The Settlement Fixation

The Obama administration and the Western media treat Israeli settlements as the key to Mideast peace. In reality, it's the least of their problems.

Of all the problems bedeviling Israeli-Palestinian peace talks, the status of Jewish settlements in the West Bank -- thrown into the spotlight again this week by Prime Minister Benjamin Netanyahu's visit to the United States -- has surely attracted the most attention. But that does not make it the most important or the most pressing issue.

Contrary to what many believe, Israelis are largely in agreement over the terms and circumstances under which they would compromise over the settlements -- a consensus that is surely larger than that which exists in Palestinian society over how to reconcile the feuding Islamist and secular nationalist factions in Gaza and the West Bank. While Palestinian Authority President Mahmoud Abbas has used settlements as an excuse to disrupt the latest round of peace talks, the open secret in today's Middle East is that the issue is one of the least problematic obstacles to a final-status agreement.

The settlement project was originally conceived as a response to Israel's national security concerns and was bolstered through an awkward marriage with the ambitions of Messianic Judaism. But as Israeli realpolitik and demographic calculations have turned against the settlers, the settlements have been emptied of their original ideological justifications and reduced to the status of a mere bargaining chip by even the country's most hawkish leaders.

The first settlements were built following Israel's capture of Gaza and the West Bank after the 1967 Six-Day War, but expansionism did not begin in earnest until after the 1973 Yom Kippur War. Although Israel prevailed in 1973, Israelis believed the war could easily have gone the other way. The Israeli security establishment reckoned that possessing the military buffer zone of the Israeli-occupied territories made the critical difference between victory and defeat. Territorial depth provided the Israel Defense Forces with the room to maneuver and time to recover from the surprise attack by Egypt and Syria. Jordan stayed out of the war, but Israelis worried that it would not have been so restrained if the Hashemite Kingdom still controlled the West Bank and was thus capable of launching an invasion from next door.

Shortly after the Six-Day War, Israel mooted a program for geographical deterrence which, in the wake of a far less confident victory in 1973, now seemed all the more compelling. Conceived by Yigal Allon, then the deputy prime minister, it suggested a plan for the strategic settlement of the West Bank. Although never formally adopted, the Allon Plan attained the level of de facto policy as it was fitfully implemented by successive left-wing Labor governments.

The mountainous rift above the Jordan River was to constitute the best bulwark against Arab invasion. A strip of 12 to 15 kilometers along the west bank of the river would therefore be annexed by Israel, and Israeli towns overlooking the predominantly Arab cities in the West Bank such as Jericho and Hebron would be developed.

The security motive for the Allon Plan was obvious, but there was also a second aspect of the plan's logic that was equally important: to prevent Israel from permanently acquiring any part of the West Bank that was home to large Arab populations. Allon envisioned that the land falling outside the 12-to-15-kilometer fortified strip would be governed by some form of Arab "autonomy." As Irish academic and politician Conor Cruise O'Brien observed in The Siege, his magisterial history of Zionism and the early decades of the state of Israel:

In those parts of it which were implemented, the Allon Plan was a document of annexationist tendency. But the questions it raised, or expressed, over the future of the densely populated Arab areas did have the effect, during most of the period between 1967 and 1977, of closing these areas to Jewish settlement. [Italics in the original.]

The goal, then, of the initial settlement project was minimal rather than maximal. The Israeli political class sought to forestall what veteran Israeli diplomat Abba Eban termed "superfluous domination" of Arab land.

However, the escalation of Palestinian terrorist attacks soon provoked an equally hard-edged Israeli response, which gave the settlement project a more ideological underpinning. In May 1974, Arab fedayeen kidnapped 90 schoolchildren and teachers in the northern Israeli town of Ma'alot. The Israeli rescue operation was a calamity, resulting in the deaths of more than 20 children. In October of that year, the Arab League summit held in Rabat, Morocco, formally recognized the Palestine Liberation Organization, which included the faction responsible for the Ma'alot attack, as the "sole legitimate representative" of the Palestinian people. A month later, PLO head Yasir Arafat, by then the public face of Arab terrorism, addressed the U.N. General Assembly in New York and received a standing ovation.

Not by coincidence, 1974 was also the year that Gush Emunim -- "Bloc of the Faithful" -- was founded by young Israeli activists from the National Religious Party. The movement, which was dedicated to the expansion of Israeli settlements, preached that the Jewish nation and its land were holy and given to the Jews by God. Gush Emunim's official policy with respect to the occupied territories was hitnahalut, which literally means "colonization" and, in practice, meant squatting on Arab territory regardless of state policy. By 1976, then Defense Minister Shimon Peres allowed Gush Emunim to "colonize" the Palestinian village of Sebastia, near Nablus. It was fast becoming clear that the interests of Messianic Judaism and Israeli security had merged.

The first and second intifadas -- Palestinian uprisings -- only reinforced this precarious dynamic. But following the 1991 Madrid peace conference, the settlements also acquired a role as a bargaining chip in Israeli-Palestinian peace talks. Israel accepts a "land for peace" arrangement premised on territorial concessions, while continuing to suggest that Jewish real estate in the West Bank knows no limits. It's a paradox with a point, as historian Walter Russell Mead recently noted: "Without the threat of more settlements, it's not clear what the incentives are for the Palestinians to accept a territorial compromise based on the 1967 frontiers." Fueled by this logic, the settlement population has tripled since the Madrid conference.

But the continued growth of the settlements and the international attention directed toward them obscures the fact that their original rationale has eroded. The prospect of Israel fighting a conventional war against another Arab army is outmoded, as both its recent conflicts with Hezbollah and Hamas attest. Terrorists, unlike tanks, are not deterred from crossing over rocky terrain. Moreover, the security wall that now physically separates much of Israel from the West Bank acts as its own buffer and has so far managed to radically reduce the number of suicide bombings in cities such as Tel Aviv and Jerusalem. Furthermore, the West Bank has largely been pacified since the Second Intifada due to the savvy partnership between Israel and the Palestinian Authority's security establishment, the training of a professional Palestinian gendarmerie by the United States, and the internal policing methods of Palestinian Prime Minister Salam Fayyad.

In Israel, settlements have also lost popular support. The 1995 assassination of Prime Minister Yitzhak Rabin by Yigal Amir, a Messianic rejectionist of the Oslo Accords, marked the beginning of the erosion of the settler movement's credibility. As recently as this March, a poll conducted by the Harry S. Truman Institute for the Advancement of Peace at the Hebrew University of Jerusalem found that 60 percent of Israelis support "dismantling most of the settlements in the territories as part of a peace agreement with the Palestinians."

In 2005, Israeli Prime Minister Ariel Sharon, judging that an indefinite occupation was destructive to Israel's long-term national interests, withdrew all settlements from Gaza. By Sharon's reckoning, Israel stood to become an Arab-majority state if its expansionist project in the occupied territories reached a level of de facto annexation. He feared that this would allow Arab inhabitants to vote away Israel's identity as a Jewish homeland, or force Israel to deny this population equal democratic rights and to establish a system of apartheid.

Netanyahu epitomizes the Israeli establishment's embrace of this hardheaded logic and the marginalization of Messianic Judaism in its mainstream political discourse. In his 2009 address at Bar-Ilan University, the current prime minister acknowledged the legitimacy of a Palestinian state. Although the speech was criticized as being insufficient by Netanyahu's leftist critics, it in fact ended the Likud party dream of a state of Israel lying between the Mediterranean Sea and the Jordan River and encompassing all of Gaza and "Judea and Samaria" (the biblical terms for the West Bank).

This speech, which came just four years after Netanyahu quit his post as finance minister in Sharon's cabinet to protest the Gaza withdrawal, certified a slow reorientation of Israeli politics away from a theological or security-based justification for the settlement enterprise. The prime minister's latest offer to extend the construction moratorium in exchange for the Palestinian recognition of Israel as a "Jewish state" has been roundly criticized as a diplomatic non-starter while the larger point -- that a conservative hawk sees the settlements as leverage and not a divine mandate -- is just as predictably elided.

So where does that leave the die-hard settlers? Perhaps bidding for renewed political relevance, the movement has itself begun to flirt with democratic integration -- except that its preferred model is the so-called "one-state solution," which envisions the Jewish and Arab polities in Israel, Gaza, and the West Bank merging into a single democratic state. This concept, however, is even more fraught with obstacles and the possibility of bloodshed than the two-state solution. Ethnic power-sharing would, at best, transform Israel into another Lebanon and invite the same wardrobe of calamity, including civil war and tribal assassinations.

If this is God's will then so be it, argues Uri Elitzur, Netanyahu's former chief of staff and a leading intellectual of the Israeli religious right. Elitzur recently endorsed the one-state solution in Nekuda, the settler movement's official magazine. Reuven Rivlin, the speaker of the Knesset, the Israeli parliament, said this year that he "would rather [have] Palestinians as citizens of this country over dividing the land up."

Wondrous though it undoubtedly is to imagine the religious Jewish right nodding in agreement with the New York Review of Books, the settlers' rethink on Greater Israel's political boundaries also demonstrates their divorce from mainstream Israeli thought and practical reality. It is all the more reason to see their movement for what it is: marginalized politically and curtailed in scope.

That is not to say that the existing West Bank settlements are destined to fall from Israeli control. Land swaps have long been part of the tool kit of final-status negotiations; in late 2008, Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas undertook a hypothetical map-drawing exercise that delineated the border between the two states. The end result allowed for large settlement blocs to be incorporated into the Jewish state, while according land currently inside Israel to the new Palestinian state. Ma'ale Adumim, for instance, which was a sticking point in the international debate preceding the construction moratorium, is home to some 36,500 Israelis who aren't likely to go anywhere, as most Palestinians acknowledge. Building new bathrooms or balconies there is hardly the fatal blow to peace that it has been made to appear.

Settlements should not be the top Mideast priority for the Obama administration. More critical issues will have to be resolved first, such as reconciling feuding Palestinian political factions, guaranteeing that security can be maintained in the West Bank without an IDF presence, and ensuring that Palestinian institutions now being built are stable enough to sustain a functioning democratic government, regardless of which party is elected. The settlement fixation is a convenient distraction from these obstacles, which have no easy remedy and continue to block the way to a two-state solution.

Shaul Schwarz/Getty Images


Emerged Economies

In the post-recession era, developing countries have come out on top. And they're going to stay there.

This week's G-20 summit, which begins today in Seoul, will have to acknowledge that the old conventional wisdom no longer holds true -- in the post-recession era, developing countries will steer the global economy, while the developed world takes the economic back seat. It's a major shift in the world's balance of economic power, and managing it is going to demand some deft policy moves from countries not known for their technocratic prowess.

The rise of the rest is not likely to be a temporary blip, a product only of the financial crisis. We are in fact at a major historical inflection point. Five long-term trends explain why.

First, over the last decade, emerging economies have generally put their balance sheets in order. This will make them magnets for some of the new, massive savings that advanced economies will be forced to accumulate. But whereas the massive southbound capital flows of the early 1980s precipitated a series of debt crises, this time the money won't go to bankrolling bloated fiscal deficits in emerging economies. Governments in many of these countries are sitting on surpluses, after all. Instead, the money will pay for productivity-enhancing infrastructure investments, much of it initiated by private companies.

Second, it's becoming cheaper for emerging economies to acquire, adapt, and adopt industrial technologies. These countries can now enter the industrial supply chain, if at a relatively lower rung. Take cars: For now, Japan makes the "electronically controlled, continuously variable transmission," China stamps the steel, while Vietnam makes the tires, and all countries benefit.

Third, the new middle classes of the emerging economies are teeming. China's grew by 400 million in the past 30 years. Soon Brazil's and India's middle classes will match that rate of exponential growth. This won't just be about larger demand for TVs, cars, and apartments. As is already happening in many Latin American countries, it will also shift the political game toward the center, limiting the risk of sudden changes in policy course.

Fourth, emerging economies are increasingly seeking to trade with one another. A free trade agreement with the United States or Europe is no longer seen as a sure-shot ticket to faster development. You also need entry into China, India, and other up-and-coming markets. South-south trade is powering new economies of scale and scope.

And, fifth, natural resources have finally proved themselves to be more blessing than curse: Professional central bankers and more stringent independent watchdogs are ensuring that the influx of money isn't feeding government corruption or otherwise going to waste. NGOs are helping to ensure that the environment isn't sacrificed in the search for more natural resources.

Meanwhile, G-7 countries face a horizon of high unemployment, depleted house values, timid consumers, heavy public debt, stagnant growth, limited international coordination, and almost no policy levers left to pull.

So while advanced economies are in a state of quasi-terminal lethargy, the developing world has been given a shot of adrenaline. But it's an open question what they'll make of it. The old playbook no longer applies: Policymakers in emerging economies will have to develop and pursue a new economic orthodoxy. No longer can they take their cues from their colleagues in the so-called First World.

Imagine, for instance, that you are a finance minister in a developing country. While your peers in London, Paris, and Washington desperately need more revenue and less expenditure, your country probably came out of the crisis with a relatively strong fiscal position, especially if it is commodity-rich. They worry about the pain they are causing with austerity; you worry how to use your plentiful cash. Their priority is quantity; yours is quality.

Slowly but surely, developing countries are learning to save for hard times by putting in place smart, countercyclical policies. Politicians have finally converted into true believers. Leaders are learning that their popularity soars if they save enough money during good times to spend it when things go south. (Chile's former president, Michelle Bachelet, is the prime example of this: She dramatically turned around her declining approval rating by cushioning the initial impact of global economic turmoil with funds accumulated previously.)

Free trade orthodoxy has also been turned on its head. The 2008-2009 crisis proved that free markets are more volatile than once thought. In two years, the volume of world trade fell by a third. International production networks carried the recession contagion at staggering speed from country to country.

Naturally, calls for assertive trade policy have since gotten louder. The question is: What kind of intervention will it be? Public policy will, in most developing countries, take an enlightened path. Call it "export-led growth 2.0." A giant premium will be put on diversification, not only of partners but also of products, as an insurance against volatility. "Innovation" will be the new buzzword in global trade. To maintain the sustainability of their export-led growth models, emerging economies will push internal reforms that promote new industries, including incentives from research and development to increased investments in higher education.

Poverty-reduction policies demand the most change in the years ahead. There is a budding consensus -- amply corroborated by the crisis -- on what reduces poverty: fast and sustained growth (more jobs), stable consumer prices (no inflation), and targeted redistribution (subsidies only to the poor). Poverty fighters in the developing world will focus on all three, but most of all on providing for better jobs. Not just any jobs will do: What matters in reducing poverty is not just the number of jobs, but their productivity. This, of course, points toward a broader agenda of reforms to make their economies more competitive.

Developing countries are also experimenting with more finely tuned social programs. Over the last 10 years, 30 developing countries have set up mechanisms to transfer cash directly to the poor via their cell phones. They now know their poor by name. This kind of state-citizen relationship proved a blessing to cushion the impact of the global crisis -- forestalling social unrest in Mexico, for example. It will also continue to make social expenditures more efficient, with smarter design and less duplication.

In sum, if they further develop these sensible, new policies, many developing countries will break out of their "developing" status entirely. Such hopes should be tempered, though. Before the Great Recession, the developed world -- as well as the economics profession -- was confident it had laid a permanent foundation for never-ending prosperity. Now, those countries will have to depend on the developing world to pull them out of crisis. That's a smart strategy for now, but what works today will not necessarily work tomorrow.