Peace Talks To Remain Constrained By Political Realities

BMI View: Momentum towards a resumption of Israeli-Palestinian peace talks has accelerated in recent days, yet cracks in the facade have quickly emerged. We retain our view that despite ongoing efforts by US Secretary of State John Kerry , the current political configuration in Israel, combined with the increasing fragmentation of the Palestinian Authority, will hind er any progress in negotiations.

Momentum towards a resumption of Israeli-Palestinian peace talks has accelerated in recent days, fuelled by the shuttle diplomacy of U S Secretary of State John Kerry, who has visited the region six times since February. On July 19, Kerry announced that Israeli and Palestinian representatives would meet in Washington 'within the next week or so' for preliminary talks towards resuming full negotiations. The following day, Israel announced it would free an unspecified number of long-serving Palestinian prisoners (a key Palestinian demand), while Israeli Prime Minister Benjamin Netanyahu called a resumption of talks 'a vital and strategic interest for Israel' . The 22-member Arab League , a key political backer of the Palestinian Authority (PA) ruling the West Bank, has also endorsed a return to direct negotiations.

However, cracks in the facade have quickly emerged. Israeli officials cautioned on July 21 that no date had been set for sending negotiators to Washington, and that Netanyahu would seek cabinet authorisation before proceeding further - a procedure that is likely to shine additional light on the internal divisions of the Israeli government. Netanyahu's ruling coalition is comprised of parties with mutually incompatible views rega rding the Palestinian question, with Jewish Home (a pro-settler, nationalist party) and large elements of Netanyahu's own Likud party broadly opposed to any deal that would grant statehood to Palestinians. Ha'tnua is the only party in the government to openly favour peace talks, but holds a mere six seats in the 120-seats parliament .

Coalition Composition Limits Prospects For Peace
Israel - Composition Of The 19th Knesset

BMI View: Momentum towards a resumption of Israeli-Palestinian peace talks has accelerated in recent days, yet cracks in the facade have quickly emerged. We retain our view that despite ongoing efforts by US Secretary of State John Kerry , the current political configuration in Israel, combined with the increasing fragmentation of the Palestinian Authority, will hind er any progress in negotiations.

Momentum towards a resumption of Israeli-Palestinian peace talks has accelerated in recent days, fuelled by the shuttle diplomacy of U S Secretary of State John Kerry, who has visited the region six times since February. On July 19, Kerry announced that Israeli and Palestinian representatives would meet in Washington 'within the next week or so' for preliminary talks towards resuming full negotiations. The following day, Israel announced it would free an unspecified number of long-serving Palestinian prisoners (a key Palestinian demand), while Israeli Prime Minister Benjamin Netanyahu called a resumption of talks 'a vital and strategic interest for Israel' . The 22-member Arab League , a key political backer of the Palestinian Authority (PA) ruling the West Bank, has also endorsed a return to direct negotiations.

However, cracks in the facade have quickly emerged. Israeli officials cautioned on July 21 that no date had been set for sending negotiators to Washington, and that Netanyahu would seek cabinet authorisation before proceeding further - a procedure that is likely to shine additional light on the internal divisions of the Israeli government. Netanyahu's ruling coalition is comprised of parties with mutually incompatible views rega rding the Palestinian question, with Jewish Home (a pro-settler, nationalist party) and large elements of Netanyahu's own Likud party broadly opposed to any deal that would grant statehood to Palestinians. Ha'tnua is the only party in the government to openly favour peace talks, but holds a mere six seats in the 120-seats parliament .

Coalition Composition Limits Prospects For Peace
Israel - Composition Of The 19th Knesset

As we have noted in the past, Jewish Home controls the housing ministry and has the levers to promote continued settlement expansion in the West Bank and East Jerusalem - even as senior Palestinian officials have repeatedly called for a settlement freeze as a condition for resuming negotiations. The last peace talks between the two sides, held in 2010, foundered over the settlement issue. Jewish Home leader and Economy M inister Naftali Bennett took a hard line on July 20 , warning that construction of West Bank settlements would continue regardless of talks. Highlighting the scale of the impasse, n ew house buildings in the settlements reached a seven-year high in the first quarter of the year (see chart below) .

More Settlements Than Ever
Israel/West Bank & Gaza - New House Buildings in West Bank Settlements

The Palestinians have also insisted that any peace talks would need to be predicated on pre-1967 lines (the borders that defined Palestinian territory before the 1967 Arab-Israeli War). Yet this condition is anathema to many members of Netanyahu's coalition: Likud's Yuval Steinitz, minister of intelligence and international relations , publicly stated on July 20 that "t here is no chance we will agree to enter any negotiations that begin with defining territorial borders or concessions by Israel, nor a [se ttlement] construction freeze " .

Insufficient Political Capital On Either Side

At the same time, t he Palestinian leader ship is increasingly fragmented. Rami Hamdallah , sworn in as the PA's prime minister on June 6, resigned less than three weeks after , blaming 'conflicts, confusion, and corruption' . The Islamist Hamas movement, which rules the Gaza Strip and has a long-standing rivalry with the PA, has called any engagement in peace talks a 'betrayal' , and ha s questioned PA President Mahmoud Abbas' legitimacy . That said, Hamas is currently facing its own share of trouble , and stands diplomatically and economically isolated following the ouster of Egyptian President Mohammed Morsi on July 3 (see 'Regional Implications Of Morsi's Fall', July 4) .

Netanyahu's po sition is more complex. A ny decisive concessions to the Palestinians would likely fracture his coalition, with Jewish Home and the right-wing of the Likud party breaking away. The prime minister has lost authority in his own party in recent months, in the aftermath of legislative elections in January that saw diminished Knesset and cabinet representation for Likud. Hardliners gained key leadership positions in internal Likud electi ons in June; the powerful post of chairman of the policy-making Central Committee went to Deputy Defence M inister Danny Danon , who in early June declared that the governing coalition is "staunchly opposed to a two-state solution and would block the creation of a Palestinian state if such a proposal ever came to a vote" .

Moreover, both Netanyahu and Abbas have stated that any eventual peace deal would have to be put to a referendum - a move that for Israel would require the passing of new legislation in parliament (the country has never held a plebiscite before). While a vote would likely enjoy the support of the Israeli Arab parties in the Knesset, the legislative arithmetic nevertheless appears arduous.

Divided Land
West Bank & Gaza - Classification Of Land In West Bank

A Way Out Of Growing Diplomatic Isolation?

The importance for Israel of reaching a deal with the Palestinians has risen in the last few years. The country finds itself increasingly isolated diplomatically both at the regional level and further abroad; only eight other states supported its attempt to block the PA's upgrade to 'non-member state' status in the UN in November 2012 (see 'Troubles Remain For The Palestinian Authority', November 30). On July 16, the European Union (EU) announced it would prohibit EU grants, prizes or loans to Israeli entities operating in the West Bank or East Jerusalem settlements. The EU is also considering guidelines for the labelling of goods originating from the settlements.

In that light, the main concern for Israel (as well as the PA) will be to retain the support of the US and avoid being perceived as the obstructionist party. Israel will also be keen to ensure that the PA does not carry out its threat to return to the UN in the September 2013 annual assembly to seek support for its border claims. While this means a return to talks is likely, we maintain our long-held view that any progress in the actual negotiations will remain halting and hindered by the political challenges confronting each side (see 'Kerry Plan Unlikely To Temper Continuing Tensions', June 14). To be sure, the impetus seen so far has been largely driven by Kerry. Yet the Secretary of State has to confront a long list of other outstanding foreign policy challenges, and is unlikely to dedicate as much of his time to the Palestinian issue going forward (see 'Foreign Policy Challenges For The Next President', October 8 2012).

Expectations amongst Israelis and Palestinians remain low. In a June poll by the Palestinian Centre For Policy and Survey Research (PSR), only 27% of the Palestinians and 10% of the Israelis surveyed thought that the two sides would return to negotiations and violence would stop (a further 34% of Israelis and 31% of Palestinians believed that negotiations would resume but that armed attacks would continue). 51% of Israelis viewed the two-state solution as bound to fail because of settlements, while 58% of Palestinians saw it as no longer viable.

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