An Israeli-Syrian IPO?

Upon hearing that President Clinton cleared his schedule this past week to play an active role in the Israeli-Syrian peace talks under way in West Virginia, many Americans are asking why the U.S. role is so critical. Just as corporations need investment banks to take them public on Wall Street, peace accords also require underwriters, and the United States has long been the lead underwriter of peace in the Middle East.

As the negotiations intensify, the Clinton administration must do more to ensure a winning coalition at home to support U.S. involvement. Without greater attention to public education and congressional consultation, President Clinton’s bid to underwrite a future Israeli-Syrian peace accord could be overwhelmed by foreign aid fatigue in Washington, as well as past hostility toward Syria.

Jerusalem and Damascus have made clear they want the United States to underwrite any future IPO, or “initial peace offering.” “Markets” in the region lack the mutual trust, risk assurance and political capital a peace agreement requires. The U.S. role is essential, and America’s willingness to underwrite the peace will have a real impact on the atmosphere of the negotiations.

When Israel and Syria came close to a major breakthrough four years ago, obstructionist sentiment from right-wing Jewish organizations and the Republican-led Congress led the Clinton administration to adopt a cautious approach to the use of inducements. According to Israel’s chief negotiator at the time, the political mood in Washington “cast a shadow” over the talks.

Unlike four years ago, the political constellation is more favorable to active American involvement, and the peace talks are unlikely to stumble due to Washington’s reluctance to maintain its historic commitment to Middle East peace.

Still, the administration needs to better explain to the public and Congress that, as on Wall Street, to the underwriters go big rewards. Though senior U.S. officials have begun referring to the strategic value of a peace accord, they have done little to elaborate as to what this means. The returns will come in the form of regional stability and a lower likelihood of war in a part of the world Americans care so deeply about.

An Israeli-Syrian peace agreement would also help the United States manage its diverse interests across the Middle East, particularly in the Persian Gulf. Israeli-Syrian reconciliation would also allow the United States to normalize its relationship with Syria, and thus exert greater influence on a range of issues, from terrorism and drug trafficking, to missile proliferation and regional security.

The White House has not done enough to explain these and other strategic dimensions of underwriting peace. American involvement is not an act of charity.

What specific role can the United States play as lead underwriter for an Israeli-Syrian IPO?

Rather than dramatically alter either side’s positions at the negotiating table, underwriting peace helps maintain momentum in the process. It will also facilitate implementation of a future agreement, and provide the reassurance necessary to sustain a settlement over the long term. Not only will there be a host of practicalities to finance, but both Syria and Israel want to improve their political and security ties to the United States as a counterbalance to the concessions they make at the negotiating table.

A similar calculus defined earlier negotiations between Israel, Egypt, Jordan and the Palestinians. This calculation is particularly germane for Israel. Prime Minister Ehud Barak believes Israel’s long-term security interests are better served if territorial concessions on the Golan can be converted into security dividends backed by the lead underwriter.

While the tangible manifestation of U.S. guarantees and commitments will no doubt be reflected in increased U.S. military and economic aid, underwriting peace is not the same as “buying peace.” America’s role is more about political and security inducements than it is about economic carrots. As with investment banks on Wall Street, underwriting peace is as much about credibility and the intangible benefits of building a relationship as it is about the provision of financial guarantees.

Syria wants a deeper relationship with the United States in order to increase its influence with Israel. But engagement with Syria faces certain obstacles. Many in Washington view Syria as an adversary—an image fueled by its continued presence on the State Department’s terrorism list. Engagement with Syria will also be difficult because some supporters of Israel believe a stronger relationship would somehow corrode the U.S.-Israel special relationship.

It is not a zero-sum equation. Engagement means influence. Israel’s interests are better served when the United States maintains close ties to its Arab neighbors, as has been the case with Egypt, Jordan and the Palestinians. The administration needs to clearly articulate this argument in order to pre-empt any renewed obstructionist campaign in Washington. At the same time, engagement will become easier once Syria softens its rhetoric toward Israel and resolutely ends its support of terrorist groups. In this regard, the White House should clearly spell out the steps Damascus must take for removal from the terrorism list.

Naturally, there are limits to our role as lead underwriter. U.S. involvement and guarantees are no substitute for the kind of public diplomacy that a peace deal requires. On this score, the Syrian leadership could be doing much more. Even symbolic steps like granting interviews with Israeli journalists or holding direct negotiations in the region would not only help Barak build a constituency for peace at home, but would also help build support in the United States for increased American commitments.

No one expects Syrian President Assad to make as dramatic a gesture as Egypt’s Anwar Sadat when he visited Jerusalem and addressed the Israeli parliament almost 25 years ago. But by being particularly parsimonious in their acts of public diplomacy, the Syrians are only helping those in Israel and the United States who oppose a peace deal.

During this “quiet period” of negotiations, all the parties should refrain from making specific cost projections, as some have been tempted to do. To their credit, American officials have avoided any mention of figures even while making the case that an “agreement of this magnitude” will inevitably come with a price tag.

For Americans concerned about the price of underwriting a future Israeli-Syrian peace agreement, it is important to remember that the costs will not fall only on U.S. shoulders. In the post-Cold War era, Washington relies on consortium arrangements to help implement and sustain regional peace accords. This has been the case on the Palestinian track, where combined European, Japanese, and Arab financial contributions have exceeded American. By virtue of Washington’s unique political and security assets, the United States will remain lead underwriter and diplomatic director in the Middle East. Just the same, political and financial imperatives require a large measure of burden sharing.

As Israeli and Syrian leaders sit down to begin the hard bargaining, the U.S. strategy for underwriting peace must go well beyond direct mediation. The Clinton administration needs to do more to build domestic support inside and outside the Beltway. Otherwise, the White House could revisit the political snags encountered last fall when Congress debated the Wye aid package for Israel and the Palestinians. If an Israeli-Syrian deal is concluded soon, the sheer momentum of such a development would help persuade Congress and the American public of the merits of increased U.S. commitments—but momentum alone will not be sufficient. Greater and more elaborate efforts toward public education and congressional consultation will ensure a bullish reception for this IPO.

If an Israeli-Syrian IPO does emerge in 2000, a successful “offering” will rest on America’s ability to underwrite the peace. This IPO would be a real bargain for investors, since, as President Clinton often says, “the most expensive peace is far, far cheaper than the cheapest war.”

Lasensky received the Yitzhak Rabin-Shimon Peres Peace Award for research in 1999. He visited Syria last January.