By fallout, I am not talking about the post-apocalyptic scenario envisioned as a result of a nuclear war that is the backdrop of the videogame of that same name. Fallout need not be so drastic but can initiate a widespread piecemeal catastrophe. I am referring to the fallout Barack Obama predicted would result if the peace talks failed. At the beginning of March, Obama warned Israel that the United States would have more difficulty defending Israel if the talks faltered, let alone failed. Both Barack Obama and John Kerry have warned both sides that the window of opportunity for a deal was closing. “Seize the Day,” was the message. Rephrasing the Jewish sage, Rav Hillel, Obama told Netanyahu directly, “If not now, when? And if not you, Mr. Prime Minister, then who?” However, the negotiating parties did not seize the day or the hour.
ALL failures have consequences. Those consequences are now upon us. The peace talks did not result in an agreement. They did not result in a watered-down framework agreement. They did not even result in an agreement to continue the talks. Now is the time to observe the fallout.
Economic – Israel
At then end of January, Israeli Finance Minister Yair Lapid, a strong supporter of the peace negotiations, predicted that, based on a Finance Ministry study, Israel was approaching a tipping point in the BDS movement in Europe. The Israeli economy was already jittery in response to an anticipated failure. If a European boycott movement expands as expected, not only in the number of parties engaged in the boycott but also in the breadth of the sanctions movement beyond products produced in West Bank settlements and businesses operating in the West Bank, the Israeli economy, which sailed through the international downturn of the last few years, will now contract.
This downturn will be exacerbated as the BDS movement spreads its tentacles, including to the southern sphere, especially Australia, where a recent court case against BDS was lost. The decision of Dutch asset manager PGGM, which manages 150 billion euros in investments, to halt investments in Israel’s five banks is but a foretaste of shifts in patterns of investment that have fuelled Israel’s tremendous growth over the last decade as private investors, pension funds and foundations begin to shift resources away from Israel, even if they do so only in anticipation of the economic effects of others shifting their investment priorities. Thus, Obama’s warning in early March that Israel could expect sanctions and international isolation, should Israeli Prime Minister Benjamin Netanyahu fail to support a framework peace agreement, was totally consistent with results of the Israeli Ministry of Finance’s own study and may result even though, in the end, Netanyahu ended up saying yes to a framework agreement.
Any dramatic economic turndown in Israel will have even more dire consequences for Palestine since the West Bank is so dependent for its economic health on trade with Israel. Parallel to the Israeli Ministry of Finance study, a separate study by the Palestinian Authority adumbrated the negative economic consequences of failed peace talks.
The economic consequences for the Palestinian Authority will be even worse than for Israel.
An IMF study prophesied that a breakthrough in the peace negotiations would result in a 6.5% growth rate in the West Bank, but its failure would result in a significant economic contraction, increasing the already fraught situation and undermining efforts to forge a non-violent political effort. Instead of the projected 4.5% growth, there would be a significant economic contraction. Even if talks just continued, even if inconclusive, the growth rate would be 2.5%. Given the termination of the talks, expect a decline in growth rate of at least 2%. If Israel resorts to economic pressure tactics against the PA, that decline will be even worse.
Political – Israel
With all her experience in leading the negotiations under Ehud Olmert, Justice Minister Tzip Livni has been the widely respected chief negotiator for the Israeli side who has been clearly and unequivocally committed to a two-state solution. Though she was undercut by a number of decisions: 1) the decision to postpone the release of the 26 Israeli Arabs from prison until the Palestinians agreed to continue the talks beyond the April deadline, a decision contrary to the agreement on entering the negotiations; 2) the decision of the PA to apply for membership in 15 of 63 international organizations by becoming a signatory to those international conventions, but explicitly excluding the International Criminal Court, though Mustafa Barghouti held out the promise that this graduated approach will end with joining the ICC as the final step.
The move to join fifteen rather innocuous conventions was, in itself, a move contrary to the agreement about the negotiating process, all on top of the decision Housing and Construction Minister, Ariel of the HaBayit HaYehudi Party to announce the building of 700 more housing units in Gilo in Jerusalem, a move, though not contrary to what was formally agreed in the conduct of the negotiations, but was a de facto understanding in proceeding with those negotiations.
Livni’s political wisdom is now undermined. Setting aside her rival within the party, Shaul Mofaz, who had his own plan for advancing the peace negotiations but was ignored even though he was the initiator of the previous interim security agreement, Amram Mitzna and Amir Peretz, who backed her controversial move to join the Netanyahu government even with the strong presence of right wing parties, may now enact their calls for their Hatnua party quitting the coalition. The party is in danger of splitting. If it does not leave the coalition, a move unlikely since Livni has been adamant in placing the bulk of the blame on the Palestinians and has defended Netanyahu as having backed her fully in the negotiations in spite of twice being sideswiped by her cabinet colleagues.
Political – Fatah / Hamas Reconciliation
If Livni blamed the Palestinians, Saeb Ekrat blamed the Israelis. “To build settlements in occupied land, kill Palestinians and demolish hundreds of Palestinian homes is certainly not the behavior of a government that wants to end occupation but of a government that wants to turn occupation into annexation,” Ekrat explicitly labeled the Netanyahu government an apartheid regime. Abbas went out of his way to insist that East Jerusalem is an Islamic and Christian Arab city and will be the capital of a Palestinian state, a capital that will include ALL of Arab East Jerusalem including at the very least the Arab parts of the old city.
Contrary to many, I think the PA / Hamas negotiations will come to an agreement to set up a technical government and to schedule elections. It is in the interest of both parties to do so and instigates an end-run around Israel’s complaints that Abbas was not a spokesman for all Palestinians while, at the same time, solidifying Abbas’ position against his rivals. Whether the two parties will be able to go further and unify their competing administrative organizations, given the radically different culture that inform both, is a very different question. But political unity does not require administrative unity. The latter can be postponed.
In the meanwhile, Abbas has stacked up credits by calling the Holocaust the most heinous crime of the twentieth century in direct refutation of the way he downplayed the Holocaust in his PhD thesis written in Moscow years ago. Israelis may dismiss the comment as empty rhetoric, but you cannot call his other denials of the extent of the Holocaust heinous and be unwilling to offer credit when he reverses himself. All this positive payoff is in spite of Abbas’ explicit unwillingness to go ahead with a framework agreement, when Netanyahu approved it, Abbas timing the announcement to sign fifteen international conventions, contrary to the terms of the peace negotiations, on the precise day before the prisoner release was to go ahead in return for America’s release of Jonathan Pollard. Abbas further undermined the initiative to cede control of part of Area C to the Palestinians for building homes in areas slated to be part of Palestine according to previous negotiations, an initiative that, in turn, was blown up by the announcement of the PLO-Hamas agreement.
One important fallout of the PLO / Hamas reconciliation is an emerging split between the USA and Israel. After all, the USA deals with the Lebanese government even though that government includes Hezbollah, characterized as a terrorist organization. As long as the merged government adheres to the three principles of not resorting to violence, accepting a two-state solution and recognizing Israel, America sees no obstacle to negotiations with the new government any more than America refusing to negotiate with Israel because its cabinet includes a few from the hard right who still reject Palestinian self-determination and a two-state solution. Israel, thus far, has rejected such a possibility but, as in the case of negotiations with Iran, Israel’s resistance may simply drift into the byways of history as once did its refusal to negotiate with the PLO.
Political – Israeli Unilateralism
In spite of the negative lessons of the past critical of unilateral moves, it is more rather than less likely that Israel will not sit back passively as the PLO pursues broadening its international recognition and status and consolidates unification. Israel is already on the road to consolidation of its settlements. Whether Israel will actually annex the settlements scheduled for the swap, move the 100,000 or so settlers outside the consolidation areas or, at the very least, offer them compensation to relocate at a cost of up to $US10 billion, and, more problematically, whether it will enact the swap and transfer jurisdiction to the PA over the territory scheduled to be swapped, would require a bold conjecture. Michael Oren, Dan Meridor and Amos Yadlin have been advocating bold moves along these lines. Even bolder still would it be for Israel to offer Palestinians within the nnexed territories – an estimated 150,000 – citizenship in Israel, or offer them the houses of the settlers evacuated from the rest of the West Bank? Naftali Bennet, of all people, has proffered such an offer.
But there are moves underway in that direction. After all, in the immediate aftermath of the termination of the negotiations, Netanyahu scheduled a cabinet meeting to discuss future Israeli unilateral moves. There are even more solid moves to transfer more control over Area B to the Palestinians that could be used as a trade-off for Palestine slowing down its own moves towards self-determination. One does not necessarily need a peace agreement to advance the two-state solution and avoid the “apartheid” state Kerry anticipated as one possible outcome. Abbas has been asking for a firm delineation of borders. Israel is free to create them – excluding Jerusalem – thus saving both Abbas and Netanyahu the embarrassment of coming to an agreement on Jerusalem that, depending on its contours, would hurt either or even both parties.