Israeli-Palestinian Conflict

Introduction There is growing risk of a violent uprising in the West Bank that could be costly to Israelis and Palestinians and harmful to U.S. interests. Violence could be ignited in various ways and escalate rapidly, further shrinking the space for a two-state solution and complicating U.S. efforts on other regional challenges. It would also necessitate humanitarian and reconstruction assistance from already burdened allies. Moreover, a West Bank crisis could elicit punitive responses from Europe, possibly driving a wedge between the United States and its European allies, and enable unhelpful regional states, particularly Qatar and Turkey, to meddle. An uprising would also stress an already troubled U.S.-Israeli relationship and possibly increase congressional opposition to any nuclear deal with Tehran. Thus, despite the seemingly isolated nature of an outbreak of violence confined to the West Bank, the United States should, especially in the wider frame of increasingly violent regional politics, take measures in the next eighteen months to reduce the probability of West Bank violence and minimize—to the extent possible—its consequences should such conflict prove unavoidable. The Contingency While Gaza under Hamas has experienced repeated wars with Israel since 2008, the West Bank has been relatively quiescent since the end of the second intifada in 2005. Yet the risk of a violent uprising in the West Bank has increased recently because of the following developments: Accumulating Palestinian frustration with the status quo and the receding prospects for political independence. Many Palestinians are disenchanted with the prospects for independence, with some turning to violence in frustration. Several dramatic "motivated lone wolf" attacks have occurred in Jerusalem, most notably the June 2014 kidnapping and murder of three Israeli teenagers, which precipitated the beating and immolation of an Arab youth by Israeli extremists shortly afterward. Incidents of stone throwing and Molotov cocktails, which stood at two hundred per month before the 2014 Gaza war, surged to five thousand per month later in 2014, while over one thousand Palestinians have been detained in Jerusalem since 2014—quadruple the number detained between 2000 and 2008. Increasing Israeli encroachment on Palestinian territories including into sensitive areas like the Temple Mount/Haram al-Sharif. Tensions surrounding the Temple Mount/Haram al-Sharif persist. Although many Jews regard the Temple Mount as holy, most have acquiesced to long-standing restrictions on Jewish worship atop the platform near the two mosques situated there. Some devout activists, however, recently challenged these constraints, sparking confrontations. The expansion of West Bank settlements, in combination with other irritants, could also spur renewed violence. A deteriorating Palestinian economy that reduces job opportunities and incomes resulting from the imposition of additional punitive measures. Israeli actions to cut off funds for the Palestinian Authority (PA), especially import duties that Israel collects on behalf of the PA under a provision of the Oslo Accords, could worsen the plight of many Palestinians. Growing friction within the PA and between the PA and Hamas. Factional fighting within the PA could spill over into clashes with the Israel Defense Forces (IDF). Hamas's rising stature within the West Bank—notwithstanding its decreasing popularity in Gaza—could embolden it to confront the PA or Israel itself. Israel arrested more than ninety Hamas operatives across the West Bank in May and June 2014, disrupting a plot to bomb the Temple Mount/Haram al-Sharif and incite a third intifada. Increasing involvement by the self-proclaimed Islamic State group and/or al-Qaeda. Al-Qaeda has attempted to infiltrate Israel, and the Islamic State has proximity, access, and a reservoir of willing volunteers. Israel would likely perceive any jihadist attack penetrating Israel's dense perimeter as having been facilitated by Palestinian sympathizers in the West Bank, which could precipitate an IDF operation in the West Bank. In January 2014, Israel disclosed that it had disrupted a jihadist conspiracy in Hebron run by senior al-Qaeda leaders. These developments are creating a combustible situation. A wide range of potential events could trigger an uprising in the West Bank. On the Palestinian side, the PA could successfully petition the International Criminal Court to investigate and indict Israelis for war crimes. This action would almost certainly precipitate an Israeli reaction, probably in the form of economic sanctions, or new or expanded settlement construction that closes off Jerusalem from the West Bank. Following the September 2012 UN General Assembly vote on observer status for Palestine, Israel ended a long-standing moratorium on settlement construction in the so-called E-1 corridor, the remaining contiguous zone linking the West Bank and Arab Jerusalem. On the Israeli side, renewed attempts to appropriate the Temple Mount/Haram al-Sharif for regular worship services, or perceived attempts to encroach on the village of Silwan, a predominantly Palestinian village in East Jerusalem, could result in violence. By 2014, the so-called silent intifada had impelled Israeli authorities to augment the current force in Jerusalem with one thousand special operations personnel, four additional border guard units, and a volunteer force of armed civilians. The Israelis have also substantially increased foot and vehicle patrols, checkpoints, and barricading of police stations; reinstated a policy of destroying the homes of Palestinian offenders; and instituted longer sentences for crimes such as stone throwing. The situation in the West Bank is not identical and should be distinguished from circumstances in Jerusalem. The latter is more sensitive to both sides. Fighting, should it erupt, will play out differently in the two locations owing to the differences in the proximity of the populations and the types of forces that would be utilized by both sides. A third round of fighting could grind on for months, entailing considerable violence and large-scale destruction. During the second intifada from 2000 to 2005, when Palestinian security forces clashed with the IDF, Israeli forces destroyed the PA's physical law enforcement and security infrastructure. As in subsequent clashes with Hamas in 2008, 2009, 2012, and 2014, the IDF deployed a combined-arms approach, using air power, armor, and infantry to subdue Palestinian combatants. The Palestinian side in the West Bank is now more heavily armed and better trained, factors that could drive violence to even higher levels. Warning Indicators Rising Palestinian frustration with the status quo and apparently receding prospects for political independence. This would be signaled by more frequent and provocative statements by Fatah; lingering protests and demonstrations; social media agitation that goes viral; sermons or other forms of incitement; a decline in Palestinian security cooperation with Israel; and increases in lone-wolf attacks, kidnappings, or similar crimes. Increasing Israeli encroachment in the West Bank. Indicators would include an increase in construction permits; Israeli public commitments to settlement expansion or construction in sensitive areas like the Temple Mount/Haram al-Sharif, Silwan, or the E-1 corridor; public endorsements by Israeli politicians or opinion leaders of altered arrangements for broader Jewish access to the Temple Mount; new closures; added checkpoints; raids into West Bank Area A; house demolitions; and settler-related violence. Violent provocations by either side that resonate emotionally would also serve as indicators. Downturn in the Palestinian economy. The major indicator would be a prolonged period during which the PA could not pay salaries, due either to steeply declining foreign donor contributions or Israeli withholding of tax revenues, alone or in combination with extended closures or roadblocks. Growing friction within the PA and with Hamas. This would include open dissent, assassinations, delegitimation of President Mahmoud Abbas by influential opposition leaders on social media and through demonstrations, loss of support for Fatah, friction with Hamas, and spillover of factional fighting leading to confrontations with the IDF. Al-Qaeda video remarks by jihadist leaders urging individual Muslims to act against Israel or an "apostate" PA. Jihadist penetration of the West Bank, whether though their prodigious social media or the insertion or recruitment of operatives, would constitute a potential precursor of renewed violence. The Islamic State could radicalize elements within Hamas and the Palestinian Authority—as it has inspired admirers in other countries—as a prelude to or as a result of a crisis. Implications for U.S. Interests Renewed violence in the West Bank would reduce Washington's already diminished ability to advance a two-state solution, which has long been a core U.S. foreign policy objective. The second intifada persuaded many Israelis that a two-state solution could not be effectively secured, and the subsequent diplomatic stalemate has made many Palestinians equally dismissive of a two-state solution. Renewed fighting, given the probable loss of life, destruction of physical infrastructure—much of it rebuilt after the second intifada—and the likely reimposition of comprehensive controls on movement within the West Bank would compound their doubts. Another violent uprising could also strain an already fraught U.S.-Israeli relationship and pit the United States against its European allies at a time when their cooperation on a range of other important issues is required. At this stage, relations between Washington and Jerusalem are likely to remain turbulent owing to differences over issues—Iran's regional role and nuclear ambitions and the peace process—regarded as strategic by one or both sides. The gap between increasingly anti-Israeli European public opinion and European governments' tolerance for Israeli policies is widening. Israeli actions to suppress an uprising in the West Bank would be assessed internationally as very different from Israel's periodic confrontations with Hamas in Gaza. Unlike Hamas, the PA has rejected violence; its success in the United Nations is a sign of growing legitimacy. Several European governments have recognized Palestinian statehood and others are likely to follow. In the context of a third uprising, European leaders would try to narrow the gap between their policy and European public opinion by intensifying international, multilateral, and bilateral diplomatic pressure on the United States to rein in Israel's response. Regional states, particularly Qatar and Turkey, which have long been accused of supporting Hamas, could also undermine efforts to resolve the crisis. Finally, heightened insecurity in Israel could increase congressional opposition to the P5+1 agreement on Iran's nuclear program. Preventive Options A range of policy options is available to help avert a major uprising. These options aim to address the various developments and risk factors that make an uprising more likely. Renew hope in and progress toward a two-state solution. The United States could signal that it intends to resume the search for a path forward on a two-state solution. However, conditions for another round of negotiations might well be unripe, given the Israeli government's skepticism about Palestinian interest in a deal, and Palestinian mistrust of Israeli intentions. The space to reactivate talks might simply be too narrow for a statement of intention to be credible, especially given the unsettled state of bilateral relations, in part because of this very issue. Anarchic or brittle conditions on Israel's borders, burgeoning Jihadist activity, and Iranian assertiveness have lowered Israel's risk tolerance—probably also the Palestinian Authority's—and have further reduced interest in renewed talks. Failure or lack of progress in negotiations could increase the risk of violence. Persuade the Palestinian Authority and Israel to desist from potentially provocative actions. Washington has long tried this with only varying degrees of success. Specifically, the United States could continue to insist that Palestinian leadership avoid provocative actions, especially in the United Nations or through incitement at home, while condemning acts of violence directed against Israelis. Israel could be urged to enforce preexisting rules for access to the Temple Mount/Haram al-Sharif, avoid settlement construction activities in areas that are especially sensitive such as Silwan, scale back or refrain from house demolitions, and pursue investigation and prosecution of settler provocateurs. The United States could encourage both sides to devise stabilizing themes for dissemination via social media and discourage verbal attacks through the application of existing legal sanctions. The United States could also try to broker agreement between the two sides identifying specific provocative actions they would avoid and coordinate steps they would take should tensions escalate. Support Palestinians with economic, political, and security assistance. The United States generally tries to dissuade Israel from withholding tax revenues, which, from an Israeli perspective, is one of the few nonviolent sanctions available to deter Palestinian provocations. Washington could continue to discourage financial coercion based on the risks flowing from Palestinian economic collapse. Through diplomatic efforts and the direct involvement of the U.S. Security Coordinator for Israel and the Palestinian Authority, Washington could continue to help both sides' security services maintain close cooperation while encouraging donors to step up financing, training, and equipping of Palestinian security forces and urging Israel to expedite such assistance. Help counter external provocations. To the extent it is not already doing so, the United States could increase its support to Israeli, Palestinian, and Jordanian intelligence and security services to identify and interdict jihadist threats to stability in the West Bank. Mitigating Options If renewed large-scale violence does erupt, the U.S. objective should be to achieve a cease-fire as quickly as possible to preserve lives and infrastructure, establish arrangements that reduce the potential for renewed crisis, and preserve space for a resumption of final-status negotiations. This will be difficult because of competing pressures on both the Israelis and Palestinians to escalate. The Israeli government will want to reestablish deterrence through punitive action and demonstrate to the Israeli public that it is responding to security threats. Palestinians will want to increase the cost of occupation to Israel and internationalize the conflict, bringing external pressure on the Israeli government. In addition, Israel will control the ground and therefore determine whether and how third parties can intervene. And in a West Bank uprising, Jordan would not have the leverage on the PA that Egypt enjoyed over Hamas during the 2014 Gaza conflagration to accede to a cease-fire arrangement acceptable to Israel. Alongside constraining domestic political dynamics on both sides and the momentum of large-scale military operations, these factors will make a swift cease-fire harder to achieve. As for other interested actors, Arab governments now caught up in Syria and concerned about Iranian regional aggression would likely avoid direct involvement beyond symbolic diplomatic or rhetorical condemnation of Israel. Jordan and possibly Egypt might attempt to press the Palestinian leadership to agree to a swift cease-fire, but the PA might not have the requisite influence on Palestinian combatants. Most west European governments would oppose an Israeli military campaign in the West Bank and could urge UN action that could conceivably lead to sanctions against Israel. By default, primary responsibility for containing the situation would fall to the United States, which would work closely with both sides to arrange a cease-fire. Judging from Israel's reluctance to work with Secretary of State John Kerry during the 2014 Gaza war, however, U.S. efforts might not bear fruit until the two sides conclude that the marginal return on hostilities has begun to diminish. Given these unpropitious conditions, the United States would have a range of options, where the impact of the intervention would likely be inversely proportional to its feasibility: Limited diplomatic involvement. At the low end of the spectrum, the United States could urge restraint and affirm the objective of a timely cease-fire but avoid getting dragged into the crisis directly. This would likely entail working with and through other multilateral actors—the United Nations and the European Union—and/or through other states that wield a degree of influence on both sides, such as Egypt in the Gaza conflict of 2014 and Jordan in the wake of the Temple Mount crisis in November 2014. By working through others, U.S. diplomatic resources can be employed without squandering prestige in search of a swift resolution that may not be attainable. At the higher end of this spectrum, the White House could dispatch a presidential envoy to present options for winding down the fighting and consolidating a cease-fire. By virtue of real-time, high-level access in Washington, this envoy could authorize incentives the parties might request to facilitate a cease-fire. Direct involvement. Under this approach, the United States would essentially lead and orchestrate efforts to bring an end to the violence, including defining an acceptable end state, mediating directly between the parties, and mobilizing outside actors in the service of the U.S. approach. This could conceivably involve the offer of a limited U.S.-North Atlantic Treaty Organization (NATO) military presence to play a monitoring role and dispute resolution along the lines proposed by French Foreign Minister Hubert Vedrine in 2002 during the second intifada, or proposed by then U.S. National Security Advisor James L. Jones in 2009. Establish third-party control of the security situation in the West Bank. The UN Security Council, with U.S. backing and consent of the parties, could authorize a limited monitoring and/or interposition force to separate combatants on both sides and assist the PA in restoring and maintaining civil order. Such a force would also assume responsibility for, or contribute to, the reconstitution of Palestinian security forces and the resumption of a train-and-equip program. Even assuming NATO agrees to carry out this mission and Israel is persuaded that outside intervention is in its interest, negotiating the scope of the mission and forming and deploying the force would require substantial lead time. Moreover, expectations of a strongly adverse domestic reaction would probably deter the administration from voting for such a resolution. Thus, despite the theoretical utility of such a force and therefore the need at least to consider the option, such a deployment would have to be regarded a real-world impossibility. Create a UN- or coalition-centered initiative to restore administrative infrastructure in the West Bank. Given the likelihood that combat operations in the West Bank would result in the destruction of much of the PA's administrative infrastructure, a rapid multilateral effort to rebuild it would be essential to the stabilization of the situation once a cease-fire has been consolidated. Support a UN Security Council resolution (UNSCR) that establishes the framework for an eventual peace agreement. European diplomatic and material support would hinge on U.S. backing for a UN Security Council resolution, like UNSCR 242, that establishes the parameters of a final-status accord and shapes a renewed push for a peace agreement. U.S. support for even a very general resolution would be perceived by Israel and its supporters in Congress as a dramatic departure from the customary U.S. position, which stipulates that final-status issues must be resolved solely through negotiation between the parties. The most durable approach to the problem of renewed West Bank violence—short of swift acceptance on both sides of the need for a final-status accord entailing a high level of Israeli-Palestinian security cooperation—would be some sort of international deployment of troops. Yet, in the event of the PA's demonstrated incapacity, Israeli officials, who have already expressed deep skepticism about the PA's ability to counter threats to Israeli interests, would oppose measures to delegate responsibility to third parties on the ground that such actions would constrain Israel's ability to react rapidly and decisively to threats. Accordingly, any effort to protect civilians or facilitate military-to-military dispute resolution by a third party would have to reflect a serious, long-term commitment—based on strong consensus—to build and sustain Israel's confidence in such measures and marshal the necessary forces. This would require a commitment of top-tier, professionalized military forces from NATO countries to be credible. NATO already deploys fifty-five thousand personnel worldwide and is upgrading its capabilities in light of Russia's recent provocations in Ukraine. It is highly improbable that parliaments would be willing to commit their national forces to such a complex challenge. Recommendations The United States should focus, in the near term, on the full range of preventive measures: Tamp down provocative actions on both sides. Washington has been only intermittently successful on this score. Nonetheless, the Israeli government has frequently been self-deterred from carrying out actual building in sensitive areas and from actions that would inflict serious long-lasting damage to the Palestinian economy. Likewise, the PA continues to be deterred from serious provocation by the harm that renewed conflict would inflict on the West Bank and on the legitimacy of the PA itself. The United States should reinforce the two sides' tendency toward restraint in tense circumstances through public statements and private messages highlighting the risk of escalation to their respective interests. At the same time, the United States should encourage Israeli and Palestinian leaders to agree on a code of conduct to avoid provocative actions, as former U.S. Middle East Envoy Dennis Ross has suggested. Help preserve Palestinian economic health, political stability, and security capabilities. President Abbas's commitment to a UN strategy, lack of confidence in U.S. diplomacy, and growing fatigue makes cooperation difficult. Moreover, certain Palestinian actions could jeopardize existing U.S. financial support for the PA even as European funding has declined. But the United States should capitalize on European symbolic actions in favor of Palestinian statehood by pressuring capitals to substantially increase their economic assistance to the PA. Washington should also ask Arab donors to increase and honor their pledges, avoiding problematic donors such as Qatar in favor of the United Arab Emirates. These donors harbor their own skepticism about the PA and Israeli policy—and are already fully occupied with Syria—but they might be receptive to this proposal nonetheless, given the stakes entailed by renewed fighting in the West Bank. Help counter external provocations. Some governments might be reluctant to dilute their focus on the Islamic State or al-Qaeda threats elsewhere, especially in Europe, the United States, the Persian Gulf, or Jordan, which are higher-priority targets for jihadists. Given the escalatory potential for a jihadist attack against Israel emanating from the West Bank, however, security services should be sufficiently motivated to devote as much attention as they can to this threat. Signal a return to negotiations. The salience of bread-and-butter issues, the spotlight on Iran, and systemic skepticism about Palestinian intentions will probably continue to blunt Israeli public interest in the peace process. In addition, U.S. rejection of the Jordanian-Palestinian UNSCR in January 2015 and a temporary European reluctance to criticize Israel in the wake of the Charlie Hebdo massacre, respectively, will likely suggest that U.S. and European pressure is not an immediate concern for Israel. Yet clear but low-key official statements that signal continued U.S. concern and an intention to renew negotiations would reassure Palestinians that they have not reached the end of the road, even if the way forward is presently blocked. In the event of major unrest in the West Bank, mitigating efforts will have to conform to the tight constraints set by the attitudes of the parties as well as the downturn in U.S. relations with Israel and the PA, in addition to the fact that European partners are preoccupied with Russia's behavior and other distractions closer to home. The following actions could help mitigate the consequences: Urge a halt to the fighting via high-level U.S. coordination with both sides. Given the bilateral tensions over Secretary Kerry's mediation efforts during the most recent Gaza conflict, prospects for high-level diplomacy in this scenario are somewhat clouded. Nevertheless, there is no substitute for sustained and intensive involvement by the White House, secretary of state, senior U.S. military commanders, and the Central Intelligence Agency director, who interact regularly with the Israel Defense Forces, Mossad, and Military Intelligence Directorate counterparts. In preparation, the White House should consider appointing a Middle East envoy sooner rather than later. Convoke relevant outside actors. Tensions surrounding the Temple Mount/Haram al-Sharif in 2014 were defused in part by the involvement of King Abdullah II of Jordan in trilateral talks with the United States and Israel. The United States should begin informal discussion now with the king on how Jordan could help in defusing major hostilities in the West Bank. If these mitigating options fail to secure a cease-fire and withdrawal of Israeli forces, the United States should consider the following steps: Table a UNSCR that urges the two sides to cease hostilities, establishes the parameters of a final-status accord, and calls for a new round of final-status negotiations under U.S. auspices. If the mitigating steps described above failed to secure a cease-fire and withdrawal of Israeli combat forces from the West Bank, Washington should attempt to leverage the fighting to lay the basis for renewed diplomacy grounded in the observable reality that Israel's control of the West Bank had become unsustainable in the absence of large-scale military operations. The most effective platform would be the UN Security Council. Israel would strongly object as it views the United Nations with suspicion and has argued, with U.S. support, that UN action cannot substitute for direct negotiations between Israel and the PA. The possibility of UN involvement, however, could dispose the Israeli government toward cooperation with efforts to deescalate the situation on the West Bank. If not, and the Security Council were to proceed with a resolution, it would be essential that the United States maintain tight control over the drafting and final text of a UNSCR to protect Israel's security. The difficulties involved in this approach cannot be minimized: despite tacit U.S.-Israeli agreement on certain territorial issues, Israeli and Palestinian positions on other issues—security, refugees, and Jerusalem—remain resistant to compromise. Moreover, conflict on the West Bank would be as likely to harden positions as to persuade the parties to negotiate. Yet a profound crisis would require a U.S. response that aims to resolve the conflict without jeopardizing Israel's safety. Conclusion The United States has a significant interest in maintaining stability in the West Bank. Widespread violence could further shrink prospects for a two-state solution, strain bilateral relations with Israel, and seriously damage Israel's European relationships. As the United States would inevitably be the primary actor tasked with mitigating a crisis, it would be prudent for the United States to address the risk factors before a major uprising breaks out.

The Obama administration is fostering Israeli-Palestinian negotiations aimed at a full and final peace agreement. While the talks last they help calm the regional political situation, but they do nothing to improve Palestinian daily life or help build the institutions of a future Palestinian state. If they fail, as all past efforts have, they may leave behind frustration and bitterness. Even so, negotiations should not be abandoned, but should be buttressed by a simultaneous effort to undertake pragmatic steps that support Palestinian institutions, improve life in the West Bank, and strengthen the Palestinian Authority (PA) against Hamas. While today's political-level peace negotiations can provide an essential umbrella for such steps, focusing solely on achieving a full "final status agreement" is too risky. Practical "on-the-ground" improvements are beneficial in themselves and can improve chances for an eventual negotiated settlement. Moreover, because such steps do not violate the interests of the Israeli or Palestinian sides, they can be pursued without continuing the top-level U.S. intervention that other and often higher U.S. policy priorities may require. The Cost of "Aiming High" At least since the Oslo Accords in 1993, Washington has sought to broker a comprehensive peace agreement to resolve the Israeli-Palestinian and Israeli-Arab conflict. Those efforts have failed, and they have damaged the prestige of both U.S. administrations and Palestinian leaders. Had the moderate leadership that emerged under President Mahmoud Abbas and former prime minister Salam Fayyad achieved a peace agreement and created a Palestinian state, it would have been greatly strengthened vis-à-vis Hamas and other terrorist groups. When this failed to occur, the PA's main argument against Hamas—that Hamas could only deliver violence, while they could deliver a state—was weakened. The United States has contributed to this problem by "aiming high." The cost of Washington's focus on a comprehensive agreement has been that it has rarely pushed hard for immediate, on-the-ground changes that would be meaningful to Palestinians—such as more jobs in Israel or more control over larger areas of the West Bank. Such changes do not reflect a lack of ambition or vision; rather, they can be characterized as "preparing for statehood," and would suggest to Palestinians that their affairs are being competently handled by the current leadership and that they have much to lose from the violent actions and extreme politics of terrorist groups. The United States can, as a matter of policy, seek both a long-term, comprehensive deal and take incremental, preparatory steps. But top officials have limited time and energy, and focusing on the former has crowded out the latter. The rebalancing of policy from focusing exclusively on a final and comprehensive deal to examining preparatory steps as well means more than just rearranging diplomatic talking points. It requires reorienting U.S. policy after decades of aiming high and falling short. It also requires a new understanding of how a Palestinian state will be built: not at the United Nations or even at the negotiating table but, rather, in the West Bank. While the U.S. timetable of nine months to negotiate a full peace agreement and the longer time needed for pragmatic steps to bear fruit appear out of sequence, the opposite is true. A final peace agreement will take many years, and the effects of practical steps can be felt far sooner. And because such steps do not threaten Israeli security or the PA's role in the West Bank, they should be agreeable to both sides. Negotiations and Practical Steps Taking incremental steps is not an argument against seeking comprehensive peace negotiations. The renewal of peace negotiations is useful, if only to demonstrate that the ultimate goal of a comprehensive agreement has not been abandoned. But it is unlikely that new negotiations will make progress in the near future; the most any Israeli government seems able to offer is less than the least any Palestinian government seems able to accept. The United States should help the PA emerge from a state of financial crisis. The PA depends on foreign aid for survival, because it cannot pay salaries or provide public services on its meager tax revenues. This objective will require maintaining U.S. aid at current levels, pressing the EU to do the same, and pushing Arab oil-exporting countries to provide additional aid. It will also mean pressing Israel to transfer PA tax monies it has intermittently withheld since the Palestinian statehood initiative in the United Nations. A bankrupt PA that cannot pay salaries will not survive. The United States should encourage Israel to take further steps to improve the Palestinian economy. In the last four years, Israel has removed some barriers and checkpoints that interfere with mobility in the West Bank, granted permission for Israeli Arabs to shop there, and created more opportunities for residents there to work in Israel. In September 2013, with negotiations under way, Israel granted five thousand more work permits, and during Ramadan it permitted hundreds of thousands of Palestinians to enter Israel to shop, visit holy sites, and meet with family members. It should be a top priority of U.S. policy to seek the continuation and enlargement of these steps. Israel should limit construction in settlements to the major blocs that, in all previous negotiations, have been understood that Israel will keep. The logic is obvious: limiting construction to the major blocs would signal that Israel does intend ultimately to enter into an agreement that establishes a Palestinian state in the rest of the West Bank. Israeli coalition politics makes achieving these limits difficult, but the United States will have a better chance if it drops the politically impossible demand that Israel cease construction in Jerusalem and all the major blocs and focus instead on outlying settlements. Israel should minimize its incursions in Palestinian territory and undertake only those with significant security payoffs. In areas of the West Bank, Palestinians feel the Israeli presence outside of settlements through their interactions with Israeli security forces: the Israeli Defense Force, police, and Shin Bet (the Israel Security Agency). Raids in urban areas are particularly likely to result in violence, as they have on several occasions in 2013. Such incidents severely damage essential Israeli-Palestinian security cooperation. The United States should publicly ask for explanations by the government of Israel when such raids do occur. The United States should encourage Israeli security forces and courts to prevent and penalize settler violence against Palestinians, which has increased in recent years. The United States should seek investigations and prosecutions of such incidents. The United States should be willing to criticize and sometimes penalize the PA whenever it glorifies violence or those who have committed acts of terror. This issue, known as preventing "incitement," goes to the heart of the Israeli-Palestinian relationship and the chances for peace. The U.S. government should publicly criticize actions that glorify violence and terror, and demand PA responses that address U.S. criticism. Financial penalties undermine U.S. efforts to help the West Bank economy but can drive home the message to the PA that this issue is viewed as serious. Given U.S. aid levels of over $400 million per year, penalties of several million dollars in the direct budget support portion (roughly $200 million) will not bankrupt the PA; conversely, the absence of them sends the message that such conduct does not matter or that U.S. complaints may be ignored. Hamas will denounce practical steps as "making the occupation more tolerable." But, in fact, steps that improve life for Palestinians and help them build state institutions are beneficial in themselves and create a positive background for serious talks and improve their chances of success. Moreover, such steps would help the PA demonstrate its efficacy to the Palestinian people today, when it cannot deliver statehood (and indeed when Fayyad's departure suggests that the PA may be hard put to deliver clean and effective governance); it will need that credibility to sell the compromises that any final status agreement will entail. None of this will transform the Palestinian political situation, but it can at least prevent a further deterioration in PA popularity. Those who focus instead on achieving a comprehensive peace are allowing their hopes to crowd out the pragmatic steps that are the most realistic path forward. The Next Three Years While today's political-level peace negotiations can provide an essential umbrella for pragmatic steps, focusing solely on achieving a full final status agreement is too risky. Practical on-the-ground improvements are beneficial in themselves and can improve chances for an eventual negotiated settlement. They will also strengthen the PA and its ability to engage in the compromises any full peace agreement will require. Supporting the construction of a Palestinian state from the ground up, strengthening Palestinian institutions, and seeking pragmatic Israeli-Palestinian cooperation should be the center of U.S. policy now, not the handmaiden to a policy aimed at a comprehensive but currently unattainable final peace agreement.

The United States treats Gaza as a pariah, supporting its isolation in an effort to undermine Hamas. This approach is counterproductive. Isolating Gaza only strengthens Hamas' grip, perpetuates Palestinian political stagnation, and helps preclude the creation of a Palestinian state and peace with Israel. Reconnecting Gaza with the West Bank politically and economically, and reestablishing legitimate nationwide institutions, is necessary for an enduring Israeli-Palestinian diplomatic agreement. The Obama administration should encourage an end to Gaza's economic isolation, national elections, and the formation of a regional contact group to promote Palestinian reconciliation. This does not mean ending Hamas' diplomatic isolation, but instead creating conditions to empower Palestinian leaders looking to make peace. The Problem Current U.S. policy supports Gaza's de facto economic and political isolation, which was imposed originally to delegitimize and undermine Hamas' leadership. It was believed that cutting Gaza off while producing positive economic and political change in the West Bank would lead Gazans to overturn Hamas rule. Instead, Hamas' control grew tighter and Israel effectively abandoned the objective of regime change after it invaded Gaza in 2009, fearing ensuing chaos if Hamas was ousted. However, the United States endeavors to broker peace between Israel and the Palestine Liberation Organization (PLO) as if Gaza and Hamas do not exist. Ignoring Gaza while pursuing peace with Palestinian president Mahmoud Abbas further incentivizes Hamas to oppose peace with Israel and any deal its Palestinian adversaries conclude. Hamas will likely increase violence the closer Israel and the PLO get to any agreement, making the U.S. goal of comprehensive Israeli-Palestinian peace more difficult. Meanwhile, the absence of links between Gaza and the West Bank pushes them economically and socially apart, further challenging the viability of a unitary Palestinian state. Both Israel and Egypt, even under the former Morsi government, have kept their borders largely closed to trade with Gaza because each would like the other party to assume responsibility. Though Israel allows limited imports into Gaza, the economy of Gaza largely relies on illicit trade that flourishes via an alternative "tunnel economy." Hamas enriches itself at the expense of the Palestinian Authority (PA) by collecting tolls from tunnel operators and import taxes on goods brought into Gaza. This second economy increases ordinary Gazans' reliance on Hamas rule, which most would prefer to see end. Gaza's isolation from the West Bank has also undermined the PA by rendering impossible the agreements on long-overdue presidential and parliamentary elections or convocation of the Palestinian parliament. This weakens the PA's popular mandate and ability to make concessions in negotiations with Israel. The U.S. approach to Gaza's rulers has further unintended consequences. Washington, along with the other members of the Quartet (the United Nations, European Union, and Russia), rightly calls on Hamas to recognize Israel, renounce violence, and adopt the PLO's previous agreements as conditions to be met before there can be diplomatic contact. Yet this effectively subcontracts Washington's Hamas diplomacy to countries that support Hamas' Islamist agenda, such as Turkey and Qatar. These parties impede the U.S. goals of Palestinian state-building and peacemaking, not to mention combating Islamist extremism. A Gaza Reintegration Strategy The United States should recognize the self-defeating nature of isolating Gaza and shift to a strategy that reconnects Gaza with the West Bank socially, economically, and politically to lessen Hamas' grip on Gaza and thereby prepare Palestinian institutions for elections. Such a reintegration strategy would require taking the following four steps: Together with Israel and other regional partners, U.S. secretary of state John Kerry should encourage Israel and the PA to reestablish trade links with Gaza. Israel should expand the amount of trade allowed from its territory, and also reopen trade from the West Bank. Moreover, Gazans should be allowed to open an export corridor through Israel, subject to the same security measures already in place for imports. Allowing goods to flow between Gaza and the West Bank will reorient Gaza's economy away from illicit trade with Egypt and strengthen the moderate middle class. It would also help most Palestinian economic sectors, thereby reducing the PA's need for U.S. economic aid. Secretary Kerry should encourage Israel to work with the PA to reestablish the suspended transit corridor for Palestinians to travel between the West Bank and Gaza. Allowing Gazans to visit the West Bank and vice versa will allow for the exchange of ideas and help restore the social bonds of a single national consciousness required for statehood. Secretary Kerry should quietly promote an exclusively regional contact group to help steer a Palestinian election process. This would require some political reconciliation and strengthen the Palestinians for negotiations. An ad hoc group would be composed of those countries already friendly with Hamas (Turkey, Qatar, and Egypt), plus countries (Jordan, the United Arab Emirates, and Saudi Arabia) more likely to take into account the Fatah-dominated PA's views and help advance reconciliation on more moderate terms. This approach would offer Hamas future participation in Palestinian politics and regional diplomacy as a result of moderation and reconciliation without providing greater political stature or violating the Quartet's conditions for negotiation. It would allow Palestinian leaders to negotiate peace with Israel while maintaining a dialogue that could temper Hamas' active opposition. The State Department should lead a concerted effort with European diplomatic partners and appropriate nongovernmental organizations to help the PA prepare for Palestinian national elections. The Palestinians have not held national elections since 2006, and governing institutions required for statehood are losing legitimacy as a result. Both Fatah and Hamas claim to want elections, though neither is acting to promote them. The contact group would help generate momentum and help prepare for an active election campaign. The first step would be to encourage both sides to make their existing agreement on elections more precise and establish a period for a campaign cycle and a specific date for a vote. Any new PA elections would need to be rooted in firm understandings that the participants subscribe to the principles that established those institutions, namely, those of the 1993 Israeli-Palestinian joint recognition agreements. Potential Objections The Israeli government and some in the United States will object that these proposals unjustifiably reward or open the door to even greater interaction with Hamas. Yet these measures provide a way to break a Gaza stalemate that benefits Hamas, not a means to legitimize the terrorist group. While changing current policies poses risk, the greater and more certain danger is in perpetuating a status quo that benefits Hamas. The new approach will weaken Hamas by reducing its control over Gaza's economic life. While Hamas could try to exploit these policy changes to take over the West Bank, the opposite is much more likely: exposure to Hamas has proven the best antidote to its popularity. Hamas has also demonstrated limited capacity to govern, and dissatisfaction with the group in Gaza only grows. It is unlikely to be effective or popular in the West Bank. The Obama administration would need to come to an understanding with Israel and with Congress, but the fact that these proposals reflect policies already adopted de facto by Israel should make this effort easier. Israel quietly acknowledges that blocking imports to Gaza is counterproductive. As part of an agreement reached with Hamas that was negotiated by Egypt, Israel has loosened some import restrictions on Gaza, further legitimizing the practice of dealing with Hamas via third parties, as proposed with the contact group. The Obama administration will need to root these policy changes in a larger private understanding with Israel that the goal is to strengthen moderate Palestinians, who would then be better positioned to make peace. It will be critical to stress that there would be no dilution of the conditions blocking direct contact between the United States and Hamas. Hamas will not like any effort that undermines its control of Gaza, but it cannot openly object to renewed economic ties. The contact group may be able to convince Hamas otherwise, as Hamas' continued refusal to participate would likely result in further loss of domestic support and increased isolation from the organization's few regional allies. Conclusions If the status quo endures, Gaza and the West Bank will continue to drift apart, making it harder to realize the U.S. goal of peace between Israel and a unified Palestinian state in the territories occupied in 1967. The proposed measures alone will not produce an Israeli-Palestinian peace agreement or a democratic Palestinian state, nor will they end internal Palestinian divisions. But without these steps, realization of U.S. objectives is impossible. Implementing these new policy steps would infuse a sense of dynamism into Palestinian national life, renew moribund national institutions, and produce demonstrable movement toward Palestinian national goals. This would in turn lay the groundwork for the Palestinians to negotiate a durable peace with Israel. A resolution of the Gaza issue would also remove one flashpoint in a region that is already boiling as a result of the Arab uprisings.