Introduction
This paper presents a roadmap for guiding Palestine from the devastation caused by the October 2023 war toward conflict resolution and the realization of a two state solution. It adopts a “reverse engineering” approach, beginning with clearly defined end goals — sovereignty and statehood — and then identifying the transitional steps required to achieve them. The proposed framework is organized into two phases: the Statehood Inception Phase, focused on recovery, reform, and the implementation of existing agreements under international oversight; and the Permanent Status Phase, centered on sovereignty, territorial reunification, an independent trade policy, fiscal reform, and social protection.
Importantly, this road map addresses one critical dimension of the transition — the institutional and economic dimension — while recognizing that any comprehensive road map must also incorporate political and security strategies, policies, and measures. By linking immediate humanitarian recovery with long term economic restructuring and institution building, this vision emphasizes that only a structured, time bound process grounded in clear commitments can transform the current wartime collapse into the foundation of a viable Palestinian state.
Regardless of how the war that began on October 7 ultimately ends, it has already triggered a shift toward a new political and economic paradigm. The pre war status quo — which had become increasingly unsustainable — has been fundamentally overturned. We are now effectively living in the “day after” of a prolonged period of escalating instability.
In the post war period, the Palestine Liberation Organization (PLO)/ Palestinian National Authority (PNA) will play a central role in shaping the political outcomes of this conflict despite its devastating human and economic costs. To do so effectively, it must present a clear and credible vision to the Palestinian people, the region, and the international community. Such a vision must address political, security, institutional, and socioeconomic dimensions in an integrated manner.
Even if recent regional and international declarations in support of a two state solution eventually evolve into official global policy and become recognized as the only viable path forward, the process of negotiation and phased implementation is likely to take years. The PLO remains committed to this objective, but major political forces in Israel continue to reject it outright.
What distinguishes the proposed post war transitional period from the Oslo interim arrangements of the 1990s is the requirement that any new transition begin with a clearly defined vision of the permanent status: two sovereign states. This vision must be supported by concrete commitments, detailed timelines, and enforceable guarantees under international supervision.
The aftermath of the war represents nothing less than a paradigm shift. There is now broad international recognition that the approach of merely “managing the conflict” has failed and that attention must instead turn toward ending the conflict through the implementation of a two state solution.
A fundamental prerequisite for this proposed road map is political reform and general elections in both the Palestinian National Authority and Israel. For Israel’s governing coalition, abandoning the long standing status quo would require a political transformation capable of producing leadership willing to make compromises — something successive governments have largely resisted since the election of the first Likud led coalition in 1996.
Within the occupied Palestinian territory — the West Bank, including East Jerusalem, and the Gaza Strip — political reform and institutional reunification would create a new political reality. Such a transformation could facilitate regional and international efforts to rebuild Gaza while also creating a pathway out of the current stalemate and toward the realization of a two state solution.
Gaza Relief and Reconstruction
Beyond the urgent priority of leading relief and reconstruction efforts in Gaza, it is clear that the post war period cannot simply restore the conditions that existed on 6 October 2023. It would be unacceptable for Gaza to return to the desperate economic circumstances that prevailed before the war, for East Jerusalem to remain isolated and disconnected, or for the West Bank economy to continue suffering under settlement expansion, territorial fragmentation, and coercive measures imposed on the ground.
The destruction of Gaza’s economy, combined with the severe decline in GDP (Gross Domestic Product) and GNI (Gross National Income) throughout the occupied Palestinian territory (oPt) as a direct consequence of the war, has produced a humanitarian catastrophe in Gaza alongside multiple economic and financial shocks in the West Bank. These developments have fueled rising unemployment, deepening poverty, and widespread economic insecurity.
In the coming phase, the highest priority will be the role of the PLO/PNA as both the Palestinian interlocutor and the leader of regional and international efforts to address Gaza’s urgent needs. These include humanitarian relief, temporary shelter, universal basic
income, the restoration of electricity, the rehabilitation of water treatment and desalination facilities, and the provision of educational, health, and other essential services. Meaningful reconstruction and sustainable development in Gaza can begin only after an initial period of healing and recovery.
Institutional and Macroeconomic Transition
At the institutional and macroeconomic levels, managing the consequences of the October war throughout the occupied Palestinian territory will continue to be constrained by the framework of the Oslo agreements until they are replaced by a permanent status agreement that formally ends the conflict.
Despite their many limitations, the Oslo Accords and their annexes remain the only internationally recognized framework governing Palestinian Israeli relations and the only signed commitments Israel has undertaken with the PLO. They therefore provide the existing legal and political basis from which the transition from the post war period to permanent status must proceed.1
At the same time, the profound paradigm shift now underway requires the PLO to articulate a clear vision of permanent economic status from the outset. Such a vision would provide regional and international partners with a clear economic objective around which political solutions could be designed and aligned.2
The first step should therefore be the mobilization of regional and international support to ensure the full implementation of existing signed agreements as a bridge toward permanent status and the eventual resolution of the conflict. It is important to recall that many provisions of the 1995 Oslo II Agreement were never implemented during the 1990s. Had they been fully implemented the socioeconomic trajectory of the Palestinian economy might have been significantly different over the past three decades.
The implementation of existing agreements serves not only as a confidence building measure but also as a test of credibility. Any future Israeli government seeking to negotiate a permanent status agreement must demonstrate a consistent commitment to honoring agreements and implementing them in good faith. In this sense, the implementation of commitments and agreements signed three decades ago remains an essential prerequisite for establishing confidence in future bilateral agreements that may emerge from a renewed peace process.
The implementation of these pending provisions in the Oslo signed agreements could provide the basis for the economic rehabilitation that the occupied Palestinian territory will require during a future Statehood Inception Phase. Politically and legally, it is both reasonable and justifiable to resume from the point at which negotiations and implementation effectively stalled in 2000.
A post war vision for Palestinian institutional and economic viability should therefore include policies, programs, and projects organized into two distinct and time bound phases: a) The Statehood Inception Phase governing post war economic relations. b) The Permanent Status Macroeconomic Phase.
Each phase will require its own institutional and macroeconomic policies, programs, and agreements with Israel and other regional and international economic partners. However, the policies developed during the Statehood Inception Phase must be structurally linked to — and explicitly designed to prepare for — the Permanent Status Phase.
The Statehood Inception Phase will continue to operate within the constraints of the existing framework and signed agreements, whereas the Permanent Status Phase will define the institutional and macroeconomic foundations of a sovereign Palestinian state.
The most significant paradigm shift today is that Palestinian statehood appears both real and attainable. It is no longer the distant and abstract possibility it seemed only months ago. The end goal has become clearer, and Palestinian demands rooted in international legality are widely understood. Any renewed political process can therefore succeed only if it openly recognizes these new realities and the legitimate expectations regarding the final outcome.
Permanent Status: Sovereignty as the Foundation
The permanent status framework begins with sovereignty. A future Palestinian state must exercise full control over its international borders, maintain territorial and political unity among Gaza, the West Bank, and East Jerusalem, and assert authority over its natural resources, energy infrastructure, and offshore gas reserves.³ Sovereignty is not treated here as a distant aspiration but rather as the foundation upon which all socioeconomic planning must be built.
In this context, Palestinian rights as a riparian (riverside) party to the Jordan River and the Dead Sea, together with rights related to the Levant Basin, the Eastern Mediterranean energy basin,4 are not only critical for economic development but also important expressions of national ownership and self determination. Without sovereign control over these resources, Palestinians will remain trapped in conditions of dependency and vulnerability.5
The roadmap envisions a developmental state capable of rebuilding a war torn economy after decades of occupation, fragmentation, and dispossession. Such a state would play an active role in institution building, economic restructuring, infrastructure development, and the provision of social welfare.6 Strong public sector intervention will be necessary to rehabilitate productive sectors such as agriculture and industry and to rebuild transportation, telecommunications, electricity, water, and fuel infrastructure.7
Human Capital and Social Welfare
Human capital development is treated as a cornerstone of recovery and state building. Investment in education, healthcare, pensions, social insurance, and vocational training is essential for strengthening resilience and preparing Palestinian society for sovereignty.8 The Palestinian diaspora is also identified as a strategic national asset whose capital, expertise, professional networks, and investment potential should be mobilized to support reconstruction and long term development.9
This emphasis on human capital reflects a broader understanding that sovereignty is not only about borders, institutions, and resources; it is ultimately about people. A healthy, educated, skilled, and economically secure population constitutes the foundation of any viable and sustainable state.
Trade Policy and Regional Integration
A sovereign Palestinian state will require an independent foreign trade and customs policy. The Paris Economic Protocol is widely criticized for structurally subordinating the Palestinian economy to Israel and limiting Palestinian policy autonomy.10
Future trade policy should therefore seek to diversify economic relations by strengthening ties with Arab economies, regional markets, and countries of the Global South.¹¹
Studies conducted by the United Nations Conference on Trade and Development (UNCTAD) demonstrate how dependence on Israeli controlled trade routes has distorted Palestinian development patterns and constrained opportunities for regional integration.¹²
As a result, the road map advocates a strategy of economic diversification and expanded regional engagement, particularly with Jordan, Egypt, Turkey, China, and other emerging economies.¹³
While acknowledging the limitations of Arab regional integration and the political fragmentation that continues to characterize much of the region, this approach argues that reducing exclusive dependence on Israel remains essential for the long term viability of the Palestinian economy.
At the same time, the future economic relationship between a sovereign Palestinian state and Israel could take a variety of forms, depending on the priorities, interests, and policy choices of both parties. These arrangements could range from a free trade area, under which goods and services move between the two countries with reduced or eliminated tariffs while each maintains its own external trade policy, to a customs union that establishes a common external tariff and coordinated trade regulations.
Other possibilities include most favored nation arrangements based on reciprocal non discriminatory trade treatment, or a more comprehensive economic union involving deeper integration of markets, infrastructure, labor mobility, investment frameworks, and regulatory systems, drawing upon the principles of economic cooperation envisaged in the framework of United Nations General Assembly Partition Resolution 181.
The choice among these alternatives should be guided by careful consideration of their likely effects on economic growth, employment, investment, fiscal sustainability, competitiveness, and the broader developmental priorities of the Palestinian state.
Any future arrangement should promote prosperity, stability, and mutually beneficial cooperation while safeguarding the economic sovereignty, policy autonomy, and developmental requirements of both parties. The structure of economic relations should also be flexible enough to adapt to changing regional and global conditions and to support the long term aspirations of the Palestinian people.
Ultimately, determining the future economic relationship between a sovereign Palestinian state and Israel is a matter of national sovereignty and democratic self determination. The authority to decide whether to pursue closer economic integration, maintain a more limited framework of cooperation, or adopt any other model of economic engagement should rest exclusively with the freely elected representative legislative body of the Palestinian state.
Such a decision must reflect the informed judgment of the Palestinian people as expressed through their democratic institutions. It should be made in light of Palestinian economic interests, political preferences, and long term development objectives. No external actor should predetermine this choice. Rather, it must emerge from a sovereign and democratic decision making process undertaken by the legitimate representatives of the Palestinian people.
Reparations and Economic Justice
Another central element of the permanent status vision concerns reparations and economic justice. Any final settlement must address reparations for Palestinian refugees displaced in 1948 in accordance with United Nations General Assembly Resolution 194, compensation for persons displaced in 1967, and reparations for decades of land confiscation, destruction of infrastructure, exploitation of natural resources, the broader economic losses resulting from occupation since 1967, and reparations and restitution for repeated military assaults on the Gaza Strip.14
The demand for reparations is not solely a financial matter. It is also a question of acknowledging historical injustice, restoring dignity, and addressing the long term economic consequences of displacement, dispossession, and occupation. Economic justice should therefore be understood as an integral component of any durable peace settlement rather than a secondary or optional consideration, as well as a prerequisite for embarking on the historical process of reconciliation between the two peoples.
Territorial Reunification
The road map emphasizes that the Palestinian economy cannot be effectively reconstructed without the territorial reunification of Gaza, the West Bank, and East Jerusalem. Both the Oslo era arrangements and subsequent Israeli policies contributed to a process of geographic and economic fragmentation that undermined the viability of a unified Palestinian economy.15
The isolation of Gaza, the separation of East Jerusalem from its natural economic hinterland, and the fragmentation of the West Bank into Areas A, B, and C have all constituted major structural obstacles to Palestinian development and statehood.16 These divisions have disrupted trade, weakened labor mobility, impeded investment, complicated service delivery, and increased the costs of economic activity across the occupied Palestinian territory.
Territorial reunification must therefore be viewed not merely as a political objective but also as an economic necessity. A viable Palestinian state requires an integrated national market, coherent infrastructure networks, coordinated institutions, and the unrestricted movement of people, goods, services, and capital throughout its territory. Without such integration, the prospects for sustainable development and long term economic viability will remain severely constrained.
Transitional Phase: The Statehood Inception Stage
Having outlined the permanent status objective, the road map turns to the transitional Statehood Inception Phase, envisioned as a preparatory stage leading toward sovereignty, self determination, and the realization of the two state solution.17 During this period, Palestine would continue to operate within many of the institutional and legal arrangements established under the Oslo framework, while simultaneously reforming and restructuring those arrangements in preparation for independence.18
Although the October 2023 war may have marked the political collapse of the Oslo process, the institutional and economic structures established through the Paris Economic Protocol and related agreements continue to govern Palestinian Israeli economic relations.19 Consequently the immediate priority should not be the negotiation of a new interim framework, but rather the implementation of signed agreements whose provisions remain unfulfilled.20
The proposed Statehood Inception Phase could include the establishment of a Multilateral Steering Commission composed of representatives of the Quartet, BRICS countries, and key regional actors. This body would be tasked with supervising implementation, monitoring compliance, facilitating cooperation, and mediating disputes.²¹
The road map also proposes the reactivation of the Palestinian-Israeli Joint Economic Committee and its thirteen technical subcommittees, while placing them under international oversight to ensure transparency, accountability, and effective implementation.²²
The purpose of this phase is not to create another open ended transitional arrangement. Rather, it is intended to serve as a clearly defined and time bound mechanism for moving from the current reality of conflict and fragmentation toward the institutional foundations of sovereign statehood.
Fiscal Reform
Fiscal reform is identified as one of the highest priorities during the transitional period. The existing revenue sharing clearance mechanism, under which Israel collects taxes and customs revenues on behalf of the Palestinian Authority has long been criticized for generating substantial fiscal leakages and enabling repeated withholding of Palestinian funds.²³
The road map therefore proposes a comprehensive review and restructuring of this mechanism, including consideration of alternative revenue sharing arrangements such as those employed by the Southern African Customs Union (SACU).24 The objective is to establish a more transparent, predictable, and equitable framework that protects Palestinian fiscal rights and strengthens the financial sustainability of Palestinian public institutions.
Addressing fiscal leakages is particularly important given the severe financial pressures facing Palestinian institutions in the aftermath of the war. Restoring fiscal stability will be essential not only for maintaining government services but also for supporting reconstruction, economic recovery, and long term development.
Trade and Border Management
Reforming trade and border management arrangements is another key priority of the Statehood Inception Phase. During the transitional Inception Phase, the road map calls for full Palestinian participation at international border crossings, the reopening of the Damiah Bridge for commercial trade with Jordan, the reopening of the Rafah Crossing in accordance with the 2005 Agreement on Movement and Access, and the facilitation of Palestinian bonded areas, dry ports, and free trade zones.25
In addition, the roadmap advocates lifting restrictions on Palestinian imports and eliminating the Israeli “dual use” system that imposes extensive limitations on a wide range of goods entering the Palestinian market.26 These restrictions have long constrained investment, industrial development, technological advancement, and productive economic activity.
Particular importance is attached to the implementation of the two safe passage arrangements between Gaza and the West Bank, as provided for in the signed map annexed to the Oslo II Agreement. The Latrun-Gaza and Tarqumia-Gaza corridors envisioned under Oslo II are essential mechanisms for restoring territorial continuity and reconnecting the Palestinian national economy.27
Reestablishing these links would facilitate the movement of people, goods, services, and investment between the two parts of the occupied Palestinian territory, helping to reverse decades of fragmentation and economic separation.
Labor Relations
Labor relations constitute another major area of concern. The existing permit system governing Palestinian workers employed in Israel has created opportunities for exploitation by intermediaries while simultaneously reducing Palestinian institutional authority over labor mobility.28
The roadmap therefore calls for the implementation of Article VII of the Paris Economic Protocol, which designates Palestinian labor institutions as the responsible counterparts for regulating labor movement and employment permits.29 Strengthening Palestinian institutional involvement in labor governance would improve transparency, reduce exploitation, and enhance worker protections.
The road map also calls for the transfer of pension contributions, social insurance payments, and other deductions that have accumulated over many years and remain under Israeli control.30 Recovering these funds would provide an important source of support
for Palestinian workers and their families while reinforcing the principle of economic justice.
Monetary and Financial Issues
Monetary and financial issues are also central to the transition toward sovereignty. The Palestine Monetary Authority (PMA) currently operates with powers significantly more limited than those of a conventional central bank.³¹
The roadmap proposes addressing a range of longstanding challenges, including correspondent banking relationships, the accumulation of excess shekels in the Palestinian banking system, seigniorage (the profit that a government of central bank makes from issuing currency) losses, and broader restrictions affecting Palestinian financial institutions.³²
As part of this discussion, the roadmap recommends examining the feasibility of establishing a trilateral currency board involving Palestine, Jordan, and Israel. Such an arrangement could provide greater monetary stability during the transitional State Inception period while allowing policymakers to assess longer term monetary options.
At the permanent status stage, the possibility of establishing an independent Palestinian national currency would be revisited as part of the broader exercise of economic sovereignty.³³
Infrastructure and Sovereign Control
A more detailed and comprehensive version of this roadmap would devote substantial attention to strategic infrastructure sectors. Electricity generation and distribution, water systems, telecommunications, transportation networks, sewage management, fuel supplies, and natural resources are all areas in which Palestinian dependence on Israel remains particularly acute.34
The roadmap argues that sovereign control over these sectors is indispensable to sustainable development and long term economic independence. Infrastructure should therefore be viewed not only as a technical or developmental issue but also as a core component of state building and sovereignty.
Reducing dependency in these sectors would improve economic resilience, strengthen national planning capacity, and provide the foundation for sustained growth and investment in the future Palestinian state.35
Emergency Conditions and Wartime Collapse
The road map recognizes that Palestine is currently not confronting conditions of normal economic development but rather the consequences of economic collapse and wartime devastation. The destruction inflicted on Gaza and the severe restrictions imposed throughout the West Bank have produced a humanitarian and economic emergency that demands immediate intervention.
Today, the Palestinian economy — including a devastated Gaza Strip, an isolated East Jerusalem, and a fragmented West Bank — operates under conditions more closely resembling a prolonged war economy than a conventional developing economy.36
Under these circumstances, emergency governance measures and extraordinary economic policies are both justified and necessary. Drawing upon the Palestinian Basic Law, the roadmap advocates the declaration of a formal state of emergency that would permit exceptional measures aimed at preserving institutional continuity, reallocating public expenditures, protecting vulnerable communities, and supporting recovery efforts.37
Such measures should be viewed as temporary responses to extraordinary conditions rather than permanent departures from normal governance practices. Their purpose would be to stabilize institutions, maintain essential services, and create the conditions necessary for recovery and reconstruction.
The broader objective of the Statehood Inception Phase is therefore not merely to manage crisis conditions but to transform emergency intervention into a pathway toward economic rehabilitation, institutional renewal, and eventual sovereignty.
Shifting Away from the Oslo Model in the Transitional State Inception Phase
The war has exposed the fragility of the post Oslo economic model, which has relied heavily on external aid, imports, Palestinian labor access to the Israeli economy, and the micro and documentary approach to the clearance of revenues transferred through Israeli controlled mechanisms.38 The cumulative effects of these structural dependencies have become increasingly apparent during periods of political crisis and conflict, revealing the vulnerability of the Palestinian economy to external shocks and unilateral measures.
The road map therefore advocates a gradual shift toward a development strategy centered on productive investment, food security, social protection, localized development, and greater economic self reliance.39 Such a strategy would seek to strengthen the productive base of the Palestinian economy while reducing excessive dependence on external actors and uncertain political conditions.
Particular emphasis is placed on supporting domestic agriculture, local industries, and community based economic initiatives. These sectors are viewed not only as sources of economic growth and employment but also as essential pillars of Palestinian steadfast endurance (sumud) under conditions of prolonged conflict and occupation.40
The objective is not economic isolation or self sufficiency in the strict sense, but rather the creation of a more resilient economy capable of withstanding political and economic disruptions while preserving national development prospects.
Localized Resilience and Lessons from the First Intifada
Historical Palestinian experiences during the First Intifada offer important examples of localized resilience and community based adaptation. Household production, agricultural self sufficiency, cooperatives, and local support networks helped communities cope with economic hardship and external restrictions during that period.41
These experiences provide valuable lessons for the current period of crisis and reconstruction. While the circumstances facing Palestinians today differ significantly from those of the late 1980s, the underlying principles of resilience, social solidarity, local initiative, and community mobilization remain highly relevant.
The road map therefore argues that localized forms of development should complement broader national strategies for reconstruction, economic recovery, and state building. Community initiatives cannot substitute for national institutions, large scale investment, or comprehensive development policies. However, they can strengthen social cohesion, reduce vulnerability, and provide important foundations for recovery during periods of transition.
Together, localized initiatives and national development strategies can help move Palestine beyond dependency and fragmentation toward the creation of sovereign institutions, greater regional integration, stronger social protection systems, and ultimately national self determination.
From Post War Reality to Permanent Status
While this road map begins with clearly defined parameters for resolving the conflict and achieving a two state solution, its primary focus remains the transitional process of the State Inception itself. The central challenge is to move from the reality created by the post October 2023 war to the threshold of permanent status and sovereign statehood.
Achieving this objective will require the careful design of institutional, political, security, economic, and legal policies, as well as practical mechanisms capable of making the transition both viable and implementable. Recovery and reconstruction alone will not be sufficient. They must be linked to a broader strategic framework that systematically advances the transition from occupation, fragmentation, and conflict toward sovereignty, peace, and sustainable development.
The transition must therefore be guided by a coherent vision that connects immediate priorities with long term objectives, ensuring that short term measures contribute directly to the achievement of permanent status goals rather than creating another indefinite interim arrangement.
Conclusion
This proposed road map seeks to provide a practical framework for moving from the devastation and economic collapse caused by the post October 2023 war toward recovery, state building, and ultimately the realization of a sovereign Palestinian state within the context of a two state solution.
Its primary focus is on the institutional, economic, fiscal, and developmental dimensions of that transition, outlining both the immediate measures required during the transitional Statehood Inception Phase and the long term foundations of a viable permanent status economy. The central premise is that economic recovery, institutional renewal, territorial reunification, and the restoration of Palestinian sovereignty must be pursued as interconnected objectives within a clearly defined and time bound process.
At the same time, this framework recognizes that economic and institution building alone cannot deliver a lasting resolution to the conflict. A truly comprehensive road map capable of carrying the oPt from the current reality of war, occupation, fragmentation, and humanitarian devastation to the threshold of self-determination and a durable two state solution must also incorporate broader political, security, legal, and diplomatic dimensions.
Such a framework will require credible security arrangements, meaningful political reforms, effective conflict resolution mechanisms, and robust international guarantees. It must also include a broader regional dimension capable of mobilizing the support, resources, and active participation of neighboring Arab states, regional institutions, and the wider international community.
Accordingly, this formulation of a road map should be viewed as one essential component of a larger strategic vision — one that seeks to transform the current crisis into an opportunity for recovery, peace, and state building. The ultimate objective is the emergence of two sovereign states living side by side in peace and security, enjoying mutual recognition, dignity, stability, and prosperity.
The road from the devastation of war to the realization of a two state solution will undoubtedly be long and complex. Nevertheless, the unprecedented destruction and suffering caused by the conflict have also underscored the unsustainability of the previous status quo. If supported by political will, regional and international commitment, and a clearly defined end goal, the present moment may yet provide an opportunity to replace conflict management with conflict resolution and to establish the foundations for a just and lasting peace.