After his landslide victory, Israel’s Prime Minister elect Ehud Barak expressed his determination to restart peace talks with the Syrians and Palestinians. But a more urgent priority, for peace as well as prosperity, is to reform Israel’s stagnant economy. Economic inefficiency is responsible for squandering much of Israel’s excellent human capital, and for the country’s growing political instability and widening social fissures. Slow growth is also for hampering the peace process. For better or worse, the Palestinians will remain inextricably linked to Israel’s laggard economy. Their welfare, not only Israel’s, depends on liberalization.

Like other historical follies, Oslo was concocted by well-intentioned academicians, led by the brilliant Yossi Beilin – who does not let reality ever interfere with a daring concept – and implemented by Shimon Peres, the indefatigable visionary.

A very smart group; but they only reconfirmed that even very experienced, clever people, who are wedded to brilliant conceptions, tend to ignore simple realities with catastrophic consequences: as the Yom Kippur War anniversary just reminded us.

It was perhaps a brilliant conception to take a broken Arafat and his PLO, give them control over the West Bank and its Arab population and hope that they would fight “the extremists”, and become our “partners for peace.”

In politics, necessity dictates that you sometimes take even a murderer off the gallows. But you must then keep him on a very short leash, and ascertain that he meticulously fulfills the deal he made to get off the noose.

In Oslo, amazingly, our clever leaders recklessly decided to arm an arch-terrorist, help him form an army disguised as “police,” seven (!) “security services” partially financed by Israeli monopolies that cut a deal with Arafat through a former secret service boss, and a Tanzim paramilitary force.

They then stood idly by as he established a rule of terror and corruption, intimidating any opposition. They even kept pumping him with money and guns as he was brainwashing children and instigating his people and the Arab world to fight Israel with the vilest anti-Semitic calumnies.

While Arafat kept reiterating his militant objectives, our leaders, deafened by wishful thinking, refused to listen. They kept insisting, against accumulating evidence that Arafat was “a partner for peace”. Alas, they still do!

You cannot supply a pyromaniac with Molotov cocktails and then expect him not to use them. Arafat made a career by fomenting brutal violence, and was repeatedly rewarded for exploiting it. He broke most agreements with impunity but was seldom held accountable.

The chances that he would suddenly honor his Oslo pledge to foreswear violence were therefore miniscule; especially since he could watch how a confused Israeli leadership made its mighty army look like a paper tiger, allowing a bunch of Hizbullah terrorists to run rings around it, and finally even eject it from southern Lebanon, in the most degrading fashion.

Yes, Israel should negotiate and be ready to make some painful concessions. But if it wants a reasonable deal and not a surrender, it must not let Arafat believe that Barak’s political future is dependent on it, otherwise he will constantly up the ante.

The prospects for an agreement are also made more remote by our peace fanatics who convince Arafat that he can get everything if he just inflicts more pain on us, by politicized generals who announce that there “is no military solution” to a popular uprising (with their hands tied by a hesitant leadership, they may be right) thus inviting more violence.

And perhaps instead of constantly chasing after Arafat, our leaders could devote some thought to how they can promote real peace by first treating Arab individuals as human beings who have other needs and rights besides political self-determination.

Perhaps they should consider how to enable them to make a decent living, and how to protect them from Arafat’s terrorists and from the criminal culture he promotes, so that they can finally build the civil society they deserve to have.

So far the “peace process” has resulted in a lot of “pride” for many Arabs, but only more economic misery and less human rights.

The sickening violence and hatred displayed by many Arabs, Palestinian and Israeli, and especially by their leadership, must not be tolerated, of course. But we must honestly acknowledge that our discriminating politico-economic system can drive even less agitated people up the wall.

Unless we soon redress their real grievances, and ours too, coexistence has no chance, and a peace agreement, even if signed by Arafat, will not last long.

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