Toward reimagined global financial architecture: Progress and challenges


Toward reimagined global financial architecture: Progress and challenges



What’s Next for the Middle East Peace Process?

December 13, 2010

Last week was a tough one for the Obama administration. The president was strongly criticized by the left wing of his own party for the compromise he reached with Republicans regarding the extension of tax cuts.

He then faced humiliation on the Middle East front as the peace process suffered a quiet death after 20 months of U.S. efforts. Add to this the ongoing embarrassment of WikiLeaks, and you can understand why the Obama administration is looking forward to the end of this difficult year. So what went wrong on the Middle East front? The short answer is that Washington’s desperate attempt to freeze Israeli settlement activity led nowhere. Binyamin Netanyahu, the Israeli prime minister, rejected the Obama administration’s generous bundle of incentives in exchange for a three-month freeze of settlement activity in Palestinian territories. The American offer included 20 of the latest American F-35 fighter aircraft and a pledge to veto anti-Israeli resolutions at the United Nations.

Under normal circumstances, one would have expected Netanyahu to gladly pocket this deal and continue negotiations with the Palestinian authority. Yet, in many ways, the Israeli prime minister is not facing normal circumstances. There were at least three reasons that led his administration to say “no” to Washington. The first had to do with Netanyahu’s domestic coalition. The religious right within the Israeli coalition was clearly opposed to a deal, in part because Americans reportedly wanted Netanyahu to drop his more right-wing allies such as Foreign Minister Avigdor Lieberman in favor of Kadima, the opposition led by former Prime Minister Tzipi Livni. In that sense, going ahead with the American offer would have required a new coalition in Tel Aviv. As The Economist reported, “Forced to choose between upsetting his allies abroad and those at home, Mr. Netanyahu chose to plump for the former.”

The second reason the Israeli prime minister refused the American offer is related to uncertainties about the incentive package. As mentioned earlier, in return for a 90-day settlement moratorium, Washington offered 20 F-35 fighter jets. Yet Tel Aviv, wanted guarantees that the U.S. Congress would not provide an obstacle. There was uncertainty as to how the Obama administration could promise such a sweetener without congressional approval. There were also other minor details such as the fact these fighters don’t yet exist and their production is years behind schedule. Finally, there were also certain dimensions of the deal that simply did not make sense from the Israeli point of view. For instance, the American pledge to veto anti-Israel resolutions in the UN was not really a big incentive since this is the regular course of action for all American administrations, anyway. When was the last time Washington voted against Israel at the UN? Other sticking points included the Obama administration’s rejection of Netanyahu’s demand that this would be the last time the Israelis would be asked to extend the settlement moratorium and Washington’s inability to assure Israel that the 90 days would yield progress toward a peace deal. Netanyahu predicted that the Palestinians would just wait out the three months and push for a permanent freeze on settlement activities.

So where do we go from here? The Palestinian course of action appears to be heading toward unilateral declaration of statehood. Earlier this month, Palestinian President Mahmoud Abbas visited Turkey and asked Prime Minister Recep Tayyip Erdoğan to recognize the Palestinian state (within the 1967 borders). Since the territory in question includes both the Hamas-controlled Gaza Strip and the Fatah-led West Bank, the question for Ankara is the ramification of such official recognition for relations between the two Palestinian entities. In response to a request from Abbas, outspoken Brazilian President Luiz Inácio Lula da Silva has already declared that his country recognized the state of Palestine based on the 1967 borders. Argentine President Cristina Kirchner also wrote to Abbas, saying that her country recognizes a “free and independent” Palestine. Uruguay followed suit with a similar declaration. There are already more than 90 countries that recognize an independent Palestine, but it is unclear how many will sign up for the official recognition of the Palestinian authority’s unilateral declaration for a seat at the United Nations. If the current trend of Palestinian statehood recognition continues, the next round of negotiations between Israel and Palestine will involve two states negotiating for their borders. This would probably be a step in the right direction.