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Responses to Prediction and the Middle East Peace Process

Janice Stein

The Mershon Center

February 1997

Note: It is important to observe that ALL THREE SCENARIOS that we identified -- the two-state solution, status-quo plus, and collapse into violent crisis -- INCLUDE VIOLENCE AGAINST CIVILIANS in the near term future. All include violence against Israeli civilians and some include violence against Palestinian civilians.

The two-state solution includes continuing but declining violence over time against Israeli and Palestinian civilians as the Palestinian state becomes entrenched and its legitimacy and authority grows, Palestinian leaders develop a commitment to the status quo, and the opposition in Israel reluctantly accepts the permanence of a Palestinian state. If the Palestinian state is poorly institutionalized, violence against Palestinian and Israeli citizens may well increase over time.

The status quo plus, which stops short of a Palestinian state, has ongoing violence from Palestinians opposed to the status quo as well as from those opposed to Arafat's leadership. It is possible that Arafat's authority may be challenged if it becomes apparent that no Palestinian state is possible [Here I am projecting the outcome as a driving force to another driving force.]

Collapse into violent crisis, where militant Palestinians control the PNA, leads to an upsurge in violence against Israeli civilians and an intifada in areas like Jerusalem and Hebron.

I. DRIVING FORCES:

If world economic growth and expansion of trade and markets continues and accelerates , Israel creates new jobs in export-led growth. This kind of growth favors the pragmatists, heightens sensitivity toward international pressure, and weakens the power of the ideological right. At one end of the spectrum, it splits the Likud into fragments, one allied to the religious and nationalist right, the other to the participants in the global economy.

For the PNA, world economic growth has less direct impact, until Palestinian entrepreneurs are positioned to become actives players in global markets. For the foreseeable future, they are likely at best to become niche players in regional markets.

If world economic growth contracts , Israel's economic entrepreneurs will have fewer opportunities to expand. Will constrained opportunity translate into disaffection with the Likud government and increased pressure to make concessions to stabilize the region and increase its attractiveness to foreign direct investment? Or, economic elites can turn back to national enterprises in a period of contraction and increase its support of the government. The sign of the vector is difficult to establish. If much of contemporary economic theory is correct, the latter contingency is unlikely.

The contraction of world economic growth would indirectly further constrain the opportunities of the PNA and its entrepreneurial classes. They would become even more dependent on regional niches, on Israel's markets, and on a cooperative economic relationship with Jordan.

Note: We should be able to specify the differential impact of accelerated growth or contraction on the political economy of Israel, the PNA, and Jordan, three very differently positioned economic players.

Changes in the flows of foreign direct investment and multinational partnerships should have a direct impact on economic growth and job creation in Israel. Positive rates should increase Israel's willingness to open its markets for fruit and vegetables, cement and other products, and labor to the PNA.

Openness of Asian markets to exports and joint ventures with Israel can enhance sensitivity of the entrepreneurial class to the costs of renewed tensions with Palestinians.

A willingness by Israel to open its labor markets to young Palestinians in significant numbers could relieve the pressure. However, the logic of integration of labor markets could push Israel toward SQ+ rather than toward a two-state solution.

Integrated labor markets are also much more vulnerable mutually to disruption. In a condition of SQ+, a higher level of integration could push militant Palestinians toward increased violence against Israeli civilians. A cycle of reciprocity could begin which leads to violent collapse.

The conflict between Israel and Syria has been the most intense and bitter of all Israel's conflicts. They were unable to reach agreement when conditions were most opportune: the Rabin government gave a deal with Syria the highest priority, Syria was keenly interested in strengthening its relationship with the United States in the wake of the Cold War, a preliminary agreement had been reached with the PLO and with Jordan, and experienced negotiators were in place. This suggests that an agreement is not surplus waiting to be picked up. It is possible that Syria does not want a deal and that ongoing conflict between Syria and Israel can be treated as a predetermined element. Whether or not a Syrian-Israeli impasse is a predetermined element is itself a critical uncertainty.

It is uncertain whether Assad prefers the return of the Golan Heights at the price of abandoning long-standing hostility to Israel and leadership of the Arab "street" that remains hostile to Israel. A preference for Arab leadership of the street would preclude progress. A continuing stalemate would make it easier to destabilize any PNA-Israel agreement and would push toward violent collapse.

It is uncertain whether this government in Israel prefers an agreement with Syria if the price is returning the Golan Heights. If it prefers to retain part of the Golan Heights, progress is precluded. A continuing stalemate would make it easier to destabilize any PNA-Israel agreement and would push toward violent collapse.

It is uncertain whether the government of Israel, even if it reached agreement with Syria, could get an agreement returning the Golan Heights ratified. It is committed to a referendum, as was the predecessor government. Failure to ratify would exacerbate Israel-Syrian relations, destabilize any PNA-Israel agreement and would push toward violent collapse.

A change in leadership in Syria could change preference structures. A successor regime could be prepared to meet Israel's terms for return of the Golan. Alternatively, it could refuse to enter into any negotiations as it seeks to consolidate its bases of support.

An escalation of violence in southern Lebanon could draw Israel and Syria into full scale confrontation, undermine any chance of progress between Syria and Israel, destabilize any PNA-Israel agreement and would push toward violent collapse.

Can Israel and the PNA implement major elements of Oslo II and beyond? I have discussed this issue in part under the heading of regional forces and regime stability. Perhaps this category is redundant.

A concentrated wave of attacks against Israeli civilians, with large numbers of casualties, would undermine the capacity of any government to deliver an agreement in the short term. It is virtually impossible, in the context of public outrage and a sense of vulnerability among the Israeli public, to move forward. These are, however, usually short-term effects. However, were the PNA to be complicit in any of the attacks, it could undermine its credibility and the confidence of the government and public in Israel that the PNA could be trusted to honor its obligations. This would push toward violent collapse. Or, a wave of attacks could continue, and provoke a massive Israeli retaliation that undermines existing PNA-Israeli agreement. Here too, the push would be toward violent collapse.

It is possible that the current Israeli government prefers NOT to fulfill Oslo II. If it fails to fulfill the agreement, it could undermine its credibility and the confidence of the PNA that a government of Israel could be trusted to fulfill its obligations. This would push toward a violent collapse.