Netanyahu's Speech and the Peace Process

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By Stratfor

Israeli Prime Minister Benjamin Netanyahu on Sunday gave his long-awaited speech, which was in effect a response to U.S. President Barack Obama's demand that Israel stop expanding its settlements in the West Bank. Netanyahu framed his response in the context of Iranian President Mahmoud Ahmadinejad's election victory. His argument was essentially that the problem was not the presence of Israeli troops in the West Bank, but rather the attitude of Palestinians, Arabs and Iranians to Israel. In doing this, Netanyahu is trying to transform the discussion of the Palestinian peace process, particularly in the United States.

Netanyahu argued that the occupation was not the problem. First, he pointed out that Palestinians had rejected peace with Israel prior to 1967, just as much as after. He went on to say, "Territorial withdrawals have not lessened the hatred, and to our regret, Palestinian moderates are not yet ready to say the simple words: Israel is the nation-state of the Jewish people, and it will stay that way." In other words, the U.S. demand for a halt to settlement expansions misses the point. There was no peace before Israel occupied the West Bank and Gaza, and there was no peace when Israel withdrew or offered to withdraw from those territories.

Therefore, he argued, the problem is not what Israel does, but what the Palestinians do, and the core of the problem is the refusal of the Palestinians and others to recognize Israel as a Jewish state. Essentially, the problem is that the Palestinians want to destroy Israel -- not that Israel is occupying Palestinian territories.

The prime minister went on to make an offer that is radically different from the traditional concept of two states. He accepted the idea of a Palestinian state -- but only as a disarmed entity, with Israel retaining security rights in the territories. Having defined the problem as Palestinian hostility, he redefined the solution as limiting Palestinian power.

This clearly puts Netanyahu on a collision course with the Obama administration. He rejected the call to stop the expansion of settlements. He has accepted the idea of a two-state solution -- but on the condition that it includes disarmament for the Palestinians -- and he has rejected the notion of "land for peace," restructuring it as "land after peace." This is not a new position by Netanyahu, and it will come no surprise to the United States.

The game Obama is playing is broader than the Israeli-Palestinian issue. He is trying to reshape the perception of the United States in the Islamic world. In his view, if he can do that, the threat to the United States from terrorism will decline and the United States' ability to pursue its interests in the Muslim world will improve. This is the essential strategy Washington is pursuing, while maintaining a presence in Iraq and prosecuting the war in Afghanistan.

There is obviously a tension in U.S. policy. In order for this strategy to work, Obama must deliver something, and the thing that he believes will have the most value is a substantial Israeli gesture leading to a resumption of the peace process. That's why Obama focused on settlements: It was substantial and immediate, and carried with it some pain for Israel.

Netanyahu has refused to play. He has rejected not only the settlements issue but also the basic concepts behind the peace process that the United States has been pushing for a generation. He has rejected land for peace and, in some ways, the principle of full Palestinian sovereignty. Rather than giving Obama what he wanted, Netanyahu is taking things off the table.

Netanyahu has said his piece. Now Obama must decide what, if anything, he is going to do about it. He has few choices other than to persuade Netanyahu to back off, sanction Israel or let it slide. Netanyahu cannot be persuaded, but he might be forced. Sanctioning Israel in the wake of the Iranian election would not be easy to do. Letting it slide undermines Obama's wider strategy in the Muslim world.

Netanyahu has called Obama's hand. All Obama can do is pass, fold or raise. According to Reuters, the White House has responded to Netanyahu's speech by announcing that Obama "believes this solution can and must ensure both Israel's security and the fulfillment of the Palestinians' legitimate aspirations for a viable state." Obama is trying to pass for the moment. The Arabs won't let him do that for long.

A Stratfor Intelligence Report.
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