When Prime Minister Binyamin Netanyahu took over the Israeli government at the end of March 2009, he spoke about his economic peace plan. In November 2009, Netanyahu said, “Economic development does not solve problems, it mitigates them and makes them more accessible for solution, and creates a stronger political base.”

He further said he would not hand over the Palestinians territories before strengthening the West Bank economy, fearing that radical Islamists backed by archenemy Iran would seize power there.

Here we are two years later. Palestinians have received more than passing grades from the World Bank and the IMF in their state and institutional building efforts.

Anyone who visits the West Bank immediately takes notice of the rapid economic development that has taken place. Despite the Palestinian rejection of Netanyahu’s economic peace plans, so far the basic theory has worked.

Economic growth has created a kind of deterrence against a return to violence. People remember all too well the horrific, tragic losses of the second intifada years, the loss of life and the destruction of property. Palestinians do not want to return to the chaos of the aftermath of the collapse of the Palestinian Authority and the complete reoccupation by Israel of all Palestinian cities. There has been progress on the ground and even if there is no political progress towards a negotiated peace settlement or an end to the occupation, for the time being Palestinians do not want to lose what has been achieved.

Netanyahu may be able to feel that his economic peace plan is widely responsible for the current stability, but it would be very wrong for him not to admit that the primary success belongs to the Palestinian leadership and the Palestinian people. The decision of Palestinian Authority President Mahmoud Abbas to implement Palestine’s road map obligation to dismantle the infrastructure of terrorism, to re-establish law and order, to unite the Palestinian security forces and to place them under the rule of the political echelon are the main elements that have enabled economic growth over the past years.

PA Prime Minister Salaam Fayyad and his government have demonstrated success in developing the institutions of statehood, including the emphasis that has been placed on the need for people servicing public government institutions. The international community has played its positive role as well by providing the necessary funding to enable the implementation of these plans.

Israel removed checkpoints and made movement somewhat easier, but all international reports on the Palestinian economy still say that the primary obstacle to greater economic growth in Palestine are Israeli limitations on movement and control of the economy.

SO WHAT now? There are no negotiations for peace and there seems to be no real plan to get the parties back to the table. The international financial crash is having a direct impact on the Palestinian Authority as well. The US punishment of Palestine because of its decision to go to the United Nations is also a real blow to the state building process, and if Israel continues to withhold Palestinian tax revenues, this will be a fatal knockout to the Palestinian government and the economy.

Soon we will see massive layoffs, closings of businesses, new hotels and restaurants shutting down. Palestinian software ventures, new start-ups, factories all over the West Bank will close their doors. The Palestinian Authority will not be able to pay its salaries. The PA is the largest employer in the West Bank. How long will it take under this scenario before there is a return to violence? Following the release of Gilad Schalit from Gaza, the policy of the Israeli government may be to also implement economic peace there was well. The office of the Coordinator of Government Affairs in the territories (COGAT) in the Ministry of Defense announced this week that quantities of agricultural produce from Gaza, mainly strawberries and flowers, exported to Europe will more than double this year, from 399 tons of strawberries this year to 1,000 tons expected in 2012. In 2011, the PA exported 10 million carnations and six tons of peppers; next year, those numbers will hit 20 million carnations and 150 tons of peppers COGAT has also announced that it will allow furniture to be exported from Gaza.

Even with Hamas in power in Gaza, apparently someone is beginning to understand that it is better for our neighbors to be gainfully employed than hungry, frustrated and angry.

UN officials have also noted that Israel is now allowing several important construction projects to take place, including the building of new schools. This is a very good step in the right direction. The Hamas government in Gaza has profited from Israel’s economic siege. The underground tunnel economy has been extremely profitable for them and they have systematized the means of collecting high revenues from this. Opening Gaza’s economy once again is the right thing to do.

So if there is no political process taking place that will lead us back to negotiations and perhaps to peace, and if Israel successfully blocked Palestine’s attempt to gain international recognition of statehood without negotiations, perhaps the best plan to implement now is a continuation and even an enhancement of Netanyahu’s economic peace.

It is no replacement for political peace.

Palestine must achieve statehood and Israel must end its control over the Palestinian people, but political constellations locally and internationally do not seem to enable political progress at this time. The main policy effort must be to prevent a return to violence.

The next step of this plan must be to release control over territories in the West Bank that are located in Area C, lands under full Israel control. Area C comprises 62 percent of the West Bank. With Israeli encouragement, large infrastructure development projects could be launched in the development of a transportation corridor, energy – including solar and wind projects, and even the construction of at least one new city, which could be used to absorb Palestinian refugees from places like Lebanon in the future.

At a time when we have no political horizon and no statesman-like leadership that can propel us into the future when peace agreements will be possible, we must avoid political collapse and economic doom that will lead to violence. Economic peace may be the only answer for the present time.