The past and future of public tax preparation


The past and future of public tax preparation


Dual Dilemmas: U.S. Policy Options for the Israeli-Palestinian Predicament

Martin S. Indyk and
Martin S. Indyk
Martin S. Indyk Former Brookings Expert, Distinguished Fellow - The Council on Foreign Relations
Tamara Cofman Wittes

May 19, 2006

The recent Palestinian and Israeli elections have produced a uniquely complicated environment for U.S. policy-makers as they contemplate what to do about the Israeli-Palestinian conflict in the Bush Administration’s final years. Perplexingly, Israelis have elected a center-left coalition government committed to withdrawal from the West Bank at the same time that Palestinian voters have given an unreconstructed, rejectionist Hamas the reins of power in the Palestinian Authority (PA).

Given Hamas’ disinterest in negotiations with Israel, Ehud Olmert, Israel’s new Prime Minister, will instead be in Washington on May 23, 2006 to begin negotiating his “consolidation” plan for West Bank withdrawal (also known as the “convergence” plan) with President George W. Bush. Meanwhile, civil strife and a humanitarian crisis are growing in Gaza, the PA faces imminent collapse because of Hamas’ inability to pay civil servants’ salaries, and Palestinian violence against Israel and against each other is likely to escalate. Despite these tumultuous developments, strong majorities of Israelis and Palestinians continue to support President Bush’s vision of a two-state solution as the means for resolving their dispute, and significant proportions of Israelis and Palestinians still support negotiations.1

At such moments of apparent diplomatic stalemate, when violence looms, American and other third-party efforts play a crucial role in preserving the gains made in earlier periods of progress, in safeguarding the possibility of future negotiations, and in preventing the destructive impact of violence. A policy of containment or conflict management, however, is insufficient to resolve the dual dilemmas that the recent elections have generated for Washington. On the Palestinian side, the Bush Administration’s well-justified policy of blocking the Hamas government’s access to international assistance appears likely to make that movement more popular, while Washington receives the blame for the looming Palestinian humanitarian crisis. On the Israeli side, a U.S. embrace of Olmert’s “consolidation” plan could encourage a deep Israeli withdrawal from the West Bank, which could imperil the prospects for a negotiated solution, and benefit a Hamas only too glad to take territory from Israel without paying a price.

Superficially, the answers to these two dilemmas appear obvious: in principle, the United States cannot recognize, condone, or in any manner support the Hamas government unless it meets the minimum standards set by the international community—standards that the Palestinians embraced when they elected Mahmoud Abbas as president in 2005. Likewise, given the impossibility of Israel negotiating with a Hamas-led PA that rejects its very existence, the United States should, in principle, support an independent Israeli plan to remove its citizens from West Bank territory. Yet how the United States applies these two principles could have profound implications for President Bush’s vision of “two states, living side by side in peace and security.”2 Indeed, given the current direction of events, the final years of the Bush Administration could witness the emergence of an Israel existing uneasily behind a high barrier side by side with an emerging Palestinian failed terror-state. That nightmare vision cannot be what President Bush has in mind.

These two principles cannot, therefore, serve as sufficient bases for U.S. policy. They must be wedded to a third principle: continued adherence to the objective of a negotiated, two-state solution to the Israeli-Palestinian conflict. Only such a mutually agreed settlement can produce lasting security for Israelis and Palestinians alike. Although far from achievable at present, this should remain the core U.S. objective. To protect this goal, the United States needs to walk a careful line. While the Bush Administration should support Israel’s plan to withdraw from occupied territories, it should seek to shape that withdrawal to maximize the possibilities for a later, negotiated peace. Similarly, while the United States should shun Hamas unless it changes its stripes, U.S. policy should be to encourage viable Palestinian alternatives that can become credible and authoritative negotiating partners for Israel. U.S. disengagement from its longstanding investment in facilitating a negotiated solution will be self-defeating and could contribute to a strategic realignment of Palestinian society with the rejectionism of Hizbollah, Iran and Syria. That realignment, on the fault-line of relations between the West and the Muslim World, would bode ill, not just for President Bush’s vision of a two-state solution, but also for his efforts to change the rogue behavior of Iran and Syria and the broader war against terrorism.

This Middle East Memo presents recommendations generated by the seventh Daniel Abraham Israeli-Palestinian Workshop, held April 24-26, 2006 at the Saban Center at Brookings. In this Workshop, a group of senior Israeli, Palestinian, Arab, European Union, and American experts and officials held an off-the-record discussion of the current stalemate, the stakes for all sides, and the choices facing the major actors in the coming months. The list of participants appears at the end of this document. However, this memo does not necessarily reflect the views of the participants, and is written in our names alone. We are very grateful to Daniel Abraham, whose determination to find a way to end the Israeli-Palestinian conflict inspires us and makes these workshops possible.


The removal of Israeli settlers and soldiers from the Gaza Strip in August 2005 left a vacuum that was quickly filled by contending Palestinian warlords, security forces, and political organizations. The crumbling PA, whether run by Fatah or Hamas, has proven unable to control the situation. The consequent anarchy and internecine strife, along with continued rocket and terrorist attacks on Israel, have impeded the flow of goods into Gaza, rendering the hard-won, U.S.-sponsored agreement on the Gaza-Egypt and Gaza-Israel passages almost inoperative. These dire circumstances and the cut-off of international aid and Israeli tax remittances following Hamas’ assumption of power are creating an economic and humanitarian crisis. As food and medical supplies run short in Gaza, a new United Nations study suggests that on current trends the Palestinian population could face a severe humanitarian crisis by the end of this summer.3

The isolation, hardship and divisions within Palestinian society may presage the collapse of PA institutions. The Palestinian political system has long been fragmented and dysfunctional. Now, however, the PA is splintered among parallel and competing institutions because the president and prime minister, both enjoying electoral mandates, present sharply divergent political programs. Hamas controls parliament and the cabinet along with some militant forces, but the various squabbling factions of Mahmoud Abbas’ Fatah Party control the security services, the top levels of the PA bureaucracy, the judiciary, the Palestine Liberation Organization (PLO), some armed militias, and the PA presidency.

If the PA is to govern effectively, some minimal consensus among these competing forces is required—which current tensions suggest is unlikely. Disputes over control of PLO and PA offices and resources are severely damaging any authoritative mechanisms for resolving the dramatic divisions among Palestinians on domestic and foreign policy. Violence between armed Palestinian factions has already broken out: wider civil strife is likely to follow.

The deteriorating situation in the Palestinian territories could also generate increased violence and terrorist attacks against Israel. A Hamas leadership that is failing to govern will possess little incentive or capacity to restrain militants. Another intifada with popular support could result if Hamas successfully blames the developing calamity on Israel and the Western powers. Hamas may already feel competitive pressure to use terrorism from Palestinian Islamic Jihad’s (PIJ) successful suicide attacks (including the April 17, 2006 bombing that killed eleven people in Tel Aviv). Israel may respond to increased terrorist attacks by expanding military activity in populated Palestinian areas, and in extreme circumstances by reoccupying parts of the Gaza Strip. These dynamics could precipitate the collapse of the PA, turning Gaza and the West Bank into failed statelets, and necessitating international intervention in a hostile environment.

In such circumstances, Prime Minister Olmert’s withdrawal plan could prove impossible to implement. Indeed, his coalition government could fracture, with Olmert losing his governing majority (a fate that befell two previous Israeli governments when attempting to cede territory). Olmert’s coalition does not have the necessary majority of 61 votes in the 120 seat Knesset for unilateral disengagement from the West Bank. He is already relying on parties outside his coalition to enable him to proceed with the withdrawal. An Israeli political crisis would delay unilateral withdrawal and might stymie less ambitious, but still vital U.S. efforts at Israeli-Palestinian crisis management.


The Bush Administration’s decision to cut off all aid to the PA once Hamas took power was inevitable and necessary. U.S. law, Congressional opinion, and basic American interests made funding a government that rejects the fundamental principles of America’s approach to Israeli-Palestinian issues impossible. Similar considerations drove the European Union to quickly impose its ban on funding the Hamas-led PA. Nevertheless, that decision prompts the question, what is the ban’s purpose? Is the leverage of U.S. and international assistance best wielded to generate regime change (the collapse of the PA) or behavioral change (the moderation of Hamas’ policies)?

In practice, the distinction will be blurred because the aid cut-off might result in the Hamas government’s collapse, even if its true purpose is to moderate Hamas’ behavior. U.S. policy must therefore seek to communicate to Palestinians that Hamas’ decision to reject the basic principles of Israeli-Palestinian coexistence is the cause of their government’s inability to meet their basic needs. If Palestinians understand Hamas’ failure in this light, then they will eventually seek alternative leaders and political programs. If, however, Hamas is able to blame its shortcomings on international pressure, then international isolation of Hamas will backfire and increase the popularity of Hamas and its rejectionism. Thus far, Hamas has turned the tables on U.S. policy by arguing that the funding suspension is a deliberate, cold-hearted external veto upon the Palestinians’ free exercise of their democratic rights, revealing the insincerity of U.S. democracy promotion. Moreover, Hamas is counting on the looming humanitarian crisis to split the Quartet (the European Union, Russia, the United Nations and the United States), because the European Union and Russia will want to find ways to assist the PA while the United States will firmly oppose it—thereby isolating the United States, not Hamas.

In other words, U.S. policy is already proving counter-productive and therefore needs adjustments to eliminate its contradictions:

  • First, the Bush Administration should clarify that its objective is for the elected, Hamas-led PA to meet the requirements of international legitimacy (i.e. forswear violence, accept Israel, and honor existing agreements), not to engineer that government’s overthrow. The United States should repeatedly emphasize that these “rules of the game” were established by the Palestinians when their official representative, the PLO, signed the Oslo Accords, recognized Israel and renounced violence. By rejecting these three conditions, Hamas should be portrayed as undercutting hard-won Palestinian legitimacy, setting back the Palestinian cause by decades;
  • Second, the Bush Administration should specify steps that Hamas could take were it inclined to observe the “rules of the game”, and should make clear that if Hamas met these conditions, then the United States would treat it as a legitimate government. The most important step would relate to violence and terrorism. As the elected government, Hamas would have to demonstrate responsibility for the territory under its control. This would mean stopping all “resistance” activities not just by Hamas cadres but also by PIJ, the Popular Resistance Committees, and Fatah’s Al-Aqsa Martyrs Brigade. If Hamas did so consistently, then it would have acted more effectively against terrorism than the Fatah PA. Moreover, Hamas would have to explain its arrest and disarming of terrorists to Palestinians, in contrast to its previous espousal of “resistance” activities. Such measures would do more to demonstrate Hamas’ true intentions than verbal gymnastics designed to approximate the Quartet’s conditions without actually meeting them;4
  • Third, given that Hamas will likely remain intransigent even if provided with such a “road map” to recognition, the United States should encourage alternative Palestinian leadership. Such a course is difficult. It could take years for Fatah to rehabilitate itself as a credible alternative to Hamas. Independent parties are also unlikely to generate significant popular support in the short-term. This leaves bolstering Mahmoud Abbas as the only viable, short-term alternative. As the elected president of the PA, Abbas has a popular mandate to forswear violence and negotiate peace with Israel. As the Chairman of the PLO, he is already the legitimate interlocutor for such negotiations.

    The problem is that Abbas has lost credibility in U.S. and Israeli eyes because of his inability to prevent violence or establish order. There is a genuine question about his ability to deliver on any commitments made in negotiations, including securing Hamas’ acquiescence to an agreement with Israel.5 Nevertheless, he is for the moment the sole alternative Palestinian leader, and the United States should treat him accordingly by seeking to bolster his capabilities and effectiveness. Because past experience suggests that his leadership style makes fulfilling this role problematic, the United States should also maintain support for the development of other Palestinian political forces. And in strengthening Abbas, the U.S. should bear in mind that it could at the same time undermine Palestinian progress toward accountable government, progress resulting from ten years of U.S. investment in Palestinian democracy;

  • Fourth, the United States should find effective means to communicate to Palestinians that their welfare and their future are matters of concern to Americans. Congress has already appropriated some $450 million in aid for the Palestinians, which has now been blocked because of Hamas’ accession to power. The Bush Administration should use some of these funds to provide emergency humanitarian assistance through non-governmental organizations and UN agencies, such as the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) and the United Nations Development Program, which can aid Palestinians independently of the Hamas government. The remaining funds should be held in a U.S. trust fund for the Palestinians, available for distribution when their government plays within the rules of international legitimacy;
  • Fifth, now that the Quartet has decided to explore establishing a “temporary international mechanism” to provide direct assistance to Palestinians, the Bush Administration should engage actively in its design to ensure that the Quartet does not head down a slippery slope of funding and engaging with Hamas-led PA ministries. To avoid such an outcome, the mechanism would need the following structure:

      Hamas can be expected to object to what would be a purposeful diminution of its control over these institutions. It could use violence, for example by targeting international aid workers, occupying hospitals and schools, or by intimidating civil servants from “collaborating” with the president’s office and the ITF. But as Palestinians’ circumstances worsen by the day, they would face a clear choice between supporting Hamas and forgoing international aid, or supporting their elected president’s partnership with the international community and acquiring the necessary health, education and welfare assistance. With the PA unable to pay salaries or fund welfare facilities, Hamas’ ability to block the mechanism’s operations could become untenable in the face of Palestinian desperation. Even if Hamas managed to prevent ITF operations in the short-term, the mechanism should remain available for use in the likely event of the PA’s collapse, when international intervention would become a necessity;6


      Ehud Olmert will make his first official visit to the White House as prime minister on May 23, 2006. While Iran may top the agenda of mutual U.S.-Israeli concerns, Olmert’s campaign promise of rapid disengagement from the West Bank Palestinians also demands American attention.

      During the recent election campaign, Olmert signaled his intentions and his strategy to Israelis more clearly than any Israeli leader in recent history. He noted that while he prefers negotiated withdrawal to unilateralism, he will not wait indefinitely for the Hamas government to remake itself to enable negotiations. In some comments, he has suggested that his withdrawal timetable will begin at the end of the year.8 His government has also suggested that withdrawal could include Arab suburbs of East Jerusalem.9 Moreover, he has repeatedly stated that the withdrawal will set Israel’s final borders, which have remained undecided since the state’s founding in 1948.

      No American president could seriously contemplate rejecting an offer of Israeli withdrawal and the evacuation of settlements from any of the territories occupied in 1967. The question is not whether the United States should welcome Olmert’s “consolidation” plan, but how. Put otherwise, what requirements should be attached to America’s support, and what diplomatic, political and security context can the United States foster for the withdrawal to ensure that it contributes to the U.S. goal of a negotiated two-state solution. These questions are pertinent because Prime Minister Olmert may make President Bush an offer that he will find difficult to refuse: that the extent of Israel’s withdrawal from the West Bank be commensurate with the degree of U.S. willingness to legitimize Israel’s new borders.

      Presenting the Israeli withdrawal this way puts President Bush in a bind. He will want to maximize the Israeli withdrawal to promote the viability of a future Palestinian state and rightfully claim credit for laying its foundations. However, longstanding U.S. policy and previous Israeli-Palestinian agreements specify that those borders be determined through Israeli-Palestinian negotiations. If Israel unilaterally decides the extent of its withdrawal, with U.S. blessing for its new borders, then the United States will have acceded to Israel’s unilateral drawing of the future Palestinian state’s borders. Since “consolidation” would involve annexing settlement blocs occupying some eight percent of the West Bank, this Israeli imposed border will be rejected as illegitimate by the Palestinians and the Arab states. America’s Quartet partners are also likely to strongly oppose the move.

      Nonetheless, President Bush might be sorely tempted to respond positively to his Israeli ally’s request to abandon the imperative of negotiating a final settlement. Bush tends towards radical and unconventional approaches to foreign policy, discarding, for example, thirty years of non-proliferation policy to secure a historic and controversial nuclear deal with India. Heading into his final years in office, his “legacy phase”, Bush might ask himself whether a unilateral Israeli withdrawal from over 90 percent of the West Bank, including Arab suburbs of east Jerusalem, would enable history to judge him favorably as the father of a viable, territorially contiguous Palestinian state. With such a prospect before him, maintaining the U.S. commitment to an eventual negotiated solution might appear foolish given its meager prospects with Hamas in power. He might well see it as a theoretical ideal obstructing an attainable good.

      If this prospect proves too powerful to resist, the Bush Administration should still shape Israeli “consolidation” to minimize negative consequences and maximize the chances for an eventual negotiated agreement. Any legitimization of Israel’s withdrawal as fulfillment of its territorial obligations under UN Security Council Resolution (UNSCR) 242 (1967) would therefore need to be combined with the following:

        Olmert’s efforts to finalize Israel’s borders may be impossible to implement if Palestinian violence and terrorist attacks escalate. In such circumstances, Israel is unlikely to contemplate removing its forces from the West Bank or allowing Palestinians free access to the Jordan border and Arab east Jerusalem, as this would increase rather than decrease the vulnerability of Israeli civilians.

        The Bush Administration would therefore be wise not to commit to any particular formulation regarding the Israeli withdrawal until it is actually carried out. The worst possible outcome for U.S. interests would be to make forward-leaning statements regarding the significance and implications of Israel’s withdrawal, only to have the withdrawal curtailed or cancelled because of changing conditions in the Palestinian territories or an Israeli political crisis.


        Taking all these requirements into account, President Bush might decide that legitimizing Israel’s unilateral borders is too costly. He could then contemplate another option: use Olmert’s evident willingness to withdraw from the West Bank to promote negotiations with Abbas over an interim agreement and the establishment of a Palestinian “state with provisional borders.”

        Transforming Israeli unilateralism into negotiations over Palestinian statehood contains several advantages. It would maintain the consistency of America’s approach to a negotiated Israeli-Palestinian solution and enable President Bush to achieve his goal of a Palestinian state during his time in office. A negotiated agreement on statehood would undercut Hamas by preventing an Israeli withdrawal being viewed as a victory for violence (unlike Gaza disengagement), and would provide Palestinians with a credible political alternative to isolation and misery. Furthermore, a negotiated agreement on a Palestinian state would require the dismantling of the PA and its replacement with a newly elected, sovereign government. This time, however, election rules excluding parties that do not forswear violence or accept negotiated agreements could be devised and strictly enforced.

        On the security level, negotiating a Palestinian state with provisional borders would be an improvement over unilateral withdrawal. Israel could retain in the interim certain security assets in the West Bank, obviating the extensive security arrangements required by a final withdrawal. The current multiple, competing PA security forces could be dismantled in favor of a functional structure. A Palestinian state would perforce have a monopoly on the use of violence within its territory, giving President Abbas the necessary grounds to act against militant groups and collect privately-held weapons.

        Another advantage to this approach is long-range, but important: when Israelis and Palestinians finally negotiate an end to their conflict, they would do so as equals, state-to-state. This would eliminate the difference in status that has plagued past negotiations, and make Palestinian commitments more explicitly binding and enforceable under international law.

        Prime Minister Olmert intends to spend this year testing whether a Palestinian negotiating partner is available. Using this time to promote a negotiation on “interim statehood” would not force Israel into an undesirable agreement, and would preserve the unilateral withdrawal option. The attempt would assuage discontent among Olmert’s partners about “consolidation.” Influential voices in Olmert’s government, including his coalition partners in the Labor Party and ministers from his Kadima Party, prefer to negotiate Israel’s withdrawal with Abbas than deliver territory gratis to the Hamas-led PA. By pursuing Palestinian statehood, Olmert could demonstrate to Labor his preference for negotiations, while reassuring right-wing critics that he does not intend to yield territory in exchange for nothing. Indeed, for Israel, withdrawal in the framework of an agreement on Palestinian statehood would enable it to secure Palestinian commitments to the demilitarization of that state and other critical security arrangements which might not be implementable in current circumstances but will be important in the future and would be unattainable if the unilateral withdrawal option is pursued.

        The option of a Palestinian state with provisional borders is provided for in Phase Two of the Quartet’s Road Map. Drafted in the middle of the second intifada and never implemented, the Road Map remains the only post-Oslo framework agreed by all the relevant actors. Under the terms of the Road Map, the parties cannot enter Phase Two until Phase One is completed—a phase that requires Israel to freeze settlement building and the PA to dismantle the infrastructure of the terrorist organizations. Pursuing a state with provisional borders involves jumping over Phase One requirements and moving directly to Phase Two.

        While this shift would free the Palestinians of their Road Map obligation to fight terrorism, the fact is that Israel’s withdrawal from West Bank territory unilaterally, without any Palestinian reciprocity, would render the PA’s Phase One obligations irrelevant anyway. Moreover, if the Bush Administration laid out a new “road map” (see above) by which Hamas could comply with international obligations, it would be conditioning diplomatic and financial relations with the PA on fighting terrorism and dismantling the terrorist infrastructure. This is a more effective way, in the current circumstances, of achieving the same Phase One objectives. Palestinian security obligations should also be incorporated into any statehood agreement. A Palestinian counterterrorism commitment, however doubtful its implementation, is worth more than the absence of any obligation to responsible behavior that will prevail following Israel’s unilateral withdrawal.

        Should President Bush wish to pursue a state with provisional borders, he will first have to convince President Abbas, who has repeatedly rejected this option. Abbas is currently proposing immediate final status negotiations (Road Map Phase Three). Abbas objects to interim statehood because of fears that the international community will forget the Palestinians once the interim state is recognized, leaving the Palestinian state’s provisional borders to become its de facto final borders. Alleviating this concern requires providing U.S. and international guarantees about what a Palestinian state’s final borders will look like, and when they will be achieved. These guarantees could be provided in a letter of assurance enunciating the “Bush Principles” for a final agreement. The principles of “territorial compensation,” refugees and Jerusalem that were discussed in the context of U.S. legitimization of Israel’s borders could be similarly employed to facilitate negotiating a state with provisional borders.


        As he contemplates these options, President Bush may find his appetite for renewed activism on the Israeli-Palestinian front limited by the policy challenges he faces elsewhere in the Middle East. The outcome of the Iraq and Iran predicaments will likely determine Bush’s legacy more than any move on Palestinian statehood. Even setting these issues aside, Bush has generally avoided major investments in Israeli-Palestinian diplomacy, restricting his personal role to statements from the bully pulpit, while U.S. efforts have focused on short-term crisis management.

        In current circumstances, he might wish to shun any Israeli-Palestinian policy option that demands significant new U.S. engagement. If Bush is not prepared to enable a major Israeli withdrawal or to jumpstart interim negotiations, then Israel will likely revert to a “default” option: a more modest, unilateral withdrawal from outlying West Bank settlements after completing the security barrier around key settlement blocs. The problem with this “default option,” however, is that it will reinforce trends toward growing anarchy, and greater Hamas influence, in areas left to Palestinian rule. It will also complicate Bush’s efforts on other Middle Eastern fronts, as Iran and Syria exploit the deterioration in the Palestinian arena to help them escape the isolation and containment that the U.S. seeks to impose upon them. The results will be increased Palestinian hardship, more terrorism against Israelis, and extinguished hopes for an outcome that would best serve the interests of Americans, Israelis and Palestinians: a negotiated, two-state solution.

        American influence will strongly determine whether Israel’s West Bank disengagement is conducted in a manner that facilitates a later negotiated settlement, is simply consistent with that possibility, or at worst undermines it. Similarly, while rejecting Hamas as an appropriate interlocutor, America’s attitude toward the PA and its interactions with other segments of Palestinian society will strongly influence the possibilities of promoting alternative Palestinian leadership that will enjoy the ability and legitimacy to negotiate effectively with Israel and to implement agreements.

        The Bush Administration’s choices regarding whether to use its remaining influence to improve the current negative environment and increase the likelihood of future peace negotiations will be read as signs of U.S. diplomatic commitment and creativity, and more fundamentally of our commitment to an Arab-Israeli peace process begun and sustained through the efforts of seven consecutive American administrations. An American misstep, just as surely as precipitous actions by Israelis and Palestinians, could help to render this conflict insoluble. That outcome must be avoided at all costs.

        The authors wish to acknowledge the research assistance of Ariel Kastner in the preparation of this paper, as well as the other staff of the Saban Center who made the Workshop possible.


        Ziad Abu Amr, Member, Palestinian Legislative Council, Gaza
        Ziad Asali, Founder, American Task Force on Palestine
        Amjad Atallah, Founder and President, Strategic Assessments Initiative
        Salam Fayyad, Member, Palestinian Legislative Council; Former Minister of Finance
        Nisreen Haj Ahmad, Former Member of Negotiations Affairs Department, Palestinian National Authority
        Lamia Matta, Legal Advisor, Palestinian Negotiations Support Unit
        Khalil Shikaki, Director, Palestinian Center for Policy and Survey Research

        Nahum Barnea, Saban Center Kreiz Visiting Fellow and Columnist for Yediot Ahronot
        Giora Eiland, Chairman, National Security Council
        Avi Gil, Former Director General, Ministry of Foreign Affairs, Center for Middle East Peace and Economic Cooperation
        Eival Gilady, CEO, The Portland Trust; Former Head of Coordination and Strategy for Prime Minister Ariel Sharon
        Gidi Grinstein, Founder and President of Re’ut Institute
        Pini Meidan, Former Policy Advisor to Israeli Prime Minister Ehud Barak
        Amnon Lipkin Shahak, Chairman of the Board, Tahal Group; Former Deputy Prime Minister
        Baruch Spiegel, Israel Defense Forces Head of Civilian and Humanitarian Issues vis-à-vis Security Fence; Brig.-Gen. (Res.) Israel Defense Forces

        Edward Abington, Bannerman and Associates; Former U.S. Consul General, Jerusalem
        Daniel Abraham, Chairman, Center for Middle East Peace and Economic Cooperation
        Robert Danin, Deputy Assistant Secretary, Bureau of Near Eastern Affairs, U.S. Department of State
        Martin Indyk, Director, Saban Center for Middle East Policy, former Assistant Secretary of State for Near East Affairs and U.S. Ambassador to Israel
        Daniel Kurtzer, S. Daniel Abraham Professor in Middle Eastern Policy Studies, Woodrow Wilson School of Public and International Affairs, Princeton University; former U.S. Ambassador to Israel and Egypt
        Scott Lasensky, Senior Research Associate, United States Institute of Peace
        David Makovsky, Senior Fellow, Washington Institute for Near East Policy
        Robert Malley, Middle East and North Africa Program Director, International Crisis Group
        Kenneth Pollack, Research Director, Saban Center for Middle East Policy
        Kim Savit, Senior Professional Staff Member, Committee on Foreign Relations, U.S. Senate
        Puneet Talwar, Senior Professional Staff Member, Committee on Foreign Relations, U.S. Senate
        Shibley Telhami, Nonresident Senior Fellow, Saban Center for Middle East Policy; Anwar Sadat Professor for Peace and Development, University of Maryland
        Toni Verstandig, Senior Policy Advisor, Center for Middle East Peace and Economic Cooperation
        Tamara Cofman Wittes, Research Fellow, Saban Center for Middle East Policy

        Hassan Barari, Center for Strategic Studies, University of Jordan
        Markus Bouillon, Associate, Middle East and Special Programs, International Peace Academy
        Ezzedine Choukri-Fishere, Ministry of Foreign Affairs, Arab Republic of Egypt
        Marc Otte, Special Representative to the Middle East, European Union

      • An International Trust Fund (ITF), fully transparent and accountable, available to all donors, including Arab states, devoted to direct assistance to the Palestinians;
      • A “partnership” arrangement with the Office of the PA President through which funds for healthcare, education and welfare would be channeled. ITF appointed representatives working inside the Office of the PA President in partnership with PA Presidential advisors would administer these sectors (including hospitals and schools). ITF representatives would be jointly accountable to President Abbas and to the ITF Trustees;
      • If the ITF succeeds in delivering assistance to the Palestinians without involving the Hamas-led government, Israel should be encouraged to place Palestinian tax revenues into the ITF. Similarly, Congress could be encouraged to shift previously-appropriated funds into this mechanism;
      • The line of withdrawal needs to allow for maximum contiguity of Palestinian territory, a connection between the West Bank and Arab neighborhoods of east Jerusalem, a border with Jordan, and an eventual West Bank-Gaza connection. The Israeli army would need to withdraw from the Jordan Valley, and be replaced by an international force. To provide the West Bank-east Jerusalem corridor, Bush would have to insist that Olmert rescind his planned annexation of “E1”, territory adjacent to Ma’ale Adumim;
      • Evacuating some 60,000 settlers and some sixty settlements will be expensive, and Israel will almost certainly seek U.S. financial assistance. President Bush is not obliged to agree. The United States has consistently opposed the building of the settlements from their inception after the 1967 war. However, if Olmert is prepared to withdraw from at least 92 percent of the West Bank, Bush should provide loan guarantees (which require Congressional approval and budgetary set-asides);
      • Any U.S. statement acquiescing to “consolidation” must articulate the principle that any final agreement provide “territorial compensation” or “land swaps” for the limited West Bank territory that Israel would annex. This American statement would maintain faith with President Bush’s commitment that an Israeli withdrawal and a Palestinian state would end the occupation that began in June 1967;10
      • Additional American principles regarding a final status agreement should be enunciated alongside any blessing for a unilateral Israeli withdrawal. Reference could be made to the principle of compensating Palestinian refugees and funding their absorption into the Palestinian state or resettlement elsewhere, including in Israel under family reunion arrangements. Reference could also be made to the principle of a Palestinian capital in east Jerusalem, and preserving universal access to the holy sites. In this way, Bush could embrace the contemporary necessity of Israeli unilateralism, while underscoring the enduring U.S. commitment to a negotiated final settlement;
      • Finally, consistent with the approach of strengthening President Abbas as an alternative to Hamas, Bush should press Israel to coordinate the withdrawal with the PA president, so that he, not Hamas, wins the credit for liberating the West Bank. Abbas will not want to be seen as legitimizing Israel’s annexation of West Bank territory, but he might be willing to coordinate the withdrawal in exchange for U.S. assurances about territorial compensation, refugees and Jerusalem.
      • Sixth, in the security arena, the Bush Administration should keep focusing on Hamas’ obligation to prevent violence while helping to build the security capabilities of the forces remaining under PA Presidency control—the Presidential Guard and Force 17. These forces will probably remain too small to supplant Palestinian Police or Preventive Security Forces’ functions, but they could usefully ensure the efficient functioning of the Gaza-Egypt and Gaza-Israel passages, which are critical to preventing a humanitarian crisis. Recently, President Abbas deployed the Presidential Guard at the Rafah crossing point, thereby considerably improving its security arrangements. This also improved Abbas’ credibility with the United States and Israel7
      • Finally, the Bush Administration should not oppose Palestinian efforts at a national dialogue that could eventually bring Hamas to accept the international community’s requirements. These efforts by President Abbas and by Marwan Barghouti, the imprisoned Fatah leader, will ultimately be meaningless unless they result in a clear termination of violence against Israelis. In the meantime, however, they indicate that some Palestinian leaders are prepared to assume responsibility for moderating Hamas’ rejectionism. Such a dialogue could open divisions within the Hamas leadership, separating more pragmatic internal leaders from those remaining under the influence of the rejectionists in Tehran and Damascus.