A "Virtual" Mideast Peace.

Israeli and Palestinian authorities should replace violent clashes with healthy competition.

Start with the heroic view that it is possible even in the midst of Israel's and the Palestinians' low-level civil war to think about structural solutions for Jerusalem. This view puts us half way out on a limb, so we may as well crawl the rest of the way to the rich foliage and make an even more affirmative assumption. Contrary to fashionable stands on the intractability of cultural conflicts, let's argue that the case for a version of shared sovereignty was never anywhere stronger than today in the Holy City.

To see how, dust off a proposal to resolve Northern Ireland's three and a half centuries of troubles penned by William F. Buckley decades ago under the title, "A Modest Proposal" in the National Review. The proposal is no more preposterous for Jerusalem than for Ulster: Give everyone in the disputed territory a choice of passport.

Thus in the Middle Eastern version, if you live in the disputed parts of the Old City or East Jerusalem and choose an Israeli passport, then you will pay Israeli taxes and receive Israeli services such as retirement support, public education, state medical benefits, and access to Israeli courts. If you choose a Palestinian passport, you will pay Palestinian taxes and receive the corresponding Palestinian services. The few services that cannot be divided between two coextensive governments are mostly local or have local counterparts, essentially law enforcement and infrastructure. Only these would fall under a unified local government entity reporting jointly to the two national governments.

In the years since Buckley proposed simply giving everyone in Ulster whichever they chose between a British and an Irish passport, technology has developed more streamlined solutions for the trickiest administrative issues. States, for example, can now follow taxpayers electronically around the country. And retirement asset management and accounting, under pressure from mutual funds and defined contribution plans, are equal to the task of tracking which individuals residing in disputed territories might at different times in their lives switch citizenship back and forth between two competing governments.

This last thought holds the real key to the proposal, and the first of three bigger reasons to think about it. It is not interesting just as a desperate effort to finesse tough historical and cultural facts on the ground like blood hatred. It is interesting because we may have reached a point where we can make governments compete. Dot-com and service companies compete in Tel Aviv and Ramallah and those cities' economies thrive. Why not let Israeli and Palestinian national governments compete for the wallets, if not the hearts and minds, of Palestinian Quarter and downtown East Jerusalem residents?

Competition between governments, even if only within the narrow confines of a few sections of a medium-sized city on the rim of the Judaean desert, provides more than discipline over what those governments offer citizens and how efficiently they offer it. It changes government from an entity organizing various forms of national service into a service organization. It transforms governments' means of survival from periodically stirring the embers of bitterness into constantly meeting people's needs.

There may be no better place to launch the concept of direct government competition than the city that has witnessed the most struggles for control in history. Borders, which from time immemorial have protected governments from competition, show in Jerusalem none of their potential to solve problems elsewhere in the world. Elsewhere, borders help people who mainly want to disengage from one another. In the West Bank they serve mainly as chalk marks where stone-throwers and tanks can line up. The difference may be that, far from disengagement, what Jews and Arabs in Jerusalem seek is access to a shared history--one of whose features is, after all, constant mutual engagement.

Its unique potential to reach a solution without drawing another boundary in Jerusalem is the second reason for seriously considering the concept of simultaneous sovereignty (we should probably call it "virtual sovereignty" with the times).

Governments need not in any event administer those few borders demanded by religious practice. Here lies a secret and overlooked ingredient to peace in Palestine: Almost no one lives in the Haram ash-Sharif (Temple Mount), and nobody lives by the Wailing Wall anymore. Tie sovereignty to people rather than territory, and you moot it where there are no people.

More practically, under simultaneous sovereignty there would be little change from current arrangements where religious authorities already maintain the Haram ash-Sharif and the precincts of the Wailing Wall. Tradition helps keep order more than an unnatural international border snaking down the downtown alleyways of a First Century city ever will. It is easy to forget after Sharon's escapade, for example, that religious law forbids orthodox Jews from entering the Mount for fear they might walk directly over the remains of the Second Temple. Similarly, Palestinians have no interest in the smooth stone face that sets even secular Jews dancing Friday evenings.

The only critical change would be the joint constabulary arrangements necessary for all precincts with overlapping sovereignty. Two examples serve to show that the complexity these arrangements would require need hardly make them impossible. One dimension of complexity is vertical, as Israel would have to enlist the joint police force in keeping messianic extremists from trying to burrow under the Temple Mount.

Another example of resolvable complexity is that choice of citizenship within the disputed territories could serve to distort voting in national elections. A Jewish resident of, say, the mostly Palestinian Christian Quarter might choose Palestinian citizenship to vote in future Palestinian national elections. To prevent cynical citizenship choices, it may be necessary to disallow residents in the disputed territories to vote in parliamentary elections much as D.C. residents may not vote for Congress. The choice in government these residents would enjoy, arguably, is sufficient compensation.

The hard part, at any rate, is not managing the coexistence on the same hillsides of two sovereign governments. It is managing the coexistence of two religions. Residents of the Holy City have had to live with that, however, for millennia.

The third and most important reason to raise the virtual sovereignty concept, admittedly, is not to forge a solution for the current Middle East impasse. It is to provide a vehicle for the question of whether Americans are right to assume that the United States has no business making this kind of proposal publicly. That is, after all, what many of us assume: America sits on a hillock of rationality surrounded by impenetrable and toxic jungles of cultural hatred that keep most of the world poor and dangerous. An American can no more usefully question the self-inflicted wounds of the world's historical resentments, goes the argument, than ask why jungles grow.

But Americans' learned reluctance to offer cheerful structural solutions to bitter cultural struggles might actually be undermining U.S. foreign policy. Only the assumption that culture is central to the state in much of the world, just not in rich countries, can explain American reticence and reluctance to call out lethal obstinacy pitting destitute neighbor against neighbor. Yet that is nowhere near capturing what we believe about states.

Competition is what Americans--by their revealed preferences--think is essential to the healthy functioning of states. It may be true, for example, that the world had a good laugh at the expense of Florida's hapless voting machines and the brigades of lawyers Washington and Texas inflicted on the state. But the reason Americans were so relaxed about the election impasse is that it reflected the powerful effects of competition in all aspects of government.

Local canvassing boards compete with state government. State legislatures compete with state courts, which compete with one another. Federal appellate courts compete with the state courts and Congress stands ready to compete with the U.S. Supreme Court when necessary. And all this is going on in the name of evaluating the most obvious competition of all, a presidential election. The competition between the opposing campaigns has even preserved one of its effects into the winner's term--the withholding of any clear mandate. Far from reflecting a system out of control, Americans seems content: It reflects a system brimming with competition.

Even outside the electoral process, competition is deeply engrained in American government. The system of checks and balances essentially recreates competition in its dally workings. One could almost say that the U.S. system has much of the effect of giving every citizen an ever-renewed choice of passport: whether on any particular day to look to the local legislature for a decision, or sue for redress in the federal court, or lobby a bureau of the federal executive branch, for example. What we really believe is essential to good government shines out in what we do: We make it compete.

If there is a basic unexpressed American tenet about the role of culture in affairs of state, it may be this. Only competitive vacuum draws culture into government. The dominance of culture in governmental and political affairs, to be more precise, reflects either insufficient or dysfunctional competition in its workings.

So street riots over linguistic non-issues in India, a fairly clear example of cultural competition in a democratic government, have grown out of the absence of any more fundamental competition between ideas and powers in some Indian states' regimes. That Friday prayers are spilling over into political action across the Muslim world no doubt reflects the lack of competitive political alternatives to governments that have not found answers to young men with no prospects.

Why, then, does America kowtow to culture in its foreign policy? None of this argues that culture is unimportant. Just the reverse: It recognizes culture is central to many governments around the world. It does, however, argue that it is a problem to be addressed rather than a condition to be supported. Over-respecting the role of culture in government is tantamount to weakening the government systems we mean to strengthen.

The violent course of recent events in Israel, the West Bank, and Gaza shows there is little the United States can do to accelerate a peace accord there. We must be accordingly modest in our objectives for the region. But that is no argument for modesty in finding ways to express what we think works in statecraft. Forthright support for structural solutions--of which "virtual sovereignty" is a modest example--are valuable to clarify American views on the roles of culture and competition in state-building even if they do not directly bring the Middle East closer to peace.

More concretely, advocacy of Middle East positions built on American experience with competition in government--in a word, with pluralism--show that we are at least as interested in making democracy work as in stabilizing oil supplies. We woefully neglect the power of the pluralist messages that ought to come most easily to us, especially in the eyes of young people frustrated with bleak futures, for whom lack of pluralism is a more direct challenge than our most egregious cultural insensitivities.

Better still if we can embody in our positions on the Middle East, and especially our proposals regarding Israel and the Palestinian territories, the idea of the state as a service rather than a cultural organization. We do not thereby commit ourselves to any disrespect for how our partners' societies may give political expression to culture. We simply present an alternative view that has worked for this polyglot country,

In the context of a region whose governments claim culture and religion as their prime source of legitimacy, of course, that alternative view becomes expansive. It suggests that the technology of governance is in the end more powerful than any politics of hate. The world needs a positivist voice, an optimist, a cheerful advocate of the belief that rough history does not condemn us to more of the same. Let us make a virtue of cultural naivete and competitive government.

David Apgar is a managing director of the Corporate Executive Board. He was formerly a vice president in bank mergers at Lehman Brothers, a senior bank policy advisor at the Office of the Comptroller of the Currency, and a consultant at McKinsey & Company.