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INTERNATIONAL JOURNAL OF COOPERATION AND DEVELOPMENT
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Abstract
Can economic integration succeed between one rich and relatively powerful partner and one poor and relatively powerless partner in the context of security tensions between them? This paper evaluates the economic reality resulting from peace treaties conceived between Israel and Palestine, countries with intentions of integration and interdependence, but that has resulted in a de facto situation
of de-development and a higher degree of economic dependence. The context of the study was evaluated based on the mercantilist and liberal theories of the 17th century. The actual conditions prevailing in Palestine-Israel relations are far from those of a liberal context. Neither are sovereign states at peace. Rather, Israel is a well-established sovereign state with an impressively developed economy and a strong army, while Palestine is an occupied nation with no formal state, fledgling institutions, a developing economy and no army. Moreover, the context of Palestine-Israel relations is not one of peace, but one of military occupation and war. Due to this power gap between the two parties and the context of occupation and war, the de facto regime and policies regulating and updating the
economic relationship between them have been very different from what is established de jure under existing economic integration agreements. Therefore, the results in terms of economic development and institution building for Palestine have not been at all what one would expect from a process of economic integration between two free well-established states at peace with each other.
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