The Kerry Peace Plan?

Middle East Policy Council

Last week, U.S. Secretary of State John Kerry unveiled a new proposal aimed at jumpstarting negotiations between the Israelis and the Palestinians. This time, however, the main component of the plan is economic rather than political. With a proposed $4 billion investment into the Palestinian economy, Mr. Kerry hopes to address rampant unemployment and sluggish economic growth in the Occupied Territories. The proposal has received mixed reaction from both Palestinians and Israelis, many questioning whether the proposal will be enough to eventually bring the two parties together.

A proponent of the “Breaking The Impasse” initiative, as the proposal is formally known, Klaus Schwab, founder and executive chairman of the World Economic Forum, notes: “It is the manifestation of a sincere yearning for a durable two-state solution from the business leaders of Israel and the Palestinian territories….The majority on both sides of the Israeli–Palestinian conflict yearn for peace and prosperity, and the BTI provides a focus for this energy. In the end, peace will bring with it stability, growth and enterprise, together with new hopes, expectations and livelihoods for current and future generations, sorely needed in these two countries, and in the region beyond.”

Reporting on the details of the proposed plan, The Jerusalem Post’s Tovah Lazaroff writes that, according to Kerry, the plan “will focus on developing the Palestinian private economy, a key ingredient for economic independence. If actualized, he said, it could increase the Palestinian GDP by 50 percent over three years and cut unemployment by two-thirds, to 8% down from 21%. It would also benefit the economies of Israel and Jordan.”

While there were some initial positive signs from the Israeli side after the Israeli President expressed interest in the plan, it soon became clear that Mr. Kerry would have a hard time selling the plan to the Netanyahu government: “Nobody is thinking about a jump-start in the stalled peace talks between the Palestinians and Israelis after the announcement by the Israeli President Shimon Peres that the two-state solution is workable….The positive move by Peres, however, received a setback with Strategic Affairs Minister Yuval Steinitz openly criticizing him, saying that it is the government which takes policy decisions and he didn’t know when the president became government spokesman.”

The announcement of the plan has, according to various news agencies, put pressure on Palestinian leader Mahmoud Abbas to return to the negotiating table: “The Palestinian president has told advisers that as the U.S. tries to restart Mideast peace talks, he is under intense international pressure to return to negotiations with Israel and drop demands for a Jewish settlement freeze in the West Bank, officials said Wednesday. In a closed meeting, Mahmoud Abbas lamented his difficult choice: Rebuff the Americans and alienate Washington, or cave in and face uproar at home.”

It is not clear, however, that the economic plan will be enough to entice the two parties to make difficult political concessions. The Palestinians continue to harbor doubts about the effectiveness of such a plan: “A $4 billion U.S. plan to boost the Palestinian economy was met with a cool response as Palestinian leaders insisted on a political dimension to the stimulus while Israel was mum as details remained unclear….But the Palestinian leadership warned on Monday that it would ‘not offer political concessions in exchange for economic benefits,’ according to a statement from Mohammad Mustafa, president of the Palestine Investment Fund and economic adviser to Palestinian president Mahmud Abbas. ‘We will not accept that the economy is the primary and sole component,’ the statement said.”

Regional observers were equally unimpressed by Mr. Kerry’s emphasis on the economic issue while glossing over the huge political gap that separates the two sides. For example, the Saudi Gazette editorial expressed concern at what the plan revealed about Mr. Kerry’s thinking: “U.S. Secretary of State John Kerry’s shuttle diplomacy may not have made any progress on a Palestinian settlement, but with the aplomb of a conjurer, he has revealed a $4 billion economic plan for the Palestinian West Bank. This in its turn revealed an awful lot about John Kerry’s understanding and thinking about the Peace Process….His thinking, as his team spun the plan at the World Economic Forum meeting in Jordan, is that a prosperous Palestine will be more able to stand on its own two feet when full sovereignty comes. To international ears, this sounds like eminent good sense, but to those who know the realities of the Occupied Territories and Gaza, it is utter claptrap.”

A similar sentiment was expressed by Palestinian negotiator Nabil Shaath. who also reiterated that the economic dimension of the plan was a necessary but insufficient element of a comprehensive peace accord: “[Kerry] won’t succeed in rekindling peace talks unless he pressures Israel to halt settlement activity and accept a two-state solution based on the 1967 borders, Palestinian negotiator Nabil Shaath said Wednesday….In contrast, Prime Minister Binyamin Netanyahu spoke of his willingness to resume talks, which have been largely frozen since December 2008….Meanwhile, the PLO Executive Committee, a key decision-making body, on Tuesday night decided to form a committee to study future options if the Israeli government continues to refuse halting construction in the settlements.”

The issue of the study of future options was also the subject of an article in Maan News by Daoud Kuttab: “Any credible alternative to negotiations must by costly enough to the other side to make it prefer negotiations to the risk of the unknown….As Palestinian, Israeli and U.S. leaders discuss the modalities of a possible return to peace talks this week, it is incumbent on all Palestinians to think seriously about the need to work on a long-term strategy that will make Israel pay a high price for keeping its occupation. Such a strategy would push Israel to be more forthcoming in the ensuing peace talks so that a just solution that is not simply based on the current balance of forces between both sides can be reached.”

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