NOW, LET'S TRY FREE TRADE IN THE MIDDLE EAST
After 46 years of hostility, the Israeli-Jordanian peace agreement offers welcome hope that one of the world's most troubled regions may soon enjoy a measure of normalcy. But even as the peace process gains momentum, it's time to look ahead to the critical next step: the creation of new economic ties that can bring prosperity to the region (page 16).
In the short run, increased tourism offers the most immediate benefits for Israel and Jordan. The Holy Land already attracts travelers of all faiths, but open borders between the former enemies will make it easier for tourists to stay longer and see more. Israeli money and knowhow can help develop tourist attractions in Jordan. And peace will create enormous economic efficiencies in transportation, since shipments from Europe to Jordan can go directly through Israel instead of traveling a more expensive and roundabout route.
But the big economic payoff in the long run will come if Israel, Jordan, and the Palestinian proto-state are able to gradually integrate their economies. That means lowering trade barriers over time and allowing free flow of capital. Politically, that won't be easy, but the potential gains could be enormous. None of the Middle East countries is a large enough market to warrant large-scale investment by multinationals. But together, they become much more attractive for foreign investment and trade.
With the long history of enmity in the region, peace cannot be taken for granted. But for the first time in decades, it looks as if the destiny of the Middle East will be determined by economics, not war.