A New U.S. Strategy for the Israeli-Palestinian Conflict

Download the full report.

Overview

As this report goes to press, the possibility of a resolution to the Israeli-Palestinian conflict seems distant. Israel continues its occupation and territorial expansion in the West Bank and East Jerusalem, with hundreds of thousands of settlers now living beyond the 1967 borders and a majority of the Israeli parliament prepared, in principle, to support annexing West Bank territory unilaterally. Palestinian governing institutions are eroding, opaque, and unaccountable, while the Palestinian political leadership and people are divided between an extremist Hamas in Gaza and a weakening Fatah-led Palestinian Authority (PA) in the West Bank. Economic and political inequality between Israelis and Palestinians, most starkly in Gaza, further exacerbates the conflict between them. And as Israelis and Palestinians increasingly live in separate spaces, the views on all sides of the conflict are hardening.

At the same time, America’s role as the primary mediator between Israelis and Palestinians has shifted dramatically. Addressing the Israeli-Palestinian conflict will remain a U.S. interest for future administrations, but it is already dropping in priority and will not receive the same level of presidential and cabinet-level attention in a world where COVID-19, domestic crises, and U.S. competition with China have emerged as urgent concerns for the U.S. government. Even as significant segments of the region’s population continue to view this issue as important, among Arab governments, resolving the Israeli-Palestinian conflict is no longer seen as a sine qua non, as evidenced by the recent agreements between Israel, Bahrain, Morocco, Sudan, and the United Arab Emirates to normalize relations.

Donald Trump's administration has fundamentally undercut the U.S. role in Israeli-Palestinian peacemaking by taking a one-sided approach, rejecting core principles that underlay Arab-Israeli peace for decades, and aligning the United States with Israeli far-right policies while freezing out the Palestinians. But U.S. policy in the pre-Trump era, under Presidents Bill Clinton, George W. Bush, and Barack Obama, also failed to produce lasting peace, and a simple return to those policies will not succeed. U.S. domestic politics are likely to change the American role as well. As political polarization colors American public attitudes toward Israel and its policies in the conflict, it creates both new constraints and opportunities for U.S. policy.

A new U.S. policy toward the Israeli-Palestinian conflict should focus on the following objectives:

• Prevent conflict and preserve the stability and security of U.S. partners.
• Promote freedom, security, and prosperity for all people living between the Mediterranean Sea and the Jordan River, both in the immediate term and in a final Israeli-Palestinian agreement.
• Preserve and advance the vision of a negotiated solution between Israelis and Palestinians that brings about a mutually agreed end of conflict.

Rooted in these objectives, this report lays out a plan that focuses on three central lines of effort:

• Tackle pressing issues that threaten any possibility of progress in addressing the conflict and keep the United States from playing a constructive role.
• Pursue concrete steps to meaningfully improve freedom, security, and prosperity for Israelis and Palestinians, and advance the prospects of an agreed two-state solution to the conflict over the medium term.
• Reshape the U.S. role for greater persistence and impact, through adjusting both how the United States engages with the parties and the rest of the world on this issue, and how its own policymaking process is organized.

Immediate Actions to Rebuild U.S. Credibility

The United States should take a series of actions that reestablish its credibility as a mediator in the Israeli-Palestinian conflict, both with the parties and with other key international stakeholders. A central part of this effort will involve rebuilding ties between the United States and the Palestinian people while reopening channels with their leadership, which has not seriously engaged with the Trump administration since the decision to move the U.S. embassy to Jerusalem in late 2017 and the announcement of the closure of Palestine Liberation Organization (PLO) offices in Washington.

Three core principles should drive U.S. policy, and the new president or secretary of state should take an early opportunity to articulate them to the world: first, a recognition that Israeli-Palestinian negotiations based on U.N. resolutions and broadly recognized international terms of reference—most importantly the concept of land for peace—remain the only means to achieve a permanent agreement between the parties, even if at the current moment such negotiations would not be fruitful; second, that U.S. policy seeks to secure freedom, security, and prosperity for all Israelis and Palestinians, both in the actions the United States takes today and in any future agreement; and finally, that the United States remains committed to a negotiated two-state solution. The viability of a two-state outcome to the conflict is increasingly called into question, but it remains the only approach that both parties’ governments have formally committed to and around which international consensus still exists.

The United States will have to reverse a number of steps taken by the Trump administration that have undercut U.S.-Palestinian relations. While the United States should not move its embassy back to Tel Aviv, Washington should make clear that it supports an outcome that enables both parties to have their capitals in Jerusalem and that the status of Jerusalem is an issue that must be resolved through negotiations.

The United States should also renew ties with the Palestinian people and their government and demonstrate its commitment to independent ties with the Palestinians, reversing the policy of making diplomatic engagement with Palestinians a subsidiary of U.S. ties to Israel. This means reopening the U.S. mission to the Palestinians in Jerusalem and returning to the consul general chief-of-mission authority over the West Bank and relations with the Palestinian Authority. The United States should also allow the reopening of the PLO mission in Washington, though this will require working with Congress.

The United States should take immediate steps to address the humanitarian crisis and economic challenges facing the West Bank, East Jerusalem, and Gaza. Part of this effort should involve the United States restarting its economic assistance programs to the Palestinian people and funding of the United Nations Relief and Works Agency for Palestine Refugees (UNRWA), both of which were cut off in the past four years. A special focus should be concentrated on Gaza, where two million people remain stuck in a perpetual cycle of violence between Hamas and Israel, with the Palestinian Authority also playing an unhelpful role. The resulting blockade has strangled both economic and human development. Early actions should focus on improving freedom of movement for Palestinians, which is the lifeblood of any economy, while also investing in access to clean water and electricity, which remain unacceptably scarce.

Another early step should be to reform the longstanding system by which the Palestinian Authority and/or Palestine Liberation Organization provides payments to Palestinian prisoners in Israeli jails and to families of Palestinians killed by Israel in the course of attacks on Israeli targets. The Palestine Liberation Organization argues that, as a national liberation movement, it has a right to compensate its people in this way, particularly since family members are frequently displaced by Israel’s policy of demolishing the homes of Palestinians who engage in attacks on Israel. Israeli and American opponents of the payments system argue that the system incentivizes and rewards violence. The practical reality is that the issue has become a significant roadblock in U.S.-Palestinian relations, with overwhelming congressional opposition to the practice. The United States should work with the PA to reform the system by eliminating any compensation associated with conviction for violent crimes, and instead convert the system to one of basic social welfare. If the Palestinians make this change, the president could more easily certify to Congress that the PLO no longer practices or supports terrorist actions and thus sunset the anachronistic Anti-Terrorism Act of 1987 under which the PLO and PA are still considered terrorist organizations under U.S. law. Such reform could also create greater flexibility on Capitol Hill to amend laws that restrict assistance and relations with the Palestinians and could facilitate reopening the PLO mission to the United States in Washington. As part of this approach, the United States should also press Israel to end its demolitions of attackers’ homes, which serves as a form of collective punishment.

The United States must also take early steps to deter Israeli annexation and settlement expansion by expressing unambiguous opposition to both. It should reverse Trump administration policies and legal opinions that loosened the U.S. attitude toward settlement activity and return to long-held positions that clearly distinguish U.S. policy and behavior between Israel and the territories it occupied in 1967. As part of this approach, the United States should make clear that it will not shield Israel from international consequences it might face when it takes actions, such as settlement construction, that are contrary to U.S. policy. The United States should also clarify to Israel that four kinds of Israeli actions will trigger a particularly strong U.S. response: (1) building or advancing plans to build in areas particularly relevant to the viability of a two-state outcome, like E-1, Givat HaMatos, E-2, and Atarot; (2) transferring or expulsing Palestinian communities from any of these or other areas; (3) constructing major new infrastructure such as roads inside the West Bank that are meant to strengthen the connection between the settlements and Israel; or (4) making any change to the historic status quo on the Haram al-Sharif/Temple Mount reaffirmed by Israel in 2015.

Finally, even as the United States makes clear that it will not aggressively pursue new negotiations on a permanent agreement, Washington should reaffirm long-standing key parameters for a final resolution of the conflict that were outlined by U.S. presidents and reaffirm its prior commitment to United Nations Security Council Resolution 242, including the concepts of land for peace and “the inadmissibility of the acquisition of territory by war,” which has long been the starting point for negotiations. These parameters include supporting borders based on the 1967 lines with mutually agreed land swaps; security arrangements that meet both sides’ needs and are based on a demilitarized Palestinian state; a just and agreed solution to the refugees; and two capitals in Jerusalem. The purpose would not be to establish a baseline for a new negotiations effort, but simply to make clear to all the parties that the unbalanced and unworkable Trump plan is no longer part of the U.S. vision for a final agreement.

Medium-Term Actions to Improve Freedom, Security, and Prosperity and Set the Conditions for Two States

While pursuing the immediate priorities laid out above, the United States should also pursue a number of initiatives that will take longer and be more difficult to accomplish. However, if successful, these steps would fundamentally change the situation on the ground, helping to create the conditions for renewed negotiations and a two-state agreement while also improving security, prosperity, and freedom for Israelis and Palestinians.

The United States should promote a series of steps that would provide for greater freedom in the West Bank and East Jerusalem. This should start with expanding freedom and creating significant economic opportunities for Palestinians, ending home demolitions, and promoting greater freedom of movement, by urging Israel to convert portions of the 60 percent of the West Bank fully controlled by Israel and known as Area C into Area B with shared Israeli-Palestinian control. Israel should also shift portions of today’s Area B into Area A, which is supposed to have full Palestinian control. This would be particularly beneficial for improving policing and security. Israel should also relax restrictions on trade and regulations that stifle the Palestinian economy. And the United States should seek to reduce the disparities in treatment, process, and outcomes between Israeli and Palestinian civilians, who face two separate and unequal legal systems in the West Bank. Until a negotiated solution to the conflict is found, and so long as Israel continues to hold ultimate control over Palestinians, everyone who lives in the West Bank should have the same basic right to due process, using the rights Israel grants to its citizens or foreign visitors as a benchmark.

Right now, Palestinian institutions are eroding and the divisions between Hamas and Fatah, and between Gaza and the West Bank, present a major obstacle to progress between Israelis and Palestinians. The Palestinian people and their leaders must unify their leadership into one that can govern an independent state committed to peaceful coexistence with Israel; but the United States can either support or impede that work by its policies and approaches. The United States and other outside players can communicate standards, including its expectation that the Palestinian government will uphold core commitments to recognition of Israel and its legitimacy, to peaceful negotiations as the sole means of settling the conflict, and to the rejection of violence. It should also press the Palestinian Authority to overcome corruption and undemocratic behavior through a process that includes elections.

As part of this shift in approach, the United States must encourage intra-Palestinian reconciliation by becoming more flexible about the composition of the government that the Palestinians form and select. The United States can also do more, working in close coordination with Egypt and the United Nations Special Coordinator for the Middle East Peace Process (UNSCO), to encourage a sustainable political arrangement for Gaza based on two pillars: (1) an agreement between the PA and Hamas on the gradual reintegration of the West Bank and Gaza, with the PA assuming greater responsibility for Gaza and Hamas being integrated into the PLO; and (2) an agreement on a long-term cease-fire between Israel and a group of Palestinian factions that includes Hamas and Fatah and that has the blessing of the PLO. This agreement would include a significant relaxation of the Israeli blockade of Gaza. Critically, not only will this lead to greater Palestinian cohesion, but it will significantly improve Israeli security by putting in place a much more stable situation in Gaza that ends the perpetual rounds of rocket attacks on Israeli civilians. The United States can also make clear that it will not engage with officials from political parties that support violence, as Hamas currently does. But it may need to find a way to work with a Palestinian government that includes Hamas. Last but not least, if progress is made and Palestinian factions do agree on holding elections, the United States should support them, make clear it will respect the outcome, and press Israel to allow voting in East Jerusalem, as it did in 1996 and 2005.

Beyond the immediate issues of annexation and sensitive settlement activity discussed previously, the United States must construct an effective long-term approach for deterring settlements. This may involve simply sticking with the approach of unambiguous opposition to settlement expansion described above, though two other options should also be rigorously evaluated: One alternative is to pursue a partial, but strict, settlement freeze. Importantly, a partial freeze cannot simply be based on the path of the security barrier, which was drawn unilaterally by Israel and includes some of the most contested territory inside the barrier, in East Jerusalem and the West Bank. Any partial freeze would also have to be very clearly defined instead of allowing for interpretations of the “blocs” that create a green light for expanded settlements. And while the United States should not expect the Palestinians to agree to such an arrangement, it could consult closely with both sides. Another option would be for the new U.S. administration to put down its own proposed final-status map after consultation with both sides and make it the basis of its policy. This approach would supersede the unworkable and unbalanced Trump map. A new map could also include equitable swap areas for the Palestinians, and the United States could continue to object to any Israeli settlement activity unless Israel took steps to hand over swap areas west of the Green Line to Palestinians. These options have advantages and drawbacks for U.S. policy, but deserve consideration in the context of the overall goal of advancing freedom, security, and prosperity for Israelis and Palestinians, even in the absence of a final agreement.

Finally, the United States must invest in a longer-term effort to rebuild support within Israeli and Palestinian society for coexistence and negotiations. This area of the conflict has long been treated as an afterthought by American policymakers. That needs to change. We propose a much more consistent, focused, and resourced strategy by American officials to engage across the range of Israeli and Palestinian society, including political and community leaders as well as civil society. The strategy should also focus on people-to-people engagement, which should include the $250 million Partnership Fund for Peace, now before Congress. The United States can also offer incentives and support mechanisms aimed at marginalizing extremist voices, to root out incitement from official discourse and to promote a culture of toleration and coexistence on both sides. Finally, the United States should encourage efforts in so-called Track Two dialogue to explore the substance of potential negotiations in an informal and unofficial setting.

Reshape the U.S. Role for Greater Persistence and Impact

The United States should take a series of steps to change both the way it engages with the rest of the world on the Israeli-Palestinian conflict and how policymaking is developed inside the U.S. government. Traditionally, the United States has sought to monopolize Israeli-Palestinian peacemaking and pressed other actors to follow its lead. But given decades of failure, the slim prospects for successful near-term negotiations, and a U.S. leadership facing other urgent priorities, it is time to reconsider this approach. A more flexible approach to international partnership can enable others with unique access or leverage on specific issues or parties to push forward in coordination with Washington. For example, in the case of Gaza, Egypt and the U.N. Special Coordinator have the greatest influence and knowledge of the situation on the ground, while the United States still maintains the most influence with Israel and the greatest international convening and organizing power. An initiative jointly led by these three that then engages other international actors would likely be more effective than unilateral U.S. strategies.

The United States also needs to adjust its approach to regional players. Jordan, more than any other Arab state, is vulnerable to the consequences of the degrading status quo between Israel and the Palestinian Authority. Amman has demonstrated consistent interest and played a constructive role over the years in trying to bring the conflict to an end. Yet Jordan has been neglected by the Trump administration, and the Israeli-Jordanian relationship is today at possibly its lowest point since the Israel-Jordan peace treaty was signed. The United States should prioritize reenergizing its cooperation with Jordan in addressing the conflict.

The United States should put the Gulf Arab agreements with Israel into an appropriate context. Rapprochement between these states and Israel is positive for the governments involved and dramatically improves connections between Israel and the Gulf states, with the potential to bring greater stability and economic prosperity to the Middle East. While these agreements may create new opportunities over time for Israeli-Palestinian peacemaking, they will not transform a conflict that is ultimately between Israelis and Palestinians—not the Arab states. The Gulf Arab opening to Israel is not driven by concern for the Palestinians and could even undermine Palestinian positions. The governments of Bahrain and the United Arab Emirates are not well positioned to leverage their new ties with Israel to persuade Palestinians to make concessions and are unlikely to condition their cooperation with Israel on its policies toward the Palestinians. The reality is that across the Middle East, sympathy for Palestinian rights remains significant, and the Gulf states’ response to the prospect of Israeli annexation makes clear that they understand there are ways in which the Israeli-Palestinian conflict threatens their interests. The United States should engage these Gulf governments to explore opportunities for constructive Gulf engagement on the conflict.

The United States should also change the way its policy is made internally. Traditionally, the Israeli-Palestinian issue has been held at the highest levels of government, with regular personal engagement from the secretary of state and the president and a secretive policymaking process that sometimes leads to groupthink or misses opportunities by not incorporating a broad enough spectrum of voices. This was understandable when the parties were themselves pursuing sensitive diplomatic negotiations and when the United States was at the center of the process, but it makes little sense given where the conflict is now and the type of strategy this paper advocates. Instead, what is needed is a more regular and inclusive interagency process that brings the key agencies with policy equities and tools to deploy into the process. It should also include a State Department special envoy closely coordinated with the Bureau of Near Eastern Affairs to manage the day-to-day execution of policy. The issue will require leadership and support from the top levels of the U.S. government—most importantly the president and the secretary of state. But pursuing the agenda we lay out does not require their day-to-day involvement. It is therefore implementable even in a world where the Israeli-Palestinian conflict is lower on the president’s priority list than it has been in the past.

Addressing the Alternative Approaches

In developing our approach, we seriously examined three other possible strategies for addressing the Israeli-Palestinian conflict: (1) conflict management; (2) an “outside-in” approach with Israeli normalization with the Arab states as the catalyst for progress on Israeli-Palestinian peace; and (3) moving away from a commitment to the two-state solution. Ultimately, we found all three lacking.

Conflict Management

Some analysts argue that there is no available negotiated solution between Israelis and Palestinians at the present time, and so the United States should focus on other issues and work simply to manage the conflict and prevent outbreaks of violence. We disagree. The current situation between Israelis and Palestinians, and between the Israeli government and the Palestinian Authority, is not stable—it is degrading in ways laid out in detail in this report. This backsliding causes daily harm, including violence, to Israelis and Palestinians living with the conflict, and also shapes the context in which the Palestinian national movement will undergo a high-stakes leadership succession in the coming period. Palestinians are forced to live with the daily humiliations of occupation, while for Israelis, perpetuating the occupation is causing an erosion of democratic values and deep internal political upheaval. Managing the conflict over the past decade has involved three major and several other minor conflagrations between Israel and Hamas, wars that have cost lives, degraded human development, destroyed physical infrastructure, and impaired economic growth. The United States can and must do more to improve the quality of life for Israelis and Palestinians now, while creating more favorable conditions for future negotiations.

Outside in

In recent months, the normalization agreements between Israel with the United Arab Emirates, Bahrain, Sudan, and Morocco have caused many analysts to argue that the diplomatic opening between Arab Gulf states and Israel has upended the Israeli-Arab dynamic and demands a thorough revision of American diplomacy on the conflict. They argue that the United States should shift away from its traditional focus on engaging Israelis and Palestinians and instead work with the region, especially the Gulf, to influence the conflict and the two key parties. Embedded in this view is the suggestion that Palestinian intransigence is the primary obstacle to diplomatic progress, and that the Arab Gulf is best positioned to moderate Palestinian views. It also implies that an infusion of Arab Gulf economic support to the Palestinian people can play a central role in overcoming the Israeli-Palestinian conflict. Many advancing this view also state a belief that with the Palestinians increasingly isolated as the Arab states walk away from them, they will have no choice but to return to the negotiating table with Israel in a weakened position.

This new Arab state engagement with Israel is positive for the region, for Israeli security, and for American interests. The United States should continue, as it has for decades, to welcome and encourage deeper official and unofficial dialogue and support programs that increase economic, political, and security cooperation between Israel and the Gulf states.

However, there are a number of reasons to be skeptical about these normalization agreements leading to major breakthroughs between Israelis and Palestinians. The Gulf states do not see the Palestinian issue as a priority, which is precisely why they are normalizing with Israel. As for the Israeli public and leadership, they see these agreements as a way to bypass the Palestinians—not as a way to work with them. The Palestinian people and leadership have strongly opposed these normalization agreements, decreasing the prospect that normalizing states can influence Palestinian attitudes or policies. Finally, the Arab Gulf’s diplomatic opening to Israel does not overcome or override the substantial challenges to peace evident in the Israeli, Palestinian, and American dynamics that are outlined in the following chapters. Given these realities, anchoring U.S. policy toward the Israeli-Palestinian conflict in these normalization agreements makes little sense. Arab Gulf–Israeli engagement may, over time, offer new diplomatic possibilities to advance this goal, and the U.S. government should be alive to those possibilities. It should also encourage the Palestinian leadership to repair its ties with some of the Arab Gulf states. And it should encourage the Arab Gulf states, who may now have a greater influence in Israel, to play a constructive role and push the parties toward peace. However, the reality remains that there will be no resolution of the conflict without direct engagement and compromise between the Israelis and Palestinians.

Moving Away from Two States

A key judgment, on which many analysts disagree, is whether a two-state outcome remains the most viable and effective means for resolving the Israeli-Palestinian conflict peacefully. Demographic and territorial changes in the West Bank, the political division between Gaza and the West Bank, the intransigence of leaders and diminishing support for the two-state solution on both sides, the prospect of unilateral Israeli annexation, and Israeli reluctance to withdraw from any settlements: All raise substantial challenges to achieving a negotiated two-state outcome and pose obstacles to the viability of an independent Palestinian state. That said, it is our view that often-cited alternative negotiated outcomes are no more realistic or durable. The two-state outcome is also the commonly understood solution around which the international community and the region, including Israelis and Palestinians, retain some degree of consensus.

This leads us to three conclusions. First, we continue to believe that the two-state solution should remain the preferred outcome for U.S. policy. Second, it is critical that the pursuit of a two-state outcome in the future not lead the United States to put off steps to increase the freedom, prosperity, and security of all people living between the Mediterranean Sea and the Jordan River right now. Finally, recognizing that a two-state outcome may no longer be achievable, or may come to be so in the future, it is prudent for the U.S. government to explore the likely consequences of alternative scenarios, undertake contingency planning for those scenarios, examine potential adjustments to the two-state paradigm as a negotiating goal, and clearly establish principles to guide U.S. policy that go beyond a vision of two independent states living side by side in peace. In particular, we believe American policymakers should be clear that any outcome to this century-old conflict must provide both Israelis and Palestinians with freedom, democracy, and equal rights.

Download the full report.