As the conflict drags on, it is clear that past approaches to resolving the conflict have failed and that new efforts should be informed by these evolving regional dynamics. To that end, USIP’s Israeli-Palestinian Conflict Program and Rice University’s Baker Institute for Public Policy (BIPP) launched a working group in fall 2019 to assess evolving regional relationships and their implications for Israeli-Palestinian peace.

Political Trends in Israel and the Palestinian Territories

The past 18 months have been among the most politically turbulent for Israelis and Palestinians in recent memory. For Israelis and Palestinians, COVID-19 has spurred two waves of infections and political and economic turmoil. In Israel, an emergency unity government was formed to tackle the public health crisis. The new government was immediately consumed by fierce debate over Prime Minister Netanyahu’s plans for West Bank annexation. In response to those plans, Palestinian leadership moved to halt security cooperation with Israel and the United States, bringing into question the continued applicability of the Oslo accords, and put pressure on the International Criminal Court to prosecute Israel, all while the Palestinian economy teeters on the brink of collapse.

Many challenges lie ahead for Israel. The Abraham Accord suspended unilateral annexation of the West Bank, though the issue is far from dead in Israeli society. Influential political constituencies still hold annexation as the ultimate goal, and broad public understanding of its potential implications is lacking. Infighting among the coalition government on other issues, such as the government budget, persists, while virus cases surge and unemployment reaches historic levels. The pandemic’s continuing toll on the economy, coupled with Netanyahu’s corruption trial, has led to mass protests against the government and counter-protests to match.

The Palestinian Authority (PA) faces its own deep-seated challenges. Many are concerned about a potential collapse of the PA, whether of its own decree or through economic catastrophe stemming from halted cooperation with Israel and the second wave of the pandemic. The PA has suspended all contact with Israel, including security coordination, a move that many assumed the PA would shy away from given the implications for West Bank stability. Palestinian leadership recently called for a return to negotiations—grounded in the 2008 talks led by then-Israeli Prime Minister Ehud Olmert and PA President Mahmoud Abbas—and for a multilateral approach rejecting the U.S. as sole mediator.

Israel currently has no incentive to engage on these terms. The PA described the UAE-Israel normalization announcement as a “betrayal” of the API, since regional normalization was one of the Palestinians’ most powerful leverage points. Meanwhile, there is eroding public support among Palestinians for their West Bank and Gaza leaderships, and consistently high support for Hamas and Fatah to move toward a unified polity. Nevertheless, the likelihood of reconciliation or fresh elections to bring an end to the Hamas-Fatah divide remains low.

Under these stressed domestic and diplomatic contexts, neither side has incentive to engage in serious final status negotiations, and the situation on the ground will likely grow more muddled and complex. For much of the past decade, however, the question of whether the rest of the region might play a constructive role toward realizing Israeli-Palestinian peace has become central.

The USIP-BIPP working group has spent significant time evaluating the positions of Arab states, what conditions or events might trigger changes to their positions, and how to approach disparate interests and capabilities with respect to desired diplomatic outcomes. Both the Obama and Trump administrations understood that a unified and active regional diplomatic effort could prove pivotal in achieving a resolution to the conflict. Now, especially given recent events, an approach that places bilateral conflict resolution in a regional framework is likely to get an even closer look by future leadership.

The Role of the Region in Israeli-Palestinian Peace

Israel’s key interests in the region include security cooperation, regional normalization, and economic integration with an anti-Iran regional bloc. To that end, it has slowly built unofficial ties with several Arab countries in recent years. The Trump administration has encouraged and facilitated this rapprochement.  

For Arab Gulf countries—particularly Saudi Arabia, the UAE, and Bahrain—Israel’s interests align with their own priorities. Concern over Iran and violent extremism; interest in trade and technical exchange; and newfound cross-cultural and religious interest have risen in importance for many Gulf states. These factors—combined with new generations of leadership, shared close relations with the United States, and the Trump administration’s encouragement—have led to a seeming de-prioritization of the Palestinian issue on the list of Gulf leadership.

Arab Gulf states maintain rhetorical support for the Palestinian cause, and most continue to vow not to establish official relations with Israel until Palestinian sovereignty is achieved along the lines of the API. However, many of these countries also continue to pursue ties with Israel through economic connections, arms trade, technological collaboration, and other ventures. This trend has increased Palestinian concern over their potential abandonment by traditional regional allies. Meanwhile, Palestinian refusal to engage with the United States resulted in challenging relations with some Arab states as they prioritize other national security issues that incentivize their continued cooperation with the United States and Israel.

In the face of potential Israeli annexation, Arab states began tempering their burgeoning coordination with Israel, stating their support for the API and a two-state solution. The UAE came out in force against annexation, albeit with mixed messaging, most visibly via Emirati Ambassador Yousef Al Otaiba’s op-ed in an Israeli newspaper.

Then, on August 13, the UAE and Israel, with American mediation, signed a preliminary agreement to normalize diplomatic relations in exchange for Israel suspending plans for West Bank annexation. Contradictory statements made the timeframe of the suspension unclear and left questions over what, if anything, the UAE will receive anything in exchange from Israel or the United States; what the final agreement will entail; and how the agreement will affect the Palestinians. While PA leadership described the Emirati decision as a “stab in the back,” some Arab states (Egypt, Bahrain) expressed relief that the agreement halted Israeli annexation. Virtually all Arab states, including the UAE, reaffirmed their commitment to the establishment of a Palestinian state along the 1967 lines, with East Jerusalem as its capital. On August 31, Qatar—an Emirati foe and frequent intermediary between Hamas and Israeli—negotiated a truce between Hamas and Israel that lightened the Israeli embargo of Gaza.

The Israeli-Palestinian conflict’s defining dynamic for the rest of 2020 will likely be how other Arab countries respond to the UAE deal. How publics and other states react to the Emirati decision will shed light on the degree to which popular opinion—long considered an inhibitor to official Israeli-Arab engagement—continues to be a barrier.

Whether the deal itself could be a step toward peace, entrench the summer’s worsened status quo, or is interpreted as the death of the API will be determined by the details and implementation of the final agreement. What is certain is that the Palestinian leadership feels deeply betrayed. Annexation has been postponed, but increased brinksmanship over the summer has worsened the status quo in the West Bank. Absent improvement of living conditions in areas controlled by the Palestinian Authority—the current situation being continued occupation, creeping annexation, diminishing regional and public support, increased economic stress, and decreasing likelihood of establishing a viable Palestinian state—the PA’s risk of collapse will continue to grow.

Under these conditions, Israel, the Palestinians, the United States, and invested regional actors face a fraught set of choices. Whether the Abraham Accord can lead to some reduction in Israeli-Palestinian distrust and improvement in conditions and relations remains to be seen. These are the critical scenarios and derivative stakes the working group will consider as it evaluates effective diplomatic paths for a resolution to the conflict.

The upcoming year—and the steps taken by Israel, the Palestinians, and the United States—could be a critical juncture for efforts to resolve the conflict. If the next administration is a second Trump term, the “deal of the century” will likely remain U.S. policy. The Trump administration may allow Israelis to proceed with implementation of the plan’s territorial aspects, offering support when needed and encouraging further relationship building with Arab nations. If there is a Biden administration, while the conflict will likely take a back seat to more pressing domestic and foreign policy priorities, a recalibration of U.S. policy toward the issue would be expected, even with continued focus on the role of regional actors to support efforts toward Israeli-Palestinian peace.  

Under either scenario, the ongoing regional dynamism has the potential to facilitate a path toward peace between Israelis and Palestinians. As the USIP-BIPP working group continues its work, it will assess the extent to which regional stakeholders’ interests and capabilities lend themselves toward advancing the peace process and consider the supportive diplomatic avenues needed to take it there. Long-held paradigms are in flux. As the landscape and options change, the stakes continue to grow.

Claire Harrison is a research assistant for the Israeli-Palestinian Conflict program at the U.S. Institute of Peace.