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Israel's lurch to the right dims two-state peace prospects

By Luke Baker JERUSALEM (Reuters) - A cartoon in Israel's left-leaning Haaretz newspaper showed Prime Minister Benjamin Netanyahu studying a poster made by his publicity team of Mahmoud Abbas, the mild-mannered, soft-featured Palestinian president. The poster depicted Abbas looking fierce, with menacing eyes and bloodied fangs. A disappointed-looking Netanyahu turns to his aide and asks: "Can you lengthen his fangs a tad?" The prime minister has lost no time in casting Abbas as the devil in recent months, accusing him of inciting violence in Jerusalem that has lead to the death of 11 Israelis, including four rabbis stabbed and shot by Palestinians in a synagogue. Around a dozen Palestinians have also been killed, including several of those who carried out the attacks. While the head of Israel's security service says Abbas is not inciting unrest, and centrist politicians have warned Netanyahu against alienating the only partner Israel has in stalled peace negotiations, the prime minister shows no sign of letting up in his criticism of the 79-year-old Palestinian. The reason, in large part, is politics. With Netanyahu's 20-month-old, right-wing coalition looking increasingly shaky and talk of early elections growing, all the constituent parties are trying to shore up their base. The threat to Netanyahu comes from nationalist groups on the far-right, and so he has sought to head off their challenge. As well as demonising Abbas, he has pushed a highly contentious bill that would establish Israel as the Jewish nation state, legislation critics say puts religion ahead of democracy and marginalises the Arab minority. He has resumed demolishing the homes of Palestinians suspected of terrorism, a tactic halted in 2005 after the Israeli army said it was counterproductive, although surveys suggest many Israelis support it. Netanyahu has also threatened to revoke the residency permit of anyone involved in terrorism. Acting for the first time on the pledge, Israel announced on Wednesday it was cancelling the East Jerusalem permit of the wife of one of the synagogue attackers, who must now return to the West Bank. When combined with Israel's ongoing construction of settlements on occupied territory and an increasingly abrasive relationship with allies including the United States, the upshot is the most hardline government analysts can recall. "This is the most right-wing government in Israeli history, much further to the right than the Menachem Begin or Ariel Sharon governments," said Menachem Klein, a professor of Israeli politics at Bar-Ilan University near Tel Aviv. When there are heightened security fears, as with the Gaza war and the violence in Jerusalem, Israeli society and politics tend to shift quickly to the right. Rather than that being uncomfortable for Netanyahu, it is familiar territory. "He is originally from the far-right, that is his base. His beliefs, his heart are there," said Klein. "He assumes early elections are on the horizon and he is competing with (Foreign Minister Avigdor) Lieberman and (Economy Minister Naftali) Bennett for leadership of the far-right," he said, referring to the leaders of the nationalist, pro-settler parties in his coalition. STILL TWO-STATE SOLUTION? The rightward shift may have a logic to it, but is likely to have profound, long-term consequences. The last round of peace talks between Israel and the Palestinians was called off in April, after nine months of largely fruitless discussion. The Palestinians said Israel was not meeting its commitments on settlements and prisoner releases; the Israelis did not like Abbas's reconciliation with Hamas, the Islamist group that runs Gaza. In the seven months since, differences have hardened. Almost no one on the Israeli or Palestinian side, or long-term observers of the peace process, sees any near-term prospect of a return to negotiations on a two-state solution. Instead, unilateralism has ensued. The Palestinians are pushing for a U.N. statehood resolution. Even if it has little chance of success, it has been encouraged by Sweden's formal recognition and non-binding votes in European parliaments supporting an independent Palestinian state. On its side, Israel has pushed ahead with settlements in East Jerusalem and the West Bank, territory it has occupied since 1967 and which the Palestinians want for a future state. In the absence of a two-state solution, Bennett - perhaps the biggest political threat to Netanyahu - is suggesting that Israel annex 60 percent of the West Bank and offer Palestinians citizenship in an enlarged Israel. Combined with the nation-state bill, which would enshrine certain rights for Jews only, that has alarmed Arabs living in Israel and Palestinians who worry about Israel's long-term territorial goals. "In terms of the nation-state bill, its effects on the peace process are immense," said Grant Rumley, a Middle East expert at the Washington-based Foundation for Defense of Democracies. "It solidifies another gap," he said, making it much more difficult to bring the sides back to negotiations. Klein believes Netanyahu has no genuine interest in a two-state solution. Instead, the Israeli leader hints at Palestinian autonomy in the West Bank, with security remaining in Israel's hands, as would control of the West Bank border with Jordan. "We are already in one regime," he said, referring to Israeli control of the whole area from the Jordan River to the Mediterranean. "The government doesn't plan to stop this de facto annexation and the Palestinian Authority has no strategy to stop it." (Editing by Robin Pomeroy)