Everyone is, or pretends to be, in favor of a "two-state solution," which stipulates that peace between Israel and the Palestinian Arabs will come only when the Palestinians can establish their own independent state next to Israel. There is nary a

Everyone is, or pretends to be, in favor of a "two-state solution," which stipulates that peace between Israel and the Palestinian Arabs will come only when the Palestinians can establish their own independent state next to Israel.

There is nary a president, prime minister, foreign minister, or opinion-shaper who doesn't call for such a state to be established forthwith on the West Bank. Just this week, in announcing a military aid agreement with Israel, President Barack Obama said that "long-term security" was only possible once there was "an independent and viable Palestine."

Few, though, have bothered to ask what kind of country this Palestinian state is likely to be. A peace loving nation like Holland or Switzerland? One that seeks peace with Israel? Or, as the Palestinian Authority already is, a dysfunctional, irredentist state, like so many of its neighbors?

Asked recently what type of state he envisioned an independent Palestine would be, Ambassador Dennis Ross (the man who served all recent administrations as their top Middle East expert and negotiator) answered that he hoped it would be "a democratic, law-abiding, well-administered, transparent and peace-seeking state," but that of course "he could not be sure."

Can a democratic state emerge from the criminal and repressive Palestinian Authority?

Asked to explain what made him hope that a democratic state could evolve out the dictatorial regime of the Palestinian Authority, Ross pointed to efforts between 2007 and 2013 by the Palestinian Authority's then prime minister, Salam Fayyad, who pushed for economic reforms to achieve growth and prosperity instead of engaging in armed struggle against Israel.

Fayyad believed that a prosperous economy would give rise to moderate leaders and a functioning state that could coexist with Israel. He was right, of course, which is why Mahmoud Abbas gave him the boot. (Elected for a single four-year term, Abbas is now in his eleventh year as "president" of the Palestinian Authority.)

Former Palestinian Authority Prime Minister Salam Fayyad (left) pushed for economic reforms rather than armed struggle against Israel. For this he was fired by President Mahmoud Abbas (right).

Salam Fayyad's failure was predictable. Dennis Ross and others rely on vain hopes if they believe a democratic Palestinian state can emerge from a criminal and repressive Palestinian Authority. But it's just another in a long line of false hopes.

Consider 1993, when Shimon Peres prodded Israeli prime minister Yitzhak Rabin to make a devil's bargain with Yasser Arafat. Rabin and Peres consented to impose the rule of Arafat and his terrorist gangs over the hapless West Bank and Gaza Palestinians. They provided Arafat's Palestine Liberation Organization (PLO) with a territorial base, arms, and money. They foolishly gave Arafat control over billions of dollars in donations and taxes, knowing that most of it would be stolen or used to promote terrorism through vile antisemitic propaganda. The mostly illiterate and destitute Palestinian fellahin were an easy prey for such incitement, so terrorism flourished. And yet, Israel thought Arafat's Palestinian Authority was a lesser threat than the more radical Hamas movement gaining ground in the West Bank and Gaza.

The deal—signed in Oslo and ratified on the White House lawn with the enthusiastic endorsement of President Bill Clinton—enabled Arafat to establish a corrupt dictatorship whose energies were directed at the destruction of Israel no matter the cost to the disenfranchised poor in the Palestinian territories. The Palestinians had enjoyed relative freedom and prosperity under a mostly benign Israeli occupation. Under Arafat they experienced an iron fist as he jailed, tortured, and murdered any who opposed him (and many he only imagined opposed him).

Birzeit University, 1978.

One of Arafat's first actions was to destroy the economic "peace process" begun in 1967, when Israel occupied the West Bank and Gaza, a process of informal reconciliation through economic cooperation that lasted 20 years.

Initially, Israel followed a laissez-faire social, economic, and to some extent even political policy in the territories. It kept open bridges with Jordan that enabled the Palestinians to trade with most Arab countries and to travel with few restrictions. Israel did not interfere in Palestinian internal affairs and even left Jordanian law in effect. Israelis ate and shopped in Arab towns and markets, their spending accounting for a quarter of the West Bank's economy.

In 20 years Palestinian GNP quadrupled. Enhanced wealth created social mobility, loosening the grip of clan and family. Health and education improved. Child mortality dropped. Palestinian women and children were the beneficiaries of these dramatic improvements.

There were remarkably few terrorist attacks from 1967 to 1993.

There were remarkably few terrorist attacks during this period. The few that occurred were mostly perpetrated by PLO hirelings. Not that the Palestinians were enamored of Israeli occupation: No one likes to live under occupation, even a relatively benign one. But, realizing the economic and social benefits it brought them, many Palestinians found the occupation a lesser evil and learned to live with it. When offered a choice after Oslo between receiving Palestinian passports or Israeli identity cards, over 90 percent of Arabs in Jerusalem—a hotbed of Muslim fervor and Arab nationalism—chose the Israeli option.

After Oslo, the Palestinians were subjected to a different sort of occupation, a kleptocracy run by Arafat. To this day, the authority continues to rob, oppress, and impoverish its citizens.

Birzeit University, 2016.

Dennis Ross has acknowledged that diplomats failed to think through what kind of government was being imposed on the Palestinians: "We should have been focused on the state-building enterprise, but we didn't really focus on that until, in effect, after the collapse of Oslo."

The United States has given hundreds of millions of dollars a year to the Palestinian Authority—billions in total. It's estimated that, in his day, Arafat siphoned off as much as $900 million from the authority's coffers. And the money that wasn't stolen was used mostly to provide jobs and other benefits to the Arafat cronies populating the Palestinian Authority's sprawling bureaucracy.

Arafat died in 2004, but more than a decade later his corrupt bureaucracy still dominates the Palestinian economy. The Palestinian Authority is the largest employer in the West Bank and Gaza, employing 220,000 workers, 160,000 in the civil sector and the remainder in 17 different "security services." (Then again, "workers" may not be the right word: According to a 2010 World Bank report, some 13,000 were "ghost employees.")

The West has provided billions of dollars to the PA, while doing little to promote good governance.

The security services include a naval security force for a nonexistent navy. But they're no joke: These services spy on the population—and on each other. They terrorize Palestinians, especially those who might dissent, with arbitrary arrests, beatings, and torture, all without trial.

Why do the United States and the European Union continue to underwrite such a ruthless regime? Every revival of the "peace process" comes with billions in grants for the Palestinian Authority, without any steps taken to promote decent governance or end decades of corruption. Most recently, in May 2013, Secretary of State John Kerry announced that the PA would be rewarded for reaching a peace agreement with an additional $4 billion in aid.

In a recent article titled "What to Expect from an Independent Palestinian State," Fred Maroun, an Arab living in Canada, summed it up: "If a Palestinian state is created without correcting [its] destructive practices, it is highly likely that the new Palestinian regime will follow the same pattern already established, and be a hatemongering, corrupt, undemocratic, oppressive, belligerent, and ineffective regime."

Peace can evolve only when the Palestinians have been freed from PA and Hamas rule.

Peace can evolve between Israelis and Palestinians, but only once the Palestinians have been freed from the rule of the Palestinian Authority and Hamas. It will require time and patience, but it is achievable. It will come when people realize that peace improves their lives, that peace brings prosperity. Alas, the Oslo Accords put an end to what was an informal economic peace process that could have evolved into a political settlement, perhaps in the form, as in Switzerland, of a loose Arab-Israeli federation of independent cantons. The corrupt government begun by Arafat—imposed on the Palestinians by a clueless Israeli leadership—put an end to this promising evolution.

Peace can still be resuscitated, but not while the Palestinian Authority continues to be supported by billions from U.S. and European taxpayers. Only then will decent Palestinians, now terrorized into silence, be able to build a civil society, the basis for a better life and a healthy polity. Such a civil society would negotiate a real and lasting peace with Israel.

A two-state solution, by contrast, would merely take the repressive Palestinian Authority and invest it with the standing of a nation-state. That wouldn't bring peace, but only delay it by another generation.

Daniel Doron is founder and director of the Israel Center for Social & Economic Progress (ICSEP), an independent public policy think tank, and a fellow at the Middle East Forum.