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Since the Madrid Peace Conference of 1991 brought Israelis and Palestinians together in direct, face-to-face negotiations for the first time, an international consensus emerged that the eventual solution would involve the creation of a Palestinian state in the West Bank and Gaza existing in peace and security with the State of Israel. The actual borders of the two states, the fate of Israeli settlements in the West Bank, how the city of Jerusalem would be shared, and how the refugee issue would be resolved were debated in many different fora. While the two sides came close several times to agreeing on the substance of these parameters, no deal was ever reached.

The goal of a two-state solution is under serious challenge today. The number of settlers in the West Bank and East Jerusalem has exceeded 650,000, putting in major doubt the prospect of a geographically contiguous Palestinian state. U.S. diplomatic efforts under Donald Trump’s administration appear to be aimed at redefining key issues such as Jerusalem, refugees, and Gaza in ways that alienate Palestinians as well as European allies. In Israel, the passage of a new nation-state law threatens the treatment of Arab and other citizens of Israel as second class, a move that many believe effectively legislates discrimination. At the same time, divisions between the West Bank and Gaza along with Palestinian factional political disputes have done little to advance the Palestinian national project. As a result, Palestinian leaders are obliged to find solutions to such disputes in order to make progress in their cause. Moreover, there are clear signs of a growing perception among Palestinians and Israelis that a two-state solution that meets the minimum needs of both communities might be impossible to attain.

Twenty-five years of diplomacy—including the Oslo Accords, the Camp David Summit and the Clinton Parameters, the Taba Summit, the Arab Peace Initiative, the Middle East Road Map, the Olmert-Abbas talks within the Annapolis process, the Kerry peace efforts, and others—have done little to stop the negatively shifting status quo.

Yet, the Israeli-Palestinian issue is not going away. Rather, demographic trends and settlement construction mean that the two communities are growing ever closer physically while remaining separated politically, socially, and economically.

This report attempts to look at actualities and trends with a fresh and analytical eye. At first glance, the two halves of this report contain two very different views of a resolution to the Israeli-Palestinian conflict: one presents the case for a two-state solution, the other suggests that it is time to look at the idea of a single state with all its variations.

But the two halves do not differ on the facts of the current situation. Nor do they differ much on the trajectory. The same facts can be used to support two different conclusions: Do we need new ideas or new determination and political will behind previous ones?

The two chapters also highlight an important political reality: any solution must adequately address the needs of both sides. Imposed solutions will not work. The section authored by the Baker Institute does not deny that a one-state reality is emerging and the two-state solution is in trouble, but it argues that the two-state solution should not be abandoned as it provides the most coherent framework for a democratic Israeli state living in peace and security next to an independent and sovereign Palestinian state. Carnegie’s section recognizes that a one-state reality is emerging, whether desirable or not, and calls for scrutinizing solutions that take this reality into account instead of wishing it away.

At a time when ideas to solve the conflict are being speculated about without much context, this report attempts to objectively analyze and present the two major options for a negotiated peace between the Israelis and the Palestinians and to explain the consequences of both for the parties involved and the international community. It is our hope that it will serve as not only a reminder of past efforts but also an incubator for future ones.

The Two-State Solution — Past or Future Tense

Edward P. Djerejian

With Samih al-Abid, Gilead Sher, and Khalil Shikaki

Introduction

For much of the twenty-first century, the Israeli-Palestinian conflict has stagnated and diplomatic initiatives have fallen short. Now, seventy years after the conflict began, progress toward a two-state solution has, by most standards, become even more challenging. Realities on the ground are complex, political trends on all sides have weakened peace camps, talks have stalled, and historic paradigms on negotiations and final-status issues are in question.

U.S. President Donald Trump’s administration took office in January 2017 promising to shake up established assumptions about how the United States engages the world. Trump and his team have clearly devoted attention to the “ultimate deal” between the Israelis and Palestinians and, as of mid-2018, have been exploring and elaborating their closely held proposal for an agreement.

By most accounts, the next few years will be a critical juncture in the Israeli-Palestinian conflict. Facts on the ground, demographics, domestic politics, and geopolitical trends all suggest that the continued passage of time is eroding some of the bedrock principles that have defined the contours of the two-state solution for decades. Failure to address the conflict and its core issues, such as land for peace, is not in the U.S., Israeli, Palestinian, or international interest but may, through continued stalemate, force more unstable and challenging realities on all parties.

This chapter seeks to evaluate the “state of the two-state solution” at a time when momentum toward such a solution is highly problematic, and to make the case for the viability of the two-state solution as the best of the existing options to end the conflict. In addition to outlining the importance of the two-state solution as the focal point of any future negotiations and offering a brief outline of what a solution might entail, this chapter advocates for the United States to be an important trusted broker for both sides in final status negotiations. Separate analyses in this chapter on Israeli and Palestinian perceptions of a two-state solution by Gilead Sher, Khalil Shikaki, and Samih al-Abid shed light on the dynamic roles of Israeli and Palestinian public opinion and domestic politics in reaching an agreement.

Remaking the Case for the Two-State Solution

As diplomatic initiatives have failed, and facts on the ground have become more complex, it is understandable to question whether the window on a two-state solution is closing or has, indeed, closed. However, the alternatives to a two-state solution pose serious problems in themselves, be it the continuation of the status quo, a single binational state, a confederation between Israel and Palestine, a confederation or association between Palestine and other Arab states (particularly Jordan and Egypt), or other proposals. Debates over these alternative approaches have yet to adequately define sufficient common ground between the parties as to constitute a serious negotiating framework. In short, these debates over alternatives to the two-state solution are so embryonic as to be currently uninstructive to diplomatic efforts. And the concessions, coordination, and cooperation on policy required between Israelis and Palestinians to achieve any “one-state solution” do not seem politically acceptable to either party. Continuing to seek two sovereign states for two sovereign peoples remains the most viable course and is in the long-term interest of all parties. The mechanisms for negotiating and sustaining a solution might change (and indeed may require new ideas and approaches), as will the breadth of issues to be addressed and agreed upon, but the ultimate solution remains the same.

The case for a two-state solution for two peoples has not radically changed in the many years it has been made, but today the urgency is higher. In Israel, where security is the primary concern, the status quo has its advocates but its continuation has significant trade-offs. Effective control of the West Bank and Gaza remains highly costly in terms of resources, limits strategic and economic opportunities with regional and international actors, erupts in intermittent conflicts, and raises significant issues. Perhaps most importantly, the continuation of the status quo will eventually force into question Israel’s identity as a Jewish state and a democracy—the very vision on which the state was founded. The negative response to the “nation-state law” passed in July 2018 would certainly pale in comparison to an international response against an effort to assert Israeli sovereignty over millions of Palestinians. Any number of plausible scenarios in the years ahead may lead to deterioration in the situation and options. A policy of ambiguity brings with it increasing risk, and the establishment of two states makes it possible to pursue a comprehensive and effective regional peace structure, including special security arrangements and measures to effectively address dangerous state and nonstate actors. Recognizing these realities and pursuing peace will require political courage and effective policies in the face of a skeptical public. But the need is great.

For Palestinians, the years of Israeli occupation have taken a toll and realizing an independent state means that difficult choices must be made. Today, the divide between the West Bank and Gaza, the fractured nature of Palestinian politics, the ineffectiveness in some areas of governance, and the unconstructive rhetoric and intransigence do little to help the Palestinian national project. There is a need for reconciliation among the Palestinian factions along the Quartet Principles, for reform efforts in Palestinian institutions, and a renewal of belief that the Palestinian national project is not dead.

The case for a two-state solution for two peoples has not radically changed in many years it has been made, but today the urgency is higher

The deteriorating situation in Gaza requires immediate action, and the international community is mobilized. Palestinian leaders have an obligation to their people to find solutions, which can be a catalyst for broader progress. On both sides, leadership today and in the future would be served by clarifying visions for peace, being pragmatic, and seeking common ground while being prepared to make the difficult decisions required for the long-term well-being of their people. The critical distinction between equitable political compromise and capitulation should be the guideline.

The Parameters of a Two-State Solution

The parameters of a two-state solution are long-established and need not be reinvented. Importantly, despite the undeniable despondency that surrounds the conflict at present, these parameters continue to have a supportive constituency on both sides, as detailed later in this chapter. The core of a two-state solution would address the following tenets:

• International framework: The principles embodied in UN Resolutions 242 and 338 should inform the negotiations. Operative Paragraph One of UN Security Council Resolution 242 “affirms that the fulfillment of Charter principles requires the establishment of a just and lasting peace in the Middle East, which should include the application of both the following principles:
  1. Withdrawal of Israeli armed forces from territories occupied in the recent conflict;
  2. Termination of all claims or states of belligerency and respect for and acknowledgment of the sovereignty, territorial integrity, and political independence of every State in the area and their right to live in peace within secure and recognized boundaries free from threats or acts of force.”

Resolution 242 also calls for a just settlement of the refugee problem.

• Territory and settlements: Negotiations on territory and on the final recognized and secure border between Israel and Palestine will be based on the June 4, 1967 borders. Modifications to the border must be agreed to and be based on equitable and agreed-upon territorial exchange (1:1) in accordance with the vital needs of both sides, including territorial contiguity and demographic considerations. A settlement freeze, either comprehensive or outside the areas to be incorporated within Israel's borders, as mutually agreed by the two parties in any final settlement should be implemented.
• Refugees: A comprehensive resolution of the Palestinian refugee problem will be negotiated and agreed upon by the parties. Major regional and international assistance will be required in addressing the issue in order to offer refugees meaningful choices and rehabilitations.
• Jerusalem: The Jerusalem metropolitan area will host the respective capitals of the two states on the basis of the 1967 borders, while recognizing the principle that Jewish neighborhoods should become part of Israel and Palestinian neighborhoods should become part of Palestine. Full access to holy sites and freedom of worship will be granted to all religions, and the Old City within the walls will come under a special regime.
• Security: With the withdrawal of Israeli forces from Palestinian territory, a non-militarized Palestinian state and special security arrangements, including the possibility of deployment of a multinational force in the Jordan Valley, will be agreed upon between the parties, concomitant with the creation of regional security arrangements in line with the obligations referred to in the Israeli-Egyptian and Israeli-Jordanian Treaties of Peace.
• Resources: The resolution of the conflict will include an equitable and reasonable allocation of all shared transboundary resources.
• State-to-state relations: Relations shall be based on the principle of equal sovereignty of states, creating supportive conditions for good neighborly relations between the two states.
• Infrastructure and development: Substantial support for constructing the physical and institutional infrastructure of the State of Palestine should be offered in support of a stable, prosperous, contiguous, secure, and democratic Palestinian state.
• Regional relations: Progress in the Israeli-Palestinian peace process will be an integral part in the promotion of a wider, comprehensive peace between Israel and all Arab and Islamic nations, as outlined in the Arab Peace Initiative of 2002.

These general parameters should constitute the core of the peace plan. There are certainly other issues to be considered, negotiated, and addressed—including timelines, specific security arrangements, economic regimes, and investment—but failure to address the core issues will not lead to a sustainable and lasting peace.

Addressing Borders and Settlements

Samih al-Abid

Central to a final agreement will be reaching a mutually acceptable permanent territorial division between Israel and Palestine on the basis of the June 4, 1967, lines with agreed land swaps, bringing about the end of occupation. A map defining the territories of Israel and Palestine is a key factor for moving the peace process forward. A potential understanding on the territorial issue would enable Israel to integrate agreed areas of settlements into the recognized sovereign territory of Israel and evacuate or relocate the settler population from the agreed Palestinian territory. Agreed modification of the border between Israel and Palestine could allow approximately 80% of Israeli settlers to stay where they are living today.

Today, the West Bank is fragmented, with a majority of the land under the control of Israel.

On the Palestinian side, the definition of a permanent border is critical to state-building; it creates the certainty necessary to successfully manage refugee resettlement and economic state-building measures and allows the Palestinian government to plan and construct an effective physical infrastructure to build a prosperous Palestinian state.

At the start of negotiations, and as the parties move forward, a settlement freeze would be a critical act of good faith as, time and again, settlements have been one of the greatest barriers to negotiations. Negotiations on territory while Israel continues to expand settlements have only complicated negotiations in the past and will do so in the future. Israeli control of large swaths of the West Bank makes negotiations increasingly complex, and Palestinian governance and day-to-day life difficult.

Today, the West Bank is fragmented, with a majority of the land under the control of Israel. More than 650,000 Israeli settlers live in settlements constituting 2.7% of the area of the West Bank and East Jerusalem.¹ Settlements continue to expand, and construction has escalated dramatically since 2017. When taking into account “areas of jurisdiction” beyond the settlements, the settlement area grows to 9.3% of the area of the West Bank. Moreover, the settlements are connected to each other and Israel through a well-developed road network that covers 2.3% of the area. Additionally, 20% of the West Bank is declared to be a closed military area, and another 20% of the West Bank is declared by Israel to be “State Land.” Further, 9.4% of the West Bank today is located between the Annexation Wall and the 1967 border, which effectively isolates it from Palestinian Authority or Israeli governance. In all, around 60% of the West Bank is today under full Israeli control, leaving 2.9 million Palestinians to live in 169 fragmented “islands” in Areas A and B (which constitute 40% of the West Bank).

As negotiations move forward, a settlement freeze will be an important act of good faith from the Israeli government. For Palestinians, a settlement freeze builds trust and confidence, which have been lacking after more than twenty years of talks. It also preserves the possibility of a two-state solution and allows for meaningful improvements on the ground and infrastructure development that will be immediately felt by Palestinians. This will shore up Palestinian support for both the two-state solution and for the current Palestinian leadership. For Israelis, a settlement freeze would allow negotiations to move forward, and alleviate concerns by the international community that Israel intends to annex the West Bank and indefinitely deny Palestinians political rights. A settlement freeze facilitates a realistic adjustment in the expectations of the settler community and establishes certain geopolitical realities between Palestinians and Israelis that support a two-state solution.

Domestic Political Considerations and Public Opinion: Challenges and Opportunities

On both sides of the conflict, Israeli and Palestinian publics have become increasingly disillusioned with the two-state solution. In Israel, security concerns have pushed the body politic considerably to the right. Polling shows that for the majority of Israelis, reaching a solution to the Israeli-Palestinian conflict is a low priority—the status quo is satisfactory. In the Palestinian territories, many feel that Oslo and the Palestinian national project have failed, and debates over alternatives have begun.

However, while political trends on both sides seem discouraging, public opinion is dynamic, changing according to the political atmosphere. The public has shown that trust can be rebuilt, that leadership matters, and that the belief that peace is possible is critical. In the following sections, Gilead Sher and Khalil Shikaki address the complex public opinion environment in Israel and Palestine as well as its challenges and opportunities.

Israeli Political Dynamics

Gilead Sher

Today, the odds of attaining a final agreement to the Israeli-Palestinian conflict are long, for several reasons: the gaps in the historical narratives of Israelis and Palestinians are wide, and are growing wider over time; there is mutual distrust between the respective leaderships and societies; the parties are far apart on the permanent status of core, contentious issues; the leaders are reluctant to move ahead and seem unprepared to take the risks involved in advancing peace; and, at present, there is no reliable, mutually trusted broker to facilitate a negotiation process.

Today, the odds of attaining a final agreement to the Israeli-Pale.

Additionally, developments in the broader Middle East and across the Arab world in the last decade have further complicated the intertwined nature of the Israeli-Palestinian conflict, have pushed it down the priority list of the Arab regimes, and have displayed trends that are concerning to decisionmakers in the region and beyond. In addition, within the Israeli and the Palestinian political systems there are domestic inhibitors to the process.

Polling reveals valuable information about Israeli public opinion on the core issues of the conflict—shown to be Jerusalem, settlements, and security—and what may incentivize and make politically feasible a two-state peace agreement. Currently, public opinion trends in Israel are not highly favorable to a two-state solution, although no alternative vision is more favored. The most recent National Security Index, developed by the Institute for National Security Studies (INSS), edifies a few key points on Israeli opinion about the conflict, and how opinion shifts along demographic lines:

• Only 21% of the Jewish Israeli public believes the Israeli-Palestinian conflict is the gravest external threat to the State of Israel, and 83% of Jewish Israelis believe that Israel is capable of successfully defending against consecutive major terrorist attacks. These percentages show that the Israeli public is in no hurry to reach a solution with the Palestinians; instead, it believes that the state will succeed in containing the threats and dealing with the challenges of the Israeli-Palestinian conflict.
• Israeli support for the establishment of a Palestinian state has decreased in the past ten years. In 2008, support stood at 46% and rose to 58% in 2010 following Prime Minister Benjamin Netanyahu's foreign policy speech at Bar Ilan University, in which he explicitly declared his support for a two-state solution. Thereafter, support for the establishment of a Palestinian state gradually decreased to 43% in 2017.²
• The index reveals that support for the two-state solution among the Israeli public stood at 55% as of 2017—though, when looking at the past five years, this percentage has fallen from 69% in 2012. A majority of the secular public (72%) supports the two-state solution, though among the religious public the support is very low—only 20%. This solution is controversial among the Israeli public, and different sectors of it believe in alternative solutions.
• The index reveals that 39% of the Jewish Israeli public believe Israel’s best option is to strive toward a permanent agreement; 18% believe the best option will be annexation of the settlement blocs in the West Bank to Israel; and 17% believe that the best option will be transitional arrangements for separation from the Palestinians. Another 15% believe that the best option will be to maintain the status quo, and the remaining 11% believe in the annexation of all territories in the West Bank to Israel.
• When presented with various proposals aimed at ending the Israeli-Palestinian conflict—a two-state solution, a confederation, or a single binational and democratic state—46% of the Israeli Jewish public still support the two-state solution, while 33% support a confederation, and the remainder prefer one binational, democratic state. Most supporters of the two-state solution define themselves as politically left and center; 63% of them are secular. Most supporters of a confederation option also self-identify as being on the left, though they are accompanied by right-wing and religious Jews (5% and 10%, respectively). Support for the binational democratic state is low and erratic, and its support is the highest among ultra-Orthodox and “religious” (modern Orthodox) Jews (40% and 31%, respectively).³
• However, an overview of the entire political spectrum shows that the two-state solution is the option with the highest support among all groups, including those that define themselves as a “moderate right.” Only the groups that define themselves as politically ‘right’ support the two-state solution and the single-state solution in equal measure (20%). Among supporters of a “one-state solution,” the option with the highest support is deportation (“transfer”) of Palestinians (29%). Among the Arab citizens of Israel, 88% support the two-state solution, and 12% are in favor of the one-state solution. Not surprisingly, other plans (apartheid, expulsion, and so on) have no support among Arab Israelis.⁴

As the above polling indicates, public opinion on undefined solutions is divided. To identify obstacles facing future negotiations, the National Security Index survey analyzed the key issues for Israeli society, which will almost certainly be central points of negotiation in future talks. To identify these issues and understand the drivers of support, respondents were first offered a two-state, permanent peace agreement. Subsequently, they were offered several incentivizing policies in combination with the initial agreement.⁵

The initial two-state agreement included (a) a demilitarized Palestinian state; (b) an Israeli withdrawal to the Green Line (the 1949 armistice line, more often referred to as the June 4, 1967, borders) with equal territorial exchange; (c) family reunification in Israel of 100,000 Palestinian refugees; (d) West Jerusalem as the capital of Israel and East Jerusalem as the capital of Palestine; (e) the Jewish Quarter and the Western Wall under Israeli sovereignty, and the Muslim and Christian quarters and the Haram al-Sharif/Temple Mount under Palestinian sovereignty; and (f) the end of the conflict and claims. This polling offered insight into the current popularity of this outcome and potential opportunities to expand Israeli support for a two-state for two-peoples solution. Some of the key takeaways:

• Only 35% of Israeli Jews supported the terms of this initial agreement and 55% were opposed, compared to 85% of Israeli Arabs who supported it. In total, 43% of Israelis supported the initial agreement. Support for the initial package was higher among the less religious respondents and lower among the more religious. The skepticism among Israeli Jews appears to be closely related to serious doubts about its feasibility, echoing the findings of previous surveys. Prior surveys have shown that trust in the Palestinians—that the Palestinian public wants peace—has been a powerful factor.
• Among all Israelis, including Arabs, nearly half (48%) believe a two-state solution is still viable, while 42% think settlements have spread too much for it to be viable. Among Israeli Jews specifically, even more think a two-state solution is not viable (46% compared to 42% who think it is). However, support among Israeli Jews for the general idea of a two-state solution stands at 46%, while among Israeli Arabs, support for the two-state solution rises to 83%. Among Israeli Jews who believe that the two-state solution is still viable, 50% support the initial agreement.
• Moreover, support for this agreement is partly dependent on the belief that there is indeed a chance for the establishment of a Palestinian state over the next five years. Regarding this timing, 73% of Israeli Jews do not expect that a Palestinian state will be established in the next five years. However, still fewer people support the other three possible alternatives to a two-state solution: one state with equal rights; one state without rights; or expulsion, relocation, or “transfer” of Palestinians.
• Despite the majority’s rejection of the initial agreement, its opposition can be shifted significantly once specifically defined incentivizing policies are added. Most promising, the 44% of Israeli Jews who are opposed would change their minds if the Palestinian government committed to continuing the security cooperation it has in place today, including sharing intelligence with Israeli security forces, preventing attacks, and arresting terror suspects; this would bring total support to a 59% majority.

Such incentives are expanded upon in other polls, which examine issues that would drive support and alleviate concerns and objections to a two-state solution. Recent polls have indicated that the following policy incentives would dramatically increase support for a new proposal among both Israelis and Palestinians:⁶

• Security remains central to Israeli public opinion. Fifty-six percent of Israeli Jews and 55% of Israeli Arabs supported the establishment of an independent Palestinian state in the West Bank and the demilitarization of the Gaza Strip (no heavy weaponry). Relatedly, the creation of a multinational force established and deployed in the Palestinian state to ensure the security and safety of both sides was supported by 48% of Israeli Jews and 69% of Israeli Arabs.
• If the agreement allows Jews to visit the Temple Mount, 47% of Israeli Jews said they would support it. If this group were added to those who already support the agreement, about 61% of Israeli Jews would support it with this item.
• Forty percent of Israeli Jews said they would support the agreement if it defined the Palestinian state as having a democratic political system based on the rule of law, periodic elections, free press, strong parliament, independent judiciary, and equal rights for religious and ethnic minorities, as well as strong anticorruption measures.
• Israelis showed increased support for a plan that included mutual recognition that Palestine and Israel are the homelands of their peoples: 59% of Israeli Jews—including 40% of West Bank settlers—and 85% o