Argument

The Unsettled Question

Does anyone have the slightest idea how many Jews are in the West Bank?

With Israeli-Palestinian peace talks about to begin again, the debate over West Bank settlements is bound to heat up -- in public and at the negotiating table. The argument, however, involves not just opinions on what policies are right, but disagreement over basic facts. Is most construction now in the major blocs and in Jerusalem -- areas that Israel is believed likely to keep in any final agreement -- or is there substantial growth as well in settlements beyond the security fence, which would likely be part of a new Palestinian state? In whose benefit is time ticking, anyway?

Given the constant focus on the settlements -- not least in Washington and European capitals -- one would expect simple and forthright answers to these questions. But getting the facts turns out to be as great a challenge as settling on the best policy. There is no agreement on population growth rates in the settlements, nor on how many Israelis live outside the "major blocs." The ambiguity around this important question has allowed interested parties to fill in the blanks with answers that best suit their political narrative.

The numbers given by the Palestinian Authority, which show linear population growth over the past decade, reported that there were a staggering 544,000 Israeli settlers in 2012, which is 9 percent of Israel's Jewish population. Those figures, however, do not distinguish between Israelis who live east of the security fence and those who live in Jerusalem or in the major blocs that at Camp David, in the Annapolis peace summit, and in every proposed peace plan end up as part of Israel.

The Israeli Central Bureau of Statistics would be the natural place to look for such figures, but as there is no single agreed definition of what constitutes a "bloc," its official number of 325,000 Israelis now living in the "Judea and Samaria region" provides only partial information. Like the Palestinian Authority's figures, the bureau's numbers do not tell us how many Israelis live in the large blocs that Israel is likely to keep, nor how many live in the areas of the West Bank that are expected to become part of the new state of Palestine.

In a New York Times op-ed last year, settler leader Dani Dayan cited 160,000 Jews living in "communities outside the settlement blocs that proponents of the two-state solution believe could be easily incorporated into Israel." Meanwhile, Peace Now's official Facebook page speaks of 70,000 citizens who would have to relocate if an agreement were finally found.

Of course, current population totals may reflect longer-term rather than recent trends. Our main goal was to see what's happening right now: Are those towns beyond the security fence still growing? The oft-repeated argument that "the window for peace is closing" depends largely on the belief that the settlements beyond the fence are expanding, meaning the number of Israelis who may resist a final agreement is presumably growing as well.

Israeli election results data provide an important insight into these elusive facts on the ground, because trends in the size of the voting population can be a good proxy for trends in overall population. According to electoral data, there has been significant recent growth all throughout the West Bank -- on both sides of the fence. More specifically, the number of Israelis over the age of 18 (eligible voters) who live beyond the Green Line and outside the settlement blocs has increased by 17 percent during Prime Minister Benjamin Netanyahu's current term in office.

The population growth rate of Jews in Israel was about 6 percent when today's voters were being born, meaning that some of the additional 11 percent reflects physical relocation to the settlements. Of course, the "natural growth" of the settlements may exceed the population growth rate of the average Israeli Jewish family: Religious families in Israel tend to be larger, and in the West Bank younger, than the general population, so it is logical that their growth rate is higher. But that does not change the bottom line: Settlements beyond the Green Line and outside the major blocs grew by over a tenth during Netanyahu's recent term of office.

As we have noted, there is no one definition of settlement "blocs" -- but that turns out not to matter much either. By counting only towns that are west of the existing security barrier, one reaches the same results: 17 percent growth. Similarly, by looking only at towns that were offered by former Prime Minister Ehud Olmert in the 2008 Annapolis negotiations, the growth in the number of voters remains as high.

Is a 10 or 11 percent growth rate high? We looked at the Olmert years for a comparison. During Olmert's three-year tenure (2006 to 2009), the number of eligible voters in those very same towns grew by 35 percent. That was more than double the current annual rate and the lower recent rate may reflect, for example, the partial moratorium on settlement construction imposed by the Netanyahu government in 2010. The growth during the Olmert years is remarkable, considering that his campaign agenda (hitkansut, usually translated as "consolidation") was a second disengagement and withdrawal from much of the West Bank area beyond the fence. It is also noteworthy that some of this faster growth comes from towns in which the majority of votes went in 2013 to center-left parties that advocate for a two-state solution (Almog, Niran, Gilgal) or to ultra-Orthodox parties that generally accept the idea of partition (Asfar, Ma'ale Amos). Those voters are Israelis who chose to move into settlements for non-ideological reasons and would presumably be willing to move if compensated.

The total number of eligible voters in settlements beyond the security fence in January 2013 stood at 43,155. Both the Yesha council website and data from the 2008 Israeli census indicate that the median age is 18 in the Judea and Samaria communities, which means that the actual population is about double the number of voters.

Ironically, both the Palestinian Authority and the Yesha council have chosen a strategy of supersizing the numbers -- the Palestinians to create a sense of urgency ("the window for peace is closing"), and the settlers a sense of irreversibility ("it's too late to move so many settlers out"). Scare tactics and alarmism, however, will only stifle productive debate and can lead to policies grounded in misinformation.

In recent years, Netanyahu has made several statements that endorsed a two-state solution and showed he understood that a peace agreement with the Palestinians would require removal of numerous settlements. If the guiding Israeli principle remains a two-state solution, partition of the West Bank, and separation from the Palestinians, it is especially hard to see the logic in allowing further blending of the populations. The roughly 80,000 Jews who live in the places included in the 2008 offer by Olmert still remain a drop in a sea of Palestinians. Perhaps the settler movement should reconsider its focus on maintaining and expanding that small population, which is only 3 to 5 percent of the number of Palestinians living in the West Bank. An internal debate over possible overstretching, and consideration of focusing their efforts on second-tier goals -- such as the Negev and the Galilee, where the Jewish population is thin, and successive governments have tried to increase it -- might be worthwhile.

The policy of several consecutive Israeli governments has been to seek a two-state solution -- but Israeli resources are still being put into the expansion of the very settlements that would have to be removed to consummate such a deal. How many resources, and how much are those settlements growing? It is hard to come up with hard numbers, and we acknowledge the limitations to our methodology. But the very fact that facts are hard to come by is significant: Transparency won't end the debate on settlement expansion, but it would make that debate better informed and far more intelligent.

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Argument

Collision Course

The U.S. and India are headed for a trade war over immigration and protectionism. Can it be stopped before it's too late?

India and the United States have come a long way over the past two decades. A once fraught relationship has developed real strategic significance, especially as both nations face major security challenges in Asia. Much of this progress has been fueled by the enthusiasm of U.S. businesses, who recognize that to be successful in a globalized economy, they need access to Indian talent and the giant subcontinental market. India also understands that to lift itself out of poverty and become globally competitive, it needs access to U.S. markets and the capital and technology of American firms. As a result, bilateral trade has quadrupled to nearly $100 billion since 2006 and, with this, cooperation has blossomed in many other areas -- including intelligence and security.

However, with U.S. Vice President Joe Biden visiting Mumbai and New Delhi this week, it's worth noting that over the past three or four years, the business environment for U.S. firms in India has deteriorated, and tensions have grown over trade and investment matters. American pharmaceutical firms and multinational companies are concerned about how policies and regulation compromise their business model. Many others face nightmarish tax challenges. For their part, Indian IT companies are very concerned about proposed changes in the U.S. Senate's immigration bill to the rules on skilled Indian workers who want to emigrate to the United States.

All companies, Indian and American, face severe headwinds in their day-to-day business operations. As a result, the business ties that have been a pillar in U.S.-India relations for decades have been dramatically weakened. Honeywell CEO and co-Chairman of the U.S.-India CEO Forum Dave Cote spoke for many of his colleagues recently when he said, "Over the last two years, we have felt a cooling when it comes to U.S. interests in investing in India." Ajay Banga, CEO of Mastercard and chairman of the U.S.-India Business Council added frankly, "There are cracks in our relationship." But this cooling may not remain restricted to trade and investment alone; the United States and India may be headed for a collision that could be seriously detrimental to the strategic interests of both nations unless U.S. President Barack Obama and Indian Prime Minister Manmohan Singh lead forcefully and personally to get things back on track

The list of grievances on both sides is long. For U.S. firms operating in India, relentless harassment by tax authorities is at the top of this list. Add to this the much-criticized Preferential Market Access (PMA), a proposed policy that would give preference in government procurement contracts to domestically manufactured electronic, computing, and telecommunciations hardware. Pharmaceutical companies are concerned about intellectual property rights protection and enforcement. Solar panel manufacturers, and companies in insurance, retail, and defense complain about continued regulatory and bureaucratic hurdles to market access in their sectors. Progress on the civil nuclear agreement between the two countries that was signed with much fanfare in 2008 remains stalled over concerns on liability which has scared away French, Russian, and American firms.

Lack of progress on improving infrastructure, a rapidly slowing economy and a rapidly depreciating currency raise further concerns about India's economic progress. For multinational companies eager to enter the Indian market, the mounting list of issues is causing frustration and annoyance to mutate into anger as more and more CEOs fear that India is discriminating against U.S. firms and failing in its obligations as an emerging economic power.

U.S. government officials expect India to collaborate with them in multilateral trade negotiations to shape the global trading system rather than setting dangerous precedents that other countries might emulate. This would drive a stake through the heart of the global expansion of American firms. It is a matter of paramount importance and urgency therefore to get India to act responsibly.

From India's standpoint, the most urgent and lethal threat is that some of the provisions of the U.S. immigration bill currently being considered by Congress would create a huge problem for the country's flagship IT industry, not to mention the American companies that are its clients. The most onerous proposal is one that prevents U.S. technology firms from placing personnel at client's sites if more than 15 percent of their employees are on H1-B visas. This destroys the business models of many global IT service providers and is also extremely problematic for U.S. companies that have become dependent on the amazingly competitive, 24/7 capability provided by Indian firms.

For Indians, it seems as if U.S. officials only criticize protectionist policies when other countries put them in place. From their point of view, India's Preferential Market Access policy is simply a way to encourage electronic hardware firms to manufacture locally in India. Such incentives are essential to creating jobs and reducing the huge balance of payments problem faced by the country. The policy is compliant with World Trade Organization rules and, anyway, how is this different in principle from the provisions of the immigration bill which aims to create more IT jobs in America, they wonder? How can a country which has a Buy American Act, which requires that the U.S. government give preference to U.S.-made products in its purchases, criticize the PMA? In a country with a legacy of colonial rule and socialism, where many Indians are still distrustful of businesses in general and foreign companies in particular, the vigorous approach of American firms and the U.S. government smacks of economic imperialism and awakens protectionist instincts.

The list of issues is mounting and emotions are rising on both sides. Left unchecked, this dynamic could trigger a spiral of finger pointing and retaliation that will damage the hard-won gains in trust and trade between the two countries. Moreover, it threatens to get in the way of the strategic cooperation between the countries as they address complex issues ranging from withdrawal in Afghanistan to simmering problems in Pakistan to China's rise. As Mahatma Gandhi famously said, "An eye for an eye will only make the whole world blind."

The reality is that India and the United States are natural allies and clear strategic partners. In addition to being enormous markets for each other's goods and services, the United States and India both stand to benefit from a more stable, less dangerous Asia. New Delhi needs Washington to stay engaged, focusing its attention and resources on the region. And Washington needs New Delhi to remain a welcoming partner, happy to share both its strategic location and deeper cultural understanding of an enormous turbulent swath of the world. It is vital therefore that the leaders of both countries take a strategic rather than tactical, short-term, and commercial approach to resolving their differences.

Unfortunately, the timing of the negotiations couldn't be more challenging. In both countries the political system is polarized. There is also an asymmetry to the dialogue. The U.S. economy and business confidence is recovering. And with new U.S. Trade Representative Mike Froman at the helm, the administration is approaching these matters forcefully. In India, however, the economy is sputtering and the coalition government has its eye more on the upcoming 2014 election than on governing.

Delhi did make a few promising recent moves in early July, when Preferential Market Access was put on hold and caps on foreign investment in a number of industries were raised. These changes signal that Indian officials are belatedly listening to American concerns. On the other hand, the Obama administration has remained ominously silent on India's grave concerns about the immigration bill. It would make it hard for the United States to make the case for India to open its markets if, with the immigration reform bill, it is closing its own market. Both countries need a stable, fair, mutually acceptable framework for trade relations, and that can only come through joint development of principles that establish parallel lines that separate free trade from tolerated protectionism in each country.

With the August session of the Indian Parliament about to commence, Prime Minister Singh has a final window of opportunity to reach across party lines -- especially to the opposition BJP -- before next year's election and forge a consensus on how to revive the economy. The passage of just a few important bills could restore optimism and trigger several billion dollars of much needed investment to jump-start the economy. This opportunity must not be wasted.

Singh must also reach out to Obama to ensure that both countries take a more strategic approach to reviving the economic partnership. Overcoming tough challenges requires committed leadership on both sides and even more, a personal chemistry between the leaders that is not currently in abundance. Yet given what is at stake for both nations, Obama and Singh must show personal commitment to finding acceptable solutions to these vexing issues. They need to sponsor a cabinet-level working group that tackles a few tough issues and settles them in a very finite period of time. This could then build the foundation of mutual confidence and trust to set the stage for the next government to negotiate a more sweeping bilateral trade and investment treaty.

Leaders in Delhi and Washington find themselves at a critical moment. They must decide whether they will make the relationship into a truly strategic and valuable partnership or allow it to deteriorate into a welter of finger pointing. Despite the political constraints on both sides, it is worth remembering what is at stake here, and how far we've come already.

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