Beyond guidelines and the green line, a chance for peace?

Daniel Levy on the EU's new directive on Israeli settlements.
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July 29, 2013
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This week the European Union published guidelines that restrict interactions with Israeli settlements. According to the EU directive, an Israeli entity seeking funding from or cooperation with the European Union will have to demonstrate that it has no direct or indirect links to the West Bank, East Jerusalem, or the Golan Heights. The EU decision follows on the heels of the Arab League's endorsement of U.S. Secretary of State John Kerry's formula for restarting Israeli-Palestinian negotiations.

Many Israeli government figures are criticizing the substance of the directive and the timing of its release, arguing that it undermines Secretary Kerry's efforts. Was the decision a political one? Is the EU shifting toward a harder stance on Israel? What does the Israeli government's response reveal about the chances that Kerry can bring Israeli and Palestinian leaders to the table to negotiate a real and lasting peace? OpenCanada asked Daniel Levy, Director of the Middle East and North Africa Programme at the European Council on Foreign Relations, to weigh in.

What motivated the new directive from the EU on the settlements and what purpose do the new guidelines serve?

The guidelines were created to codify the existing and longstanding European position that Israeli settlements beyond the 1967 “green line” are illegal. They clarify the EU’s rules around the funding of programs involving entities registered beyond the green line.

The European Union must have guessed that the release of these guidelines would stir up a fuss—was there a political motive related to negotiations to restart the Israeli-Palestinian peace talks?

The timing of the release of the guidelines has nothing to do with the negotiations, in my opinion. This particular wasn’t a political decision but a technocratic one—questions of clarification about the EU’s position on funding settlements entities had been put forward by the European parliament, to which the European Commission was duty bound to respond. There were also questions relating to the Horizon 2020 agreement under which Israel will again be given access to European research and development programming. This has been a very important source of R&D funding for Israel – 40 percent of Israeli research funding comes from these programs. The programs are seven years long, which why this came up now: this program is due to expire and needs to be renegotiated, raising questions as to exactly which entities should be eligible for funding given some evidence that entities based in the settlements had been benefitting from these programs over the past seven years.

The directive to release the guidelines was not something that was decided at a meeting of the 28 European foreign ministers. A directive of this kind results from an established bureaucratic process. Preventing publication is what would have taken political intervention.

So this doesn’t indicate a shift in the EU's stance on Israel?

When Israel signed a new treaty with the EU in 2005, there was stipulation regarding entities beyond the green line. Israel has been signing agreements with the equivalent of this stipulation for many years. The loan guarantees Israel receives from the United States includes a similar stipulation.

It’s important to understand that what Europe includes and doesn’t include when it refers to Israel has been clear to Israelis and to the world for a long time.

So if there’s nothing fundamentally new here, why the strong reactions from so many Israeli government officials? Is there any basis to claims that this directive could undermine Israel’s willingness to participate in the peace talks that have been proposed by Secretary Kerry?

I don’t see the argument that this could have a negative impact on the talks or the prospect of renewing talks. In the past week, we’ve seen a very strange phenomenon: Israeli ministers who are opposed to the peace talks came out and said that this is going to hurt the peace talks. The Netanyahu government knows exactly the positive actions it could be taking were it truly interested in advancing talks with Palestinians, efforts to resume talks have been undermined precisely because they haven’t been taking these actions, and because of the settlement expansion. So these criticisms are not coming from individuals who are really concerned that the peace talks might suffer as a consequence.

More interesting are those individuals who have responded by saying that they wish Europe hadn’t done this, but also that this proves why Israel has to engage seriously in getting peace talks going again and achieving a two-state solution. The fact that Secretary Kerry has now announced the resumption of talks proves that this has not derailed the Kerry effort.

Why are statements to that effect significant?

Israeli pragmatists, those individuals positioned in the center ground of Israeli politics, have been saying for a while that if Israel doesn’t show that it is serious about peace—if it continues with settlement expansion and entrenchment of occupation that prevents a two-state solution—the world will lose patience and there will be consequences for Israel.

For many years Israelis have heard this argument but the reality on the ground has rendered it toothless; as of yet, there have been no serious consequences to continued settlement building and occupation, so the majority of the public has dismissed the argument entirely. And if most Israelis continue to feel there will be no price to pay for these policies, the Israeli state will continue to do as it pleases in the territories.

But if the mainstream public starts to feel that impunity is coming to an end, the political inertia could also end. Some Israelis will just hunker down and accuse the world of being unfair. Some irresponsible people will make accusations of anti-Semitism, achieving nothing but a weakening of their ability to oppose actual anti-Semitism. But many Israelis, if they see that their economic wellbeing is actually linked to whether or not the occupation ends, will say enough is enough. They’ll find they have to make a choice, and many will not come down in favor of the settlements. This would force the Israeli government to confront the issue.

But are the consequences of a directive like this one really enough to drive that kind of a sea change in Israeli public opinion?

No. The price exacted by this particular directive will be next to nothing for the economy as a whole. But if we think of it as the thin end of a policy wedge, then the hysteria that this was met by in Israel makes more sense.

What we saw this week was the growing recognition of some Israeli officials that if the levies against global condemnation of the occupation get breached, the floodwaters will enter. Israel will be categorized as a rogue state. The government is nervous because no one knows when the breach will come, but political leaders do know that when it happens, this week’s guidelines will look insignificant indeed. The Israeli politicians who are taking this directive as an opportunity to push for a two-state solution are trying to preempt that moment. If the Palestinians pursue a non-violent strategy that emphasizes the denial of their rights and/or call for equal rights in one state then that moment's arrival would be accelerated.

If this is the thin end of the wedge, what policies might the EU follow it up with?

First will be the adoption of the specific stipulations by EU member states, also likely are guidelines on labeling of settlement products, and for European companies, one for where they invest, to encourage all to follow the same regulations with regards to the green line.

But there is a finite impact of this kind of policy if the focus remains exclusively on entities around the green line. Europe will likely stick to this kind of approach for some time. The next phase would be to acknowledge that this distinction is an unreal distinction -- consider the fact that every major Israeli bank has a branch in the settlements. The next phase would recognize this and develop policies that consider the whole of Israel's economy. But I don’t think that kind of transition will happen quickly or easily.

In the meantime, are you optimistic about Secretary Kerry’s ability to restart peace talks that lead to tangible progress?

Secretary Kerry deserves credit, not scorn, for making this effort and for having recognized that even in such a rapidly changing Middle East, where there are so many areas and issues that demand attention, this iconic grievance in the Arab World is still so important, especially in its shaping of how the region sees America. I think Secretary Kerry also sees that the window for a two state solution is closing.

The test of the talks if they resume, however, will be this: can Secretary Kerry manage to get the Israeli prime minister to actually come to the table on the territorial issue? It’s one thing to show up in the room to talk about a two state solution, it’s quite another to actually be prepared to determine the territory of the second state. Netanyahu’s adamant refusal to consider the ‘67 borders as a starting point places the burden of proof of seriousness on him. Secretary Kerry will have to create a moment of choice for Netanyahu that he can’t maneuver away from.

Palestinian leaders have just declared that Secretary Kerry’s formula for talks is “insufficient.” Are you optimistic that he will get all the leaders to the table? What is likely to bring a two-state solution more quickly – ending Israel’s impunity around the occupation via changes in policy by the international community toward the settlements (so continuing along the line of this week's guidelines), or another cycle of peace talks?

Combining the two may be the best option available under the current circumstances, in other words talks that focus on creating a moment of choice for Netanyahu regarding the 1967 lines and at the same time Israel understanding that their will be costs for continued rejectionism. There are few reasons to be optimistic, but Secretary Kerry's determination is encouraging, albeit he is dealing with two hesitant leaders. Palestinian President Abbas has adopted positions far more conducive to realizing a two state outcome, but he will need to show that he can make decisions and that he has a strategy if Israel's government is really going to be challenged to  show its hand and get beyond its obfuscation in negotiations and undermining of peace on the ground. The onus is not exclusively on Israel—there is a Palestinian side—but the asymmetry of the conflict determines that a two-state deal is ultimately Israel's gift to give much more so than it is the Palestinians.