Ask what causes policy. Culture has something to do with it. Where personal freedom is not respected, how do you expect there to be the policies of a free market? Perhaps Mr Romney could have explained further but it was speech not a lecture course.
I can't quite decide what the writer's purpose is. Are you trying to explain the need for economic liberty, to discredit the Israelis - who do quite well, especially considering the insecurity situation, or saying something about the Palestinian authority which is hardly an example of good policy or prosperity? If they wanted prosperity rather than conquest they would work with Israel not against it.