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The incoming U.S. administration has an opportunity to increase stability and advance U.S. security interests in the Middle East by outlining a framework for Israelis and Palestinians to make independent, coordinated, and constructive steps toward a two-state solution. This solution would support a safe and secure Israel and a sustainable, contiguous, and sovereign Palestine. At a time when the broader region continues to experience threats from civil wars, state fragmentation, and terrorist networks, the Israeli-Palestinian front is one area where the incoming administration can build on decades of investments to help enhance security and construct lasting institutions to achieve a sustainable resolution to the Israeli-Palestinian conflict.

President-elect Donald Trump has declared that he wants “to be the one that made peace with Israel and the Palestinians.”¹ Direct negotiations between Israelis and Palestinians are unworkable right now, but Trump can move toward this goal if he starts to lay the groundwork with five key steps:

1. Outline a vision that includes a nonmilitarized Palestine and a territorial point framed as 1967 lines with mutually agreed swaps. This vision would highlight a horizon that advances America’s interests, reflects bipartisan U.S. precedent and the positions of key international actors, reassures partners, and addresses existential Israeli and Palestinian concerns.

2. Lead an international effort that incentivizes Israelis and Palestinians to take parallel but mutually reinforcing routes toward the vision, rather than expecting either to be able to start negotiating immediately.²

3. Follow up on the White House invitation received by Israeli Prime Minister Benjamin Netanyahu with invitations to key Arab leaders for meetings. All of these meetings should be scheduled for the first half of 2017.

4. Ensure that preparatory meetings leading up to these White House sessions are used to see that a coordinated approach is in place.

5. Recognize that the United States may be most effective when it operates as a trusted partner between and among critical players, able to advise on what can be realistically delivered and how it can occur. It will be important to appreciate what Israel most wants and needs from its Arab neighbors and what they in turn seek from a relationship with Israel.

To make progress toward the two-state solution, six building blocks are essential:

1. Enhance teamwork with regional partners. Deploying a range of incentives and tools of persuasion to various actors, depending on relationships, will make a difference. Messages and work must remain coordinated, however, to leverage each country’s strengths. Major shifts in long-standing U.S. policies on the Israeli-Palestinian conflict could undermine the incoming U.S. administration’s credibility and leverage to shape the actions of key regional powers on this front.

2. Support political leadership. Accompanying the task of making Palestinian Authority President Mahmoud Abbas sufficiently secure in his role and position must be an effort to convince him of the value and import of a reliable supporting bench.

3. Ensure security. Israelis and Palestinians need to feel safe from threats for successful conflict resolution. Palestinian security forces coordinate closely with Israeli military and security operations in the context of their complexly intertwined population and geography; east of the security barrier, there are 110,000 Israeli settlers and 2.6 million Palestinians. The U.S. security coordinator, a three-star officer who engages with the Israelis and Palestinians on security initiatives that build trust and confidence, will offer important continuity through this role, reinforcing the Palestinian security force’s structural core work and strengthening force sustainability.

4. Put forward a vision for Jerusalem. Within the existing Jerusalem municipality structure, an administrative subdivision for Palestinian villages and Jerusalem neighborhoods could be established. It would be “managed as a separate municipal framework within the city.”³ East Jerusalem residents would collect their locality’s taxes and pensions, and administer finances; they also would develop, implement, and respond to services needed by their neighbors. Unexpected and unprecedented U.S. policy shifts on the status of Jerusalem could have broad regional implications with reliable partners like Jordan, which plays an important role in the administration of the Muslim holy sites in Jerusalem.⁴

5. Prioritize unity in improved services. More reliable delivery of quality water and electricity can provide a cornerstone for better jobs, homes, schools, and futures. Increasing water access, and the electricity to deliver it, for farmers in the northern West Bank—particularly in areas where there are fewer settlements—would be a reasonable place to start in project portfolios linked to Gaza water efforts. Having a common approach to service delivery—and being seen as taking responsibility for Gaza and West Bank Palestinians alike—is as critical to unifying the West Bank and Gaza as is reaching political understandings between Fatah and Hamas, understandings that must recognize the Quartet Principles to be viable internationally.

6. Link territory and economy. Palestinians should be able to run and operate businesses, such as farms and stone and marble quarries, on land they own. If permitted to do so, they could add nearly $1 billion to the Palestinian Authority’s gross domestic product, or GDP, as long as they had access to land and water in previously inaccessible areas, and committed to maximizing the use of recycled water and other sustainable use techniques.⁵U.S. efforts to accelerate work, partnerships, and engagement between the Palestinian information and communications technology sector, Israelis, and the international market also could increase economic growth significantly.⁶

This report examines the Israeli-Palestinian predicament in the context of today’s Middle East and the efforts by the United States and other global and regional powers to resolve this conflict over the past several years. It makes the case for the incoming Trump administration to adopt a pragmatic approach that brings Israel and the Palestinian Authority closer to resolving the conflict through coordinated actions on the security, economic, and political fronts. This formula would bring the parties closer to a sustainable agreement without direct negotiations at the outset. It outlines the six key building blocks aimed at fostering a more favorable environment to maintain a safe and secure Israel and achieve a sustainable, contiguous, and sovereign Palestine. This practical plan offers the best formula for progress.

The incoming Trump administration has indicated that it may adopt an impractical approach, which could end up producing greater instability in the region. Moving the U.S. embassy from Tel Aviv to Jerusalem—which some Trump senior advisors have suggested as a top priority—could end up isolating both Israel and the United States in the broader Middle East, where the issue of Jerusalem’s status remains an unresolved question subject to negotiations.⁷ Furthermore, Trump’s nominee for U.S. ambassador to Israel would contradict his predecessors, appointed by U.S. presidents since 1967, in his support for Israel to annex disputed territory in the West Bank and build more settlements there.⁸ These moves could inflame a fragile situation unnecessarily.

The Middle East is experiencing tremendous challenges—from the rise of the Islamic State to Iran’s ongoing destabilizing regional actions and turmoil in Syria and Iraq, to a refugee crisis with no end in sight. As the Center for American Progress recently outlined, the United States maintains a unique position to shape and influence trends in the region towards a more positive trajectory.⁹ The Israeli-Palestinian front is one area where the incoming Trump administration could have an impact if it adopts an approach centered on coordinated unilateral moves by the parties. By outlining a horizon to resolve the Israeli-Palestinian conflict and creating incentives for the parties to move toward a two-state solution, the incoming U.S. administration can focus the energies of the parties in a way that safeguards against the outbreak of another military conflict along Israel’s borders, such as the 2008, 2012, and 2014 wars in Gaza.

The new administration has an opportunity to align America’s interests and strengths with those of Israel and key Arab countries, and lay the groundwork toward a sustainable two-state resolution and broader U.S. strategy in the Middle East. This route acknowledges that direct negotiations between Israelis and Palestinians are not workable right now. It offers more opportunities for much needed gains in security, economics, governance, and the trust necessary to negotiate any agreement’s final steps. This would represent a major shift from what has become the ever-constricting space of the status quo. President-elect Trump could bring this opportunity to America, Israel, the Palestinians, and the region.

A sustainable Palestinian state with clearly demarcated borders would make Israel more secure and enhance regional and global stability. The incoming U.S. administration has an opportunity to lay the groundwork, while advancing Middle East and U.S. security interests. It can do this by outlining a framework for Israelis and Palestinians to take independent, coordinated, and constructive steps toward a two-state solution. The president-elect can build on decades of investments to help enhance security and lasting institutions to achieve a sustainable resolution to the Israeli-Palestinian conflict. Doing so with a pragmatic vision and coordination can bring together critical actors acting as a force for stability and security, even as the broader region experiences threats from civil wars, state fragmentation, and terrorist networks.

The Trump administration enters office on January 20, 2017. It will be a year with momentous anniversaries: June will mark the 50th year of the 1967 war when Israel’s occupation of the West Bank and Gaza started; November will mark 100 years since the Balfour Declaration was signed. Under the Balfour Declaration, Britain promised Israel land in Palestine for a state.

Recognizing the challenge that it represents, President-elect Trump has stated that he wants “to be the one that made peace with Israel and the Palestinians.”¹⁰ As president, Trump could expand opportunities for U.S., Israeli, and regional security in making a deal. Direct negotiations between Israelis and Palestinians are not possible immediately, but the United States can move toward this goal, with an effort supported by Israeli, Palestinian, and regional security, political, and business leaders.¹¹ The United States can help lead a properly scoped and shaped endeavor, strategically leveraging resources, relationships, and skills. The incoming administration should learn from its predecessors’ gains and miscalculations. Such an assessment would conclude that there is sound logic, premised on U.S. national security interests, in the convergence of Republican and Democratic presidents’ views on the following:

• The need for a two-state solution, defined as a safe and secure Israel and a sustainable, contiguous, and sovereign Palestine¹²
• Significant reforms to continue building the future Palestine, and some good investment to date on governance and economic fronts¹³
• Regional participation as critical to any plausible resolution

Relations between Israel and the Arab Quartet—Jordan, Egypt, Saudi Arabia, and the United Arab Emirates—have been quietly warming, as have those, to a lesser degree, with Turkey and Qatar. This is a result of shared interests and concerns, including what several commonly perceive as the more threatening regional status of Iran as a result of the nuclear agreement. Within areas of potential partnership, however, the Palestinian situation status remains “like a thorn.”¹⁴ Countries such as Jordan and Egypt also face heightened concern about direct impact on their own security from instability in the West Bank and Gaza. Conversely, they would benefit from an effectively functioning Palestinian state that could be counted as a reliable partner.

President Trump would be on firm ground, and most likely to achieve results, if he makes an early statement that: (1) reaffirms his commitment to working with the parties and regional players to resolve conflict; and (2) frames his goal as a nonmilitarized Palestine and 1967 lines with mutually agreed swaps. In doing so, Trump would be building on a framework grounded in long-standing U.S. policy positions to advance the interests of the United States, Israel, and the United States’ closest partners in the Middle East.¹⁵

Two key existing elements that could help in constructing a new framework include U.S. positions on territory and security and the Arab Peace Initiative.

U.S. positions on territory and security

The U.S. position on territory and security with respect to Israeli-Palestinian framework issues has remained consistent over nearly two decades. President Bill Clinton, President George W. Bush, and President Barack Obama have each cited the absolute of Israel’s right to self-defense against any threat; required robust provisions to prevent terrorism; and stated that the future Palestinian state be nonmilitarized.¹⁶ Each described a U.S. commitment to a negotiated two-state resolution that would result in a sovereign, sustainable Palestine and a secure Israel, with borders based on 1967 lines with mutually agreed swaps.¹⁷

Arab Peace Initiative

The Arab Peace Initiative, launched in 2002 by the late King Abdullah of Saudi Arabia, calls for withdrawal to 1967 lines—and from the Golan—as well as “a just solution to the Palestinian refugee problem to be agreed upon in accordance with UN General Assembly Resolution 194.”¹⁸ It also calls for accepting a sovereign and independent Palestinian state in the West Bank and Gaza with East Jerusalem as the capital.¹⁹ The Arab League endorsed the initiative in 2002 at its Beirut Summit and re-endorsed it in 2007. The latest version, endorsed in 2013, calls for the initiative to be based on the two-state solution on the basis of 1967 lines, with the possibility of comparable and mutually agreed-upon minor swaps of the land between Israel and Palestine.²⁰ Israel’s ambassador to the United States described the 2013 Arab Peace Initiative as “version 1.25” but in the context of openness to conversations toward a version 2.0.²¹

Moving forward, resolving the Israeli-Palestinian conflict requires advancing a framework that includes the desired destination but also captures the coordinated and simultaneous steps necessary to achieve progress on several fronts to improve the lives and security of Israelis and Palestinians alike. The framework should focus on four areas: security; politics and governance; water and electricity service delivery; and economic progress.

Security

Grappling with security is a daily worry. Palestinian security forces coordinate closely with Israeli military and security operations on their complexly intertwined population and geography, and the ever more volatile region that they face together. Consider that in the West Bank, Palestinians number 2.6 million, and Israelis number 570,000. In the West Bank, 19.3 percent of Israelis are living beyond the 1967 line, but this includes nearly 200,000 living within greater Jerusalem, and another 150,000 living in three major settlements surrounding Jerusalem: Beitar Illit; Modi’in Illit; and Maale Adumim.²² East of the security barrier, there are 110,000 Israelis, or 4.5% of the total population.

Palestinian law enforcement is constrained in its ability to operate freely only within the limited and noncontiguous Area A jurisdictions.²³ The Israel Defense Forces is responsible for a widely dispersed Israeli settler population, and significantly, for working with Jordan and Egypt to defend against other regional threats. The Center for a New American Security, or CNAS, worked with Commanders for Israel’s Security, or CIS, to tackle how a security system might be developed to promote a two-state solution that meets the needs of Israelis and Palestinians.²⁴ In doing so, CNAS included guidance on steps that could be taken immediately to lead to security improvements for both parties.²⁵ The CNAS and CIS work on security solutions, both long-term and interim, supports the two-state destination approach.

Politics and governance

Appreciating that security concerns must and can be addressed, President Trump would make his framing statement recognizing that Palestinian and Israeli politics are consumed by internal matters that need to be tackled before direct negotiations will be productive. This internal work can occur even as they each progress on parallel coordinated paths toward the two-state destination.

In recent years, President Abbas has been subject to intense speculation about his tenure.²⁶ He is 81 years old, has threatened to resign several times, and last faced a Palestinian Authority election in 2005. He convened the first Fatah Congress in seven years in late November 2016, with restricted participation terms, to support his position as Fatah leader and chairman of the Palestine Liberation Organization, or PLO.²⁷ He believes, not without reason, that he is in a precarious political position domestically and that he lacks sufficient external backing.²⁸ He is unlikely to be the Palestinian leader who seals a deal with Israel; instead, he is a transition leader. President-elect Trump should consider what kind of transition this will be, and what is in America’s interests for Palestinians and Israelis to transition toward. If the United States is best protected and most secure with a Middle East in which Israel and its Arab Quartet neighbors are strongly allied—and more united than not with Turkey and Qatar—it will be best served by continuing to make gains toward Palestinian statehood.

It seems likely Prime Minister Netanyahu has made the same calculation within his own country and that he is assessing how to execute it given his position within his rightward leaning coalition.²⁹ Since the 2016 U.S. presidential election, he has more than once made statements to remind his ministers—and others—that he speaks for the state of Israel. He has done so to leave options on the table with the Palestinians and Arab states, and with the incoming U.S. administration.

The political turmoil among Palestinian leaders precludes focus on challenging governance and negotiation issues. Resolving high politics could lead to a stronger foundation for negotiations. Arguably, faith in functioning governing institutions should undergird any future state. Such institutions should be able to deliver services that people need and be seen to be to delivering such services. These all should be key for the viability of a future Palestine. So too is unifying Palestinians in the West Bank and Gaza, and getting people the basic services they need: water, electricity, food, shelter, schooling, and rule of law.³⁰

Having a government that delivers on its promises to its people is an important component of building and retaining political legitimacy. In laying out his state-building vision in 2010, then-Palestinian Authority Prime Minister Salam Fayyad said, “It’s the power of ideas translated into facts on the ground … putting institutions together and getting them to coordinate their activities, getting them to be better able to provide services like medical care and security—that’s what statehood is about.”³¹ The Palestinian Authority has made some gains since its initial major internal reform and restructuring effort, but it also has suffered some setbacks.³²

Service delivery: Water and electricity critical

Any Palestinian governance stocktaking requires focus on water and electricity. The Palestinian Authority is neither solely responsible for these services, nor is it completely free of burden. In Gaza, the water situation is dire.³³ Its population could run out of reasonable water supplies as soon as 2020.³⁴ Israel shares the interests of Palestinians in Gaza to stave off this crisis and put longer-term solutions in place. The Palestinian Water Authority, run by the Palestinian Authority, and the Gaza Coastal Municipalities Water Utility—operated by technicians but on which Hamas-elected mayors may retain a governing majority—share control of water distribution. Israel, Egypt, and/or a privately owned Gaza facility contracted by the Palestinian Authority provide the electricity needed to meet water demands. Water issues also are complicated in the West Bank. Most new water resources require application by permit to Israeli authorities, and funding assistance from international donors. The approval process for Palestinians has not been smooth.

Economic progress

In April 2016, the Center for American Progress published a report discussing specific measures to bolster the Palestinian economy.³⁵ Particular areas offer the most opportunity for outside actors to leverage their resources to the greatest advantage:

• The Palestinian Information Communications Technologies, or ICT, sector could capture a growing percentage of the Palestinian GDP. It has the basis for natural partnership with Israeli offices of multinational companies, such as Cisco, Microsoft, Google, Hewlett-Packard, and Intel. But Palestinians anxious to work in the ICT sector need skills that match the current needs of the companies from which they seek work.
• The new U.S. administration is well-positioned to encourage the direct input and commitment of high-level executives at the leading companies, whose regional offices in Israel are eager to support outreach to Palestinian ICT companies for contracts that meet current and future market needs.³⁶
• U.S. efforts to accelerate work, partnerships, and engagement between the Palestinian ICT sector, Israelis, and the international market could increase economic growth beyond that sector. Technological gains in sustainable water use, for example, would revolutionize Palestinian farming, particularly if combined with smart access to previously unavailable land or water resources.³⁷
• President-elect Trump’s White House will appreciate that land use planning and other related rule of law efforts are critical to real estate development. The Palestinian Authority needs rules of the road that will impact actors operating now. Laying the foundation for a functioning state that controls the desired destination—land within 1967 lines with mutually agreed swaps, where currently, Palestinian property options and zoning are often haphazard—means restructuring property taxes and seeking stewardship accountability opportunities to incentivize the most appropriate land use in a given municipality.³⁸

First, President-elect Trump should lay out a vision for resolving the conflict. Next, to make progress toward a two-state solution with a sustainable Palestinian state while maintaining a safe and secure Israel, the Trump administration should focus on the following six initial building blocks.

1. Advance teamwork with regional partners. The United States should work with Israelis and Palestinians who live the realities daily. It also should work with regional actors who have direct and immediate interests in building a sustainable state that will be a good neighbor and an overall asset in a tough neighborhood, and with European and multilateral partners who have long been active contributors.

• Follow up on the White House’s invitation to Prime Minister Netanyahu with invitations to key Arab leaders. All meetings should occur within the first half of 2017.
• Preparatory meetings leading up to the president’s White House sessions should ensure that an integrated approach is in place.
• Each country shares an interest in building long-term stability for Palestinians in the West Bank and Gaza. It will be important to deploy a variety of tools of persuasion and incentives with different actors, depending on relationships. Messages and work must remain coordinated, however, to leverage each country’s strengths.³⁹

2. Support political leadership. To progress toward Palestinian statehood, the United States, Israel, and regional and international partners need to make a conscious choice to support Palestinian Authority President Abbas.⁴⁰ This means recognizing him as the transition leader that he is, with an appreciation of his strengths and the limits of his capabilities. Accompanying the task of making President Abbas sufficiently secure in his role and position must be convincing him of the value and import of a reliable supporting bench.

• With these assurances, President Abbas should be encouraged to return his focus to daily governance and the broader political horizon required for peace negotiations.
• Included in regular discussions should be transparent planning for a development process for next generation leaders within Fatah and, separately, in the Palestinian Authority.
• Hamas also is undergoing leadership turmoil. Khaled Meshaal, the political leader based in Qatar, has said that he will step down by year’s end.⁴¹ Ismail Haniyeh, the political leader