Kushner's Mideast Peace Gamble Puts Economics Ahead of Strife

(Bloomberg) -- For those who’d come to doubt that the Trump administration actually had a Middle East peace plan in the works, Jared Kushner proved them half-wrong on Saturday. The president’s son-in-law released a detailed $50 billion road map for the future Palestinian economy, but said nothing about resolving the region’s political troubles.

Kushner’s “Peace to Prosperity” economic blueprint was revealed in a glossy brochure ahead of a two-day workshop the U.S. is hosting in Bahrain, where the Trump administration hopes to persuade other countries to pick up the tab and put the heat on Palestinians to accept the blueprint.

Kushner, a White House senior adviser who is President Donald Trump’s point man on Middle East peace, said in a statement that Palestinians have been “trapped in inefficient frameworks of the past.” He called the proposal “a vision of what is possible if there is peace.”

There is, of course, no peace yet -- and the U.S. hasn’t signaled how it will get there. On the contrary, Trump has alienated the Palestinians by recognizing Jerusalem as Israel’s capital, moving the American embassy there and then cutting off aid to the territories after Palestinian leaders complained.

Kushner further perturbed the Palestinians by expressing doubt, in an interview that aired this month, about their capacity to govern themselves. “The hope is that over time they can become capable of governing,” he said in an interview with “Axios on HBO.”

Serious Proposal

Palestinian leaders largely broke off contact with the Trump administration after the Jerusalem moves and weren’t consulted on Kushner’s plan.

But even skeptics acknowledged a seriousness of purpose to Kushner’s economic proposal, which outlined more than 200 programs and projects to connect Gaza and the West Bank, expand exports and the Palestinian internet and increase access to drinking water, natural gas, hospitals, education and job training.

The plan includes at least one proposal that could prove difficult for Israeli leaders to accept: a $5 billion transit corridor cutting across the Jewish state to connect the Palestinian territories of the Gaza Strip and the West Bank.

Kushner’s blueprint is silent about who would administer the investments, and the White House faces a pervasive sense from experts in the region and in the U.S. -- not to mention the Palestinians -- that it’s put the cart before the horse. There are deep doubts that an investment-first approach, without a political solution, can lead to peace.

“Even an ambitious vision of much-needed economic development cannot substitute for a political agreement that will finally resolve the core issues driving the Israeli-Palestinian conflict,” Jeremy Ben-Ami, president of the progressive Jewish group J Street, said in a statement.

In effect, Kushner started with the easiest, most achievable part of a full peace plan.

The economic document was put forth without any proposed resolution for the many political disputes between the Palestinians and the Israelis, including territorial boundaries, Israeli settlements in the West Bank, or Palestinian demands for a “right of return” to land they lost in wars against Israel.

That half of the U.S. peace plan is expected to be delayed at least until September, with Israel facing new elections after Prime Minister Benjamin Netanyahu failed to assemble a governing coalition.

Aaron David Miller, a public policy fellow at the Woodrow Wilson International Center for Scholars and a former Mideast peace negotiator, called the economic plan a comprehensive, detailed proposal.

‘No Confidence’

“In a galaxy far, far away” the plan would be “a very good approach to the economic components of peacemaking,” he said. There are exceptions, he said, including provisions to develop a Palestinian tourism industry that he called unrealistic and out-of-touch.

“But I can’t see under these circumstances that this could possibly work. There is no confidence or trust to support this,” Miller said.

By splitting the economics from the politics, he said, “It leaves the impression they’ve trotted out the easy part, that they won’t trot out the hard part because they don’t want to alienate Trump’s political constituencies at home and they don’t want to screw up the prospects of Netanyahu being re-elected.”

The Palestinians, who’ve criticized the U.S. approach to focus first on economic development, are boycotting the Bahrain workshop. As a result, Israeli government representatives weren’t invited either. Questions remain about whether either side could agree to any two-state solution and whether Israel will pursue annexing some Jewish settlements in the West Bank.

Husam Zomlot, the Palestinian Authority’s ambassador to the U.K., said that “omitting Israeli occupation of Palestine is self-explanatory: the plan is designed to perpetuate it.”

Hanan Ashrawi, a member of the Palestinian Leadership Organization Executive Committee, said that if the U.S. began with a peace plan that forced Israel to make sacrifices, the Palestinians would handle economic development themselves.

“First lift the siege of Gaza, stop the Israeli theft of our land, resources & funds, give us our freedom of movement & control over our borders, airspace, territorial waters etc. Then watch us build a vibrant prosperous economy as a free & sovereign people,” Ashrawi said on Twitter.

J Street’s Ben-Ami agreed that dangling investments before the Palestinians would not yield political concessions to Israel. “No amount of promised investment will convince the Palestinian people to surrender their legitimate aspirations to civil rights, equality and self-determination in an independent state of their own,” he said.

Schwarzman, Stephenson

Speakers at the Bahrain investment summit that begins Tuesday will include business leaders including Stephen Schwarzman, chairman of Blackstone Group; Randall Stephenson, chairman of AT&T; and Tom Barrack, the chairman of Colony Capital Inc. and the chairman of Trump’s inaugural committee. World Bank President David Malpass and International Monetary Fund Managing Director Christine Lagarde will also attend, the administration said.

In addition to Kushner, on hand from the administration will be Treasury Secretary Steven Mnuchin; Mideast special envoy Jason Greenblatt; Brian Hook, U.S. special representative for Iran; and Kevin Hassett, the outgoing chairman of the Council of Economic Advisers.

Official delegations are expected in Bahrain from 21 countries including the U.S., Japan, Oman, Egypt, Jordan, Saudi Arabia, the United Arab Emirates, Qatar, Italy, U.K. and France.

Trump pledged not long after his election to find the “ultimate deal” between Israel and the Palestinians. Since then, Palestinians have essentially broken off contact with the administration, saying Trump’s support for Israel and his close relationship with Netanyahu do not make him an honest broker.

The Kushner-led plan aims to generate more than $50 billion in new investment over 10 years, doubling the size of the Palestinian economy, creating more than 1 million jobs and cutting the poverty rate in half. More than half the money -- $27.8 billion -- would go to Gaza and the West Bank. Egypt would get $9.2 billion; Jordan, $7.4 billion and Lebanon $6.3 billion.

The transit link between the Palestinian territories would “fundamentally change the Palestinian economy,” according to the White House.

The plan also calls for $2 billion to expand the Palestinian internet, $1 billion to help develop the Gaza marine natural gas field, and $900 million for Palestinian hospitals and health care facilities to acquire and upgrade equipment.

--With assistance from Hailey Waller, Sebastian Tong and Michael S. Arnold.

To contact the reporters on this story: Margaret Talev in Washington at mtalev@bloomberg.net;Rich Miller in Washington at rmiller28@bloomberg.net

To contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, Ros Krasny

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