We reconsider the case for constructing a port in the city of Gaza, and more generally for a future Palestinian State controlling independently its vital economic interests. We construct a theoretical example that demonstrates that the notion of economic sovereignty is compatible with modern economic theory: essentially, a State should have sovereign power over its vital economic interests just as a company should acquire property rights over specific assets of strategic importance. The

more »

... cal example yields two main results: firstly, Israel and Palestine will not be able to realise a peace dividend without Palestine having some economic sovereignty. Secondly, strategic assets generate value by enabling trade, but their separate records are likely to show accounting losses.