Prospects for Middle East economic cooperation are largely determined by the underlying political structure of the Middle East peace process. The Middle East peace dilemma lies in identifying the most effective form of negotiation – bilateral or multilateral – for the promotion of economic cooperation in the region. The capacity of bilateral dialogue to nurture effective economic cooperation is curtailed by impediments to cooperation including ongoing conflict; external strategic political alliances; and economic structural distortions which affect more than two countries. The continuing bilateral approach to the peace process encourages quantitative rather than qualitative structural changes since each new player is brought into the dialogue on the basis of specific strategic interests of two parties rather than the collective interests of the region. This approach may bring about short-term economic progress but has limited potential for long-term sustainable development. A multilateral forum, however, can provide a more suitable environment for promoting economic cooperation by encouraging full inclusion of all players in the political process and ensuring that all players’ economic interests are satisfied proportionately.
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