Over the past half decade a broad consensus has emerged among informed observers in the Middle East that recent U.S. policies in the region – from Iraq and Iran to our approach to the Palestinian-Israeli conflict, Syria, Hamas, and Hezbollah – have been ill-conceived and executed, and have damaged both America’s standing in the region and prospects for peace and stability in the area. Yet a series of local initiatives this year suggests that an important restructuring of relationships across the region might lead to some resolution to a number of the region’s thorniest problems.

The positive developments include the Israeli-Hamas ceasefire, the relaxation of sanctions on Gaza, and the Israeli-Hezbollah prisoner exchange. The two key Palestinian factions, Fatah and Hamas, have made some efforts at reconciliation. Meanwhile, the government crisis has been resolved in Lebanon, and there has been an uptick in Syria-Lebanon relations. Indirect talks have also intensified between Israel and Syria. Even in Iraq, despite the tragic misadventures of invasion and occupation, the security and political situations show signs of improvement, and analysts in the region are beginning to look toward a post-U.S. occupation period.

These developments are occurring largely despite not because of U.S. efforts. There has been a marked diminution of U.S. influence in the region as local actors continue to harbor considerable skepticism about U.S. motives. At the same time, European influence has increased, in particular France, whose Mediterranean Union initiative, launched in July, includes Israel and the Palestinians as well as Turkey and key Arab states. Ironically, as these events unfold, and despite disappointing U.S. policies, there is still room for America to engage more fully in shaping positive outcomes in the region.

Resolving the Israel-Palestine Conflict

The one area where prospects for progress remain decidedly bleak is the Israeli-Palestinian conflict, which the Arab world continues to view as a central and urgent issue that must be resolved before peace and stability can be achieved in the region. Renewed hopes for progress, which flowed from the November 2007 Annapolis Middle East Peace Conference, are evaporating in the face of the apparent lack of progress in the talks between the Israelis and the Palestinians.

In the region, the lack of progress is largely attributed to Israeli intransigence or paralysis and U.S. inaction. The Bush administration’s perceived abandonment of America’s long-standing “honest broker” approach to this conflict and Arab-Israeli issues more generally has deeply disillusioned the political elite in the Middle East. In particular, U.S. failure to address continued Israeli settlement activity in the West Bank and East Jerusalem, and the U.S. backing of Israel in the 2006 war in Lebanon have made it very difficult for Washington to play an effective mediating role. Unless and until the United States changes it position, Israel will likely continue to run out the clock and pressure the Palestinians. U.S. support of Israel has effectively blocked any UN action to resolve the conflict, and both Egypt and Jordan fear that Congress will curtail their aid if they challenge the U.S. position.

This picture is especially distressing because both the Arab and Palestinian leaderships are strongly signaling that they have opted for peace and compromise, and believe that a negotiated settlement is the only way to solve the conflict. Moreover, current trends suggest that Israel’s leverage will diminish if it does not act soon to reach an accommodation with the Palestinians and its other neighbors in the region. These trends have many dimensions and are mostly not reversible. They are demographic, economic/ technological, and political in nature. They include both shifts in the balance of power (for example, via a vis Lebanon, whose Hezbollah resistance model could be exported elsewhere in the region) and the overwhelming international consensus in favor of a just settlement of the Israel-Palestine conflict.

Broad acceptance in the region of Israel within its pre-1967 borders is accompanied by a sense that, with some effort by the United States, a solution remains possible. The big question has been whether a final push by the Bush administration to nudge the sides closer to a deal on Palestinian statehood could produce results or will the task be left to the new administration in Washington. Israeli Prime Minister Ehud Olmert’s decision to step down once his party chooses a successor in September makes it even less likely that significant progress toward a settlement will be reached before Inauguration Day.

The Conflict in Gaza

The present standoff in Gaza has its origins in the January 2006 Palestinian elections, which followed Israel’s unilateral withdrawal from the area. In these elections, Hamas won a majority of seats in the Palestinian Legislative Council, allowing it to form a government with President Abbas’ Fatah party, which refused to join a Hamas-led coalition. The United States, the EU, and Israel then imposed sanctions on the West Bank and Gaza with a view to forcing Hamas to renounce violence, recognize Israel, and accept previous Israeli-Palestinian agreements. The sanctions were relaxed after Fatah and Hamas formed a national unity government brokered by Saudi King Abdullah in February 2007. Then, they were reapplied in more stringent form on Gaza after Hamas overwhelmed Fatah and seized control of the strip in June 2007.

In fact, Hamas’ rejectionist position on Israel has evolved since it was formally enunciated in its 1988 Charter. Hamas now says that it is ready to accept a Palestinian state within the June 4, 1967 borders. At the same time, Hamas refuses to accept previous agreements, such as the Oslo Accords, without similar acceptance by the Israelis. Hamas leader Ismael Haniyah said in an interview with me and a delegation from the United States that some of these agreements have to be revised because Israel does not honor them.

According to Haniyah, Hamas wants a peace that will end the occupation, and the organization will not be an obstacle to achievement of a Palestinian state based on the pre-Six Day War borders – with East Jerusalem as its capital. Hamas has given President Abbas a mandate to handle the negotiations with Israel. However, current efforts are leading nowhere, he said. He accused the Israelis of talking about peace while their actions belie these assertions. There are now more settlers and more roadblocks in the West Bank than ever. President Abbas, he maintained, has lost hope and is talking about resigning.

When we asked Haniyah about Article 7 of Hamas’ charter (which includes a passage from the Prophet Mohammed regarding Muslims killing Jews) and Article 13 (which argues that there is no solution for the Palestinian question except through jihad), he replied that there are extremist statements on both sides. But he also directed us to Hamas’ political platform of March 2006 and the unity government agreement of February 8, 2007, neither of which, he emphasized, refers to these matters.

Israel and the West Bank

As in Gaza, the situation in the West Bank remains dismal. The number of Israeli checkpoints has not declined since the Annapolis Conference in the West Bank, settlement activity has increased, and more than a third of the territory is off limits to Palestinians. The separation wall between Israel and the West Bank, which the Israelis continue to construct, encroaches on 10% of the West Bank, much of its water resources, and some of the territory’s most productive land.

The situation is not entirely hopeless, however. As influential Israeli observers point out, the settlement process in the West Bank is reversible. Fifty percent of the settlers are in three large settlements near the 1967 border. When the East Jerusalem settlements are added, 70% of the settlers are on about 1% of the territory. As such, these analysts argue, Israel and Palestine are currently disputing only around 2% of the occupied territory

Retired Israeli military and foreign ministry officers associated with the 2003 Geneva Initiative, the unofficial draft framework final status agreement developed and endorsed by a group of private Palestinians and Israelis, remain cautiously hopeful. They believe that Hamas is the only real power in Gaza, and a way must be found to bring it back into the political arena. The Israeli government, meanwhile, must work with President Abbas to change realities on the West Bank and give the Palestinians hope. Abbas must be allowed to govern, and there must be a prisoner exchange.

In this context, the Arab Peace Initiative, originally proposed in 2002 by Saudi Arabia’s then-Crown Prince Abdullah and “relaunched” at the Arab League Summit of March 2007, is critical. The initiative calls for full Israeli withdrawal from the territories occupied in 1967, creation of an independent Palestinian state with East Jerusalem as its capital, and a just, agreed-upon solution to the Palestinian refugee problem. In exchange, there would be an end-of-conflict agreement in which Arab states would enter into peace agreements and establish normal relations with Israel. Both Israel and Palestine must make concessions to reach this kind of consensus, but Abbas needs the Arab world behind him so he can make compromises.

Any Israel-Palestine resolution should involve Jordan. But Jordan cannot be a substitute for a viable Palestinian state. Jordan is already hosting some 700,000 Iraqis, many of whom are not likely to return to Iraq. Any effort to push the West Bankers into Jordan would create enormous problems. Instead, given the special relationship between the Jordanians and the Palestinians some kind of confederation with links to Israel would work. This would involve considerable cooperation on the mineral and water resources in the region, and on tourism and transportation.

Syrian Perspectives

Syria’s position began to improve after it withdrew from Lebanon, and President Assad now appears stronger than ever. He has the military under control, and has delinked the Golan Heights and Palestinian issues. Moreover, despite a land dispute, Turkish-Syrian relations have warmed considerably since 2000, when the Syrians turned over Kurdish rebel leader Abdullah Ocalan. Syria is poised to establish diplomatic relations with Lebanon and begin the delineation of its border with Lebanon. It does not claim the Israeli-controlled Shebaa Farms parcel of land, which it considers Lebanese, and maintains that it will not place obstacles before a Palestinian-Israeli agreement, although it argues that a comprehensive Middle East peace is needed.

Syria continues to see the United States as a major player in the region, and seems to accept that there would be an adjustment in Syrian-Iranian relations following a Syrian-Israeli peace agreement. However, according to a foreign ministry source, what Israel is asking regarding Syria’s relations with Iran – namely, breaking its alliance with Iran and cutting off contacts with Hezbollah and Hamas – is totally unacceptable. Assad is prepared to show flexibility regarding Hamas, but he will not adjust his Iranian connection until he gets another strong partner. According to diplomatic sources in Damascus, Assad needs a U.S. guarantee that neither it nor Israel will attempt regime change.

Lebanon, Hezbollah, and Iran

Lebanon appears to be finally entering a new and more promising era. The situation in the south is stable and secure, and there is a general sense of optimism concerning Lebanese political life. The July 11 formation of a national unity government (with 11 of the 30 cabinet seats going to the Hezbollah-led opposition); the announcement the next day that Lebanon and Syria had agreed to establish diplomatic relations; and the July 16 Hezbollah-Israeli prisoner exchange, in which the last Lebanese prisoners held by the Israelis were returned, have contributed to the optimism.

The Lebanese are generally grateful and appreciative of Hezbollah’s role in standing up to the Israelis in the 2006 war and for the Lebanese in the July prisoner exchange. Some argue that Hezbollah simply wants to participate meaningfully in the government and that, as it is fully incorporated into the state, its identity as a militia will become less and less pronounced. However, Hezbollah’s military prowess and its remarkable ascendancy in Lebanon’s political life remain the subject of mixed feelings in the country. Many remain suspicious of Hezbollah’s intentions and of its relationship with Iran.

The wild card in the region is Iran. Most countries in the region are expanding their relations with Teheran, and disastrous U.S. policies have contributed to an increase in Iranian influence. Whatever ambivalence the political elite in the Middle East has toward Iran – and its links with Hamas and other actors on the ground – the overwhelming consensus is that a U.S. attack would have dire and unpredictable consequences.

To a large degree, the region has been divided into two camps – one aligned with the U.S.-Israeli perspective and the other based on Syrian-Iranian positions. As a result, the pendulum has swung toward the extremists. Any actions by the United States that further this divide would be counter-productive. At the same time, attempts to bridge the divide – for instance, Washington’s recent decisions to expand its diplomatic contacts with Teheran and to continue to seek to resolve its differences with Iran via diplomacy – can help encourage the positive trends in the region.

These moves, which have been well-received in Teheran, are signs that Washington is adjusting to the changing realities in the region. They also suggest that what began as a series of local initiatives could become part of a broad regional realignment and accommodations involving the various Middle East players as well as outside powers with significant stakes in the region.

Given the strong coincidence of U.S. and Iranian interests in peace and stability in the area, a diminution of confrontational stances and an increase in cooperative action between these major actors could pave the way for resolution of the region’s most deep-seated problems. This, of course, would be one of the most important developments in decades; and, alongside the progress toward resolution of key security issues in Northeast Asia, could provide the basis for President Bush’s foreign policy legacy.

Time is short for the current administration. But there still remains room for it to lay the foundation for such a restructuring of regional relationships – a foundation on which an Obama or McCain administration could build.

Foreign Policy In Focus contributor Benjamin Tua, a retired Foreign Service Officer, served in Israel from 1982-85. The Council for the National Interest Foundation arranged the visit in the region in which he participated.

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