For decades, Palestinians and most of the international community generally have envisioned the same sustainable final settlement, the two-state solution, and the diplomatic tools for building it. The notional “stick” has been Israelis’ eventual recognition that the alternative to two states—an Israel that is either undemocratic or subject to a non-Jewish majority—is objectionable. The “carrot” was peace and Israel’s acceptance and integration into a region of Arab states.

In recent months, all stakeholders to the Israeli-Palestinian conflict have justifiably focused on Israel’s threat to annex Palestinian territory in the West Bank. The suspension of that disastrous step is indisputably a positive development, and the accord with the United Arab Emirates (UAE) contributed significantly to achieving this objective. The UAE Foreign Ministry has said that the country’s normalization of relations with Israel would be unaffected if Israel were to conduct annexations in some months, yet it will be difficult for Israel to rescind this suspension anytime soon without risking damage to this normalization.

The Promise of Regional Acceptance

For years, the United States, the European Union and Israel have used official talks and unofficial, “track-two” diplomacy to urge Arab countries to make gestures to convince Israelis that living in peace with the rest of the region is possible. Policymakers and analysts frequently cite hopes for a “Sadat to Jerusalem moment”—a reference to Egyptian President Anwar Sadat’s 1977 trip, which transformed Israeli public opinion and paved the way for the 1979 Camp David peace accords.

The Arab Peace Initiative of 2002 enshrined this paradigm, offering Israel full regional normalization in return for Israel’s acceptance of a sovereign and viable Palestinian state in Israeli-occupied lands, with East Jerusalem serving as its capital. In 2009, at the behest of The Arab League, the foreign ministers of Egypt and Jordan traveled to Israel to present this plan to the Israeli leadership and public.  Other Arab countries have offered gestures including hosting Israeli trade or representative offices, hosting economic summits, or through political positions.

In 2009, the U.S. envoy to the Middle East peace process, George Mitchell, recognized this paradigm, requesting gestures from Arab partners to encourage Israel to extend a 10-month moratorium on building settlements in occupied lands. This effort fell apart, however, when Israel insisted that, in exchange for an extended settlement freeze, flights arriving and departing from Israel be allowed to use Saudi Arabia’s airspace, which the kingdom refused.  In a sign of the changing times Saudi Arabia this month gave permission for Israel to use its airspace for commercial flights to the UAE and the east.

In August-September 2020, however, Israeli Prime Minister Benjamin Netanyahu has dealt a major blow to the idea of exchanging a Palestinian state for an Israeli place in the Middle Eastern community. He has continuously underscored that “land for peace” is now an obsolete proposition, declaring instead that the Israel-UAE agreement represents “peace for peace”  and “peace through strength.” The prime minister says he made no concessions in this deal, that he suspended annexation at President Trump’s request rather than in service of the deal with the Emirates.

Most Arab states have shown a reticence to follow the Emirati move, yet also have been reluctant to forcefully reject the shift it represents. Netanyahu and Jared Kushner, President Trump’s senior advisor, have said other Arab countries will follow the UAE’s lead—and Bahrain has done so. Kushner has said that Israel-Saudi normalization is an inevitability, and that for the other 22 Arab states normalization is the “logical” thing over time.  Such a statement may be premature—indeed the Saudi foreign minister has reaffirmed his country’s commitment to the Arab Peace Initiative as the basis for normalization with Israel.

The partial normalization of Arab relations with Israel—a significant cession of leverage for Palestinian rights in service to other Arab interests—arises as the divisions between Israel and the Palestinians continue to widen. These shifts combine to make a negotiated agreement even harder to achieve.

Consensus Lost Amid Israel’s Right Turn

As progress has stalled on Israeli-Palestinian peace, Israeli society has moved dramatically to the right. Israel’s traditional left-wing peace camp is currently a non-factor, and even the centrists have adopted positions once considered right-wing. This is starkly reflected in the dominant narratives and positions of Israel today as compared to those during successive rounds of negotiations:

• On Land. In this century’s first decade, it appeared that the height of Israel’s West Bank territorial ambitions was to negotiate borders on the basis of the path of the wall Israel constructed after the second intifada, a de facto annexation of 9.5 percent of the occupied territories. This position was premised on this boundary providing a defensible border. In 2008, Israeli President Ehud Olmert proposed to swap 6.3 percent of the occupied territories; Palestinian President Mahmoud Abbas agreed only to 1.9 percent. Now the U.S. administration and Netanyahu government agreed that no Israeli settlement will be removed—effectively, an annexation of 30 percent of the West Bank.
• On Security. For years, Israel insisted on a long-term military presence in the Jordan Valley. In 2013, the Palestinians rejected a U.S. proposal for a 10-year Israeli presence, saying that Washington was reneging on a 2008 proposal, which President Abbas had accepted, for the stationing of a NATO force led by the United States. Now Israel proposes to formally annex the Jordan Valley in line with the Trump plan.
• On Palestinian Statehood. Previous negotiations, while fraught, framed a goal of a sovereign, viable Palestinian state. Today, Israel’s government is trying to reassure a far-right constituency that rejects even the fragmented Palestinian entity, deprived of key attributes of sovereignty, that is proposed in the Trump plan. Accordingly, the Israeli prime minister has tried to balance enthusiasm for the U.S. proposal with a message to the plan’s right-wing detractors that a meaningful Palestinian state is not in the cards.
• On Israeli Settlers. Previous negotiations were based on minimizing the number of settlers to be relocated by negotiating the areas to be swapped. Olmert suggested to Abbas a land swap that would leave 85 percent of settlers under Israeli sovereignty; Abbas’ proposal would have kept 63 percent in place. The current Israeli position is that not a single settler will be moved.
• On Jerusalem. Since 2001, negotiations on Jerusalem were mainly based around the concept of an open, undivided city encompassing the internationally recognized capitals of Israel and Palestine with Arab neighborhoods going to Palestine and Jewish neighborhoods going to Israel, with special arrangements for Jewish, Christian and Muslim holy shrines. The current Israeli position, in line with the Trump plan, is one that Israel knows from its history of negotiations the Palestinians can’t accept: a Palestinian capital in an area beyond what constituted east Jerusalem in 1967, with Israel maintaining sovereignty over Al-Aqsa Mosque.
• On Refugees. The Palestinians at the Annapolis Peace Conference in 2007 envisioned the return of up to 100,000 refugees to Israel (10,000 per year for 10 years). Israel proposed the return of 5,000 Palestinian refugees (1,000 a year for five years). Israel now says that no refugees will be allowed to return. The Trump plan goes much further in giving Israel control over those returning to the Palestinian entity.
• The Jewish state. Israel’s demand that the Palestinians recognize it as a Jewish state is relatively recent, first raised in 2007. The Palestinian Authority has refused to do so, saying that 20 percent of Israeli citizens are Palestinian and that Israel is free to define its own identity, but that all Israeli citizens should be equal. Israel’s 2018 Jewish Nation-State Law, stipulates that the Jewish people alone have the right to self-determination in Israel, considers the development of Jewish settlements as a national value that governments should act to encourage and promote, and has anticipated discriminatory implications for Israeli Arabs.

Palestinians argue that their huge concessions over the years are unrecognized. They have accepted a future Palestinian state on only 22 percent of “Mandatory Palestine,” the Palestinian territory defined a century ago. They note they have agreed to land swaps around the 1967 borders, expressed willingness to allow Israelis to remain as residents in Palestine, and agreed to only a symbolic return of refugees. Palestinian leadership does not feel that it can make further concessions on issues such as Israeli control of Al-Aqsa Mosque, sovereignty and recognition of the rights of Palestinian refugees.

The gaps between the Israeli and the Palestinian positions, now wider than at any point since 1967, are approaching the point of being unbridgeable. This is one of the main reasons why many Palestinians believe that the two-state solution is dead. This has led to a rise in support for a single binational state among younger Palestinians—an outcome that risks more violence.

Many Arab states have recognized that they have more immediate concerns: countering Iran; the wars in Yemen, Libya and Syria; and domestic development and stability. The Palestinians are weakened by their internal divisions, lack of a strategy, and leadership made unpopular through bad governance and corruption. The Palestinians’ power to say "no" is neither sustainable nor a strategy for achieving peace. Perhaps the only advantage they have is that the Israeli argument that there is “no Palestinian partner” has withered away as the United States and Israel are now urging the Palestinians to come to the negotiating table. It is tempting for Israel to rely on its power, U.S. support and Palestinian weakness, but the abuse of this imbalance of power will destroy peace prospects.

The historic paradigm for peace is damaged, without clarity on whether it could be replaced. Israeli society is moving steadily to the right, feeling no pressure to concede. Palestinians are weak and divided, and the gap is growing between them and Israelis. And the Arab world is in flux. All this is collapsing the foundation for peace and preparing for the next perfect storm. Leaders will need to work hard to prevent this collapse or prepare for an inevitable new crisis.