medina years reflect this growing negativism.
Several Suras are aimed against Jews and Christians and these provide the basis for the harsh
attitudes towards Jews and Christians currently fermented by Islamic fundamentalists.
Like other parts of the Middle East, Palestine has witnessed the dramatic growth of various
Islamist movements, especially in the Occupied Territories. Inside Israel itself, the Islamist
movement is much more muted, working as it does among a Muslim minority population.
Radical Islam in the Occupied Territories is a response not only to a brutal Israeli dictatorship
throughout Gaza (until the 2005 withdrawal), the West Bank, and Eastern Jerusalem, but also
to the secular nationalist ideology of a corrupt Palestine Liberation Organization (PLO) that
was founded in 1964.
Yasser Arafat, throughout his career, was a murderous thug and a committed terrorist. He
was also a thief who ruthlessly transferred Palestinian assets to numbered private accounts
in Switzerland and elsewhere. The fact that he eventually shared a Nobel Peace Prize with
Yitzhak Rabin indicates, one must suspect, the existence of deep-rooted corruption within
the Norwegian Nobel Committee.
Arafat was only nineteen years of age when Israel declared independence. He was shocked
by the poor performance of the Arabs in the first Israeli-Arab war. He became consumed with
two interlocking ideas, namely that Palestinians must have their own independent country,
and that the Israeli Jews must be driven into the sea. He never relinquished either of these
two goals, despite the unnecessary suffering that he imposed on his own people, and despite
paying self-serving lip-service to the Oslo Accord and to the Road Map to Peace. He died
many years after he should have been eliminated. Targeted assassinations are sometimes
cost-effective mechanisms for ridding the planet of undesirable political leaders.
Working in Kuwait, Arafat formed the Fatah party, dedicated to his twin goals. Later Fatah
merged with the Popular front for the Liberation of Palestine (PFLP) to form the Palestine
Liberation Organization (PLO). Arafat became the leader of the PLO and set up his terrorist
base in Jordan. As the PLO grew in power and notoriety, it became a threat to Jordan, leading
to a two-year civil war. In 1971 the victorious King Hussein threw Arafat and the PLO out
of Jordan. Arafat and the PLO regrouped in Beirut, from which location they assassinated
almost the entire Israeli Olympics team in Munich in 1972. Arafat used the Lebanon base,
with the assistance of Hezbullah guerrillas, to infiltrate Israel across its northern border.

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 88 Public Choice (2006) 128:77-90

Ariel Sharon invaded Lebanon in

The United States and French gove
the PLO to safety in Tunisia. From
Israel, endorsing, in 1988, the firs
spontaneously with rock-throwing
Arafat belatedly recognized howe
role of the PLO with respect to the
the leopard pretended to change h
the PLO renounced terrorism and
co-exist.

In the guise of world statesman, Arafat signed the Oslo Accord in 1993 and entered into
negotiations that, in 1995, created the Palestinian Authority. On this basis, Arafat returned
to Palestine, assuming the presidency of the PLO by popular acclaim. He ruled absolutely
and corruptly, through Fatah and its military wing, Tanzim, continuing his terrorist activities
against Israel while lining personal European bank accounts with monies earmarked for
assistance to his impoverished people.
From 1964, when it was created, until the present time, the PLO has attracted ongoing
criticism and hostility from Islamist organizations working within and outside Palestine. For
example, the Islamic Liberation Party (ILP) immediately condemned the PLO for surren-
dering Palestine instead of liberating it, and for disobeying Allah and his Messenger. For
these reasons, the ILP argued that it was forbidden (haram) for any Muslim to join, work
with, or provide financial assistance to the PLO (Barghouti, 1996, 166). The ILP advocates
the revival of the classical Islamic institution of government - the Caliphate - and believes
that the Caliph should lead Muslims in accordance with the Islamic shari'a, and endeavor to
spread the word of Islam throughout the world.
The Islamist movement in the Occupied Territories confronted a changed situation after the
1967 Israeli occupation of Gaza and the West Bank. Two new movements were established,
and became active.
The Islamic Jihad was established in Palestine in 1979, the year of the Iranian Revolution.
The Jihad considers Iran to be the strategic base for world Islam and argues that resistance
against the Israeli occupation of Palestine should have commenced the moment that the land
was occupied. The Jihad emphasizes military resistance over political activity. It also views
other Arab regimes as part of the 'imperialist project' in the region. The Jihad despises the
PLO and all its officers including the late Yasser Arafat.
The Islamic Resistance Movement, Harakat al-Moqawmah al-Islamiyya, (Hamas)
emerged in 1987 with the advent of the first Intifada against Israel. In August 1988, Hamas
published a covenant rejecting the legitimacy of the PLO as the sole representative of the
Palestinian people. Hamas quickly achieved popular acceptance within the Occupied Terri-
tories and became the main competitor to the PLO (Barghouti, 1996, 167). Hamas shares the
position of the Islamic Jihad that Palestine must be returned completely to the Muslims.
Hamas rejects any compromise with the State of Israel and has declared a holy war
against Israel as well as corrupt elements within Palestinian society. It has engaged in un-
ceasing terrorist missions against Israel since its inception, but it has not initiated military
resistance. Hamas, unlike the corrupt PLO, has provided educational and health care facilities
for Palestinians in the Occupied Territories. As a consequence, it won a majority of seats in
the Palestine Authority in recent elections and has replaced the PLO, forming a theocratic,
fundamentalist Islamic government of that Authority in March 2006. So now, in Palestine,
the theocratic dog wags the secular tail.

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 Public Choice (2006) 128:77-90 89

5. Implications for the road ma

'Turning and turning in the wide

The falcon cannot hear the falcon
Things fall apart, the center cann
Mere anarchy is loosed upon the
The blood-dimmed tide is loosed,
The ceremony of innocence is dr
The best lack all conviction, whil
Are full of passionate intensity.
(William Butler Yeats, "The Sec
1921)

The road map to peace, as developed through Oslo 1 (1993) and Oslo 2 (1995) presupposes
that Israel and Palestine are interested in reaping the gains from trade implicit in a negotiated
settlement (Cowen, 2004a, b; Dershowitz, 2005). The historical evidence of the past 60 years
unequivocally indicates that neither side is seriously interested in such an outcome (Plaut,
2004a, b; Farsoun 1997). Transaction costs are far too high for the Coase theorem to apply.
The transaction costs in question are clearly not economic. The economic benefits to both
sides from a negotiated peace are enormous. The problem lies in religious zealotry. The Jewish
zealots will never sacrifice Jerusalem (not even the Old City which is Arab-dominated). They
are unlikely to accept a shift back to the pre-1967 borders, sacrificing many of the Israeli
settlements illegally developed on the West Bank. They will certainly refuse to allow an
unlimited right of return to ousted Palestinians Cohen, 1986; Vogel, 1986).
The Palestinian zealots probably will not sacrifice any part of the old British Mandate,
which means that there is no place for Israel on the map of the Middle East. They will
certainly not sacrifice the Old City of Jerusalem and, probably, they will not sacrifice the
right to return. With all of these issues essentially off the negotiating table, no deal can be
struck and the road map to peace is a non-starter (Barghouti, 1996).
In such circumstances, three alternative scenarios exist. In the first, most likely scenario,
Israel and Palestine will continue a long-term low-level limited war, in which terrorist attacks
by Palestinians are punished by Israeli rocket and tank attacks on Palestinian members of
Hamas and the Islamic Jihad and in which Israel isolates itself with a Berlin Wall across a
disputed border (Aruri, 1995; Farsoun, 1997).
In this scenario, the United States appears likely increasingly to provide aid to Israel and
Western European nations appear likely increasingly to provide aid to Palestine. Thus, the
Middle Eastern conflict will polarize relationships between the United States and Western
Europe. In consequence, the United States will become a much more focused target of Islamic
fundamentalist terrorists, while Western Europe increasingly will pay Danegelt to Muslim
radicals in return for peace.
In the second scenario, Palestine radicals, with the support of Middle Eastern sympathizers
in Iran, Syria, Saudi Arabia, and Pakistan, will launch major rocket attacks on Israeli cities,
using weapons of mass destruction secured by Saudi money from Pakistan and Iran. Israel
would respond with the nuclear option eliminating, on the first strike, the capital cities of
each of the major conspirators, namely Tehran, Damascus, Riyadh and Karachi. The Middle
East would become largely uninhabitable. The US most likely would intervene militarily in
favor of Israel in response to the American Jewish lobby and in fear of a loss of oil supplies.
Armageddon might well become a real prospect.
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 90 Public Choice (2006) 128:77-90

In the third, most preferred sce

little to the primarily Democratic
American-Israel Public Affairs C
majority, non-Jewish, non-funda
the European Union in which all
East in its entirety until a peace
circumstances, the price paid for
parties to the continuing conflict.
other hand, would face a much lowe
be a much safer place.

References

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Islamic fundamentalism (pp. 163-178). Boulder, Colorado: Westview Press.
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