[Senate Hearing 111-648]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-648
 
           MIDDLE EAST PEACE: GROUND TRUTHS, CHALLENGES AHEAD

=======================================================================

                                HEARING

                               BEFORE THE



                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 4, 2010

                               __________

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                COMMITTEE ON FOREIGN RELATIONS         

             JOHN F. KERRY, Massachusetts, Chairman        
CHRISTOPHER J. DODD, Connecticut     RICHARD G. LUGAR, Indiana
RUSSELL D. FEINGOLD, Wisconsin       BOB CORKER, Tennessee
BARBARA BOXER, California            JOHNNY ISAKSON, Georgia
ROBERT MENENDEZ, New Jersey          JAMES E. RISCH, Idaho
BENJAMIN L. CARDIN, Maryland         JIM DeMINT, South Carolina
ROBERT P. CASEY, Jr., Pennsylvania   JOHN BARRASSO, Wyoming
JIM WEBB, Virginia                   ROGER F. WICKER, Mississippi
JEANNE SHAHEEN, New Hampshire        JAMES M. INHOFE, Oklahoma
EDWARD E. KAUFMAN, Delaware
KIRSTEN E. GILLIBRAND, New York
                  David McKean, Staff Director        
        Kenneth A. Myers, Jr., Republican Staff Director        

                              (ii)        

  
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                            C O N T E N T S

                              ----------                              
                                                                   Page

Asali, Dr. Ziad, president, American Task Force on Palestine, 
  Washington, DC.................................................    21
    Prepared statement...........................................    23
Kerry, Hon. John F., U.S. Senator from Massachusetts, opening 
  statement......................................................     1
Kurtzer, Hon. Daniel, lecturer and S. Daniel Abraham Professor in 
  Middle Eastern Policy Studies, Princeton University, former 
  U.S. Ambassador to Israel and Egypt, Washington, DC............     6
    Prepared statement...........................................     8
Lugar, Hon. Richard G., U.S. Senator from Indiana, opening 
  statement......................................................     4
Makovsky, David, Ziegler Distinguished Fellow and director of the 
  Project on the Middle East Peace Process, Washington Institute 
  of Near East Policy, Washington, DC............................    30
    Prepared statement...........................................    33
Malley, Dr. Robert, director of Middle East/North Africa Program, 
  International Crisis Group, Washington, DC.....................    13
    Prepared statement...........................................    16

                                 (iii)

  


           MIDDLE EAST PEACE: GROUND TRUTHS, CHALLENGES AHEAD

                              ----------                              


                        THURSDAY, MARCH 4, 2010

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:05 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. John F. Kerry 
(chairman of the committee) presiding.
    Present: Senators Kerry, Dodd, Feingold, Casey, Shaheen, 
Kaufman, Lugar, and Risch.

            OPENING STATEMENT OF HON. JOHN F. KERRY,
                U.S. SENATOR FROM MASSACHUSETTS

    The Chairman. Good morning. The hearing will officially 
come to order, though you have all unofficially already come to 
order. We welcome you here today. Thanks so much.
    We have a terrific panel, and we're very grateful to have 
you, and to be able to take a moment to reflect on one of the 
longest and most complex and sometimes frustrating challenges 
that we have, all of us, faced over the years. Today, we will 
take a moment to talk about where we are in the effort to 
revive the Middle East peace process.
    Yesterday, as I think most know--certainly all those who 
follow these matters--in Cairo, the Arab League endorsed 
Palestinian President Mahmoud Abbas's entry into United States-
mediated indirect talks with Israel. With negotiations likely 
to resume soon, we're really reaching a critical juncture. And 
after meetings, just this past weekend, that I engaged in with 
Israeli and Palestinian leaders, in Jordan and in the West 
Bank, and in Israel, I personally am confident that this really 
is a moment of opportunity.
    Of course, we're all well aware that we've had those 
moments before. I remember standing on the White House lawn 
when the great handshake took place, and we had a sense of 
great optimism, and the President visited Gaza at the airport 
opening, and so forth. We've been down this road, and we're all 
well aware of the obstacles.
    There is a profound trust deficit between Israelis and 
Palestinians, deep divisions between Palestinian factions in 
Gaza and the West Bank, perhaps even to some degree, with some 
leadership ensconced in Damascus, an Israel coalition 
government that initially retreated from prior peace 
initiatives, and a profound frustration in the region with the 
lack of progress since the President's Cairo speech raised 
expectations and new hopes.
    While some are deeply skeptical, I do continue to believe 
that, to a greater extent than many realize, the conditions are 
in place for significant progress, but only if all sides can 
summon the leadership, the commitment, and the courage 
necessary to make lasting peace possible.
    One thing on which I might just comment. I spoke at the 
Doha Conference on Islam and the West a few weeks ago. And in 
conversations that I had with different people, including the 
Emir of Qatar and the Prime Minister/Foreign Minister--same 
person--increasingly, from the people that I talked to, there 
is a growing realization and awareness of the few tracks that 
really can work. There's a unanimity out there, if you will, 
among many different parties, who don't often talk to each 
other, and, for political reasons, can't get together, but all 
of whom kind of have a good sense of the end game. And the 
bigger question is not, What's it look like? It's more, How do 
you get there? And these various restraints stand in the way of 
it.
    The fact is, most Israelis and Palestinians still recognize 
that a two-state solution remains the only workable solution 
and the only just solution. The demographics in Israel simply 
demand a two-state solution if Israel is to remain a Jewish 
democracy.
    Israelis are troubled by what they see as growing efforts 
to delegitimize Israel around the world. And, while many 
Israelis are understandably gravely concerned about the 
existential threat posed by Iran, and the danger of a rearmed 
Hezbollah and Hamas, nothing will do more to undermine 
extremists and rejectionists than progress--real progress--
toward peace with the Palestinians. I have heard--in Pakistan, 
in Afghanistan, in Sudan, in other parts of the world--the 
constant drumbeat of the way the Palestinians are treated, and 
of Israel-Palestine relations. It is a recruitment tool. It is 
an albatross around all necks, in so many ways, and it needs to 
be resolved.
    In President Abbas and Prime Minister Fayyad, I am 
convinced we have genuine partners for peace. And the Israelis 
seem to recognize this, as well, now. They've made 
unprecedented strides in the West Bank toward building a future 
Palestinian state, from the ground up, by increasing security 
capacity, fighting corruption, building institutions that can 
govern effectively. And if you talk to General Dayton or 
others, there's clear proof that, at times of great stress--
i.e., during Gaza and the war--the West Bank stayed quiet. And 
large credit is given to the development of the security forces 
in that having happened.
    But, we have to show progress now, in the peace process, to 
capitalize on Hamas's weakness at this particular moment and to 
build greater credibility with the Palestinian people. 
Ultimately, we all know it is the Israelis and the Palestinians 
who must reach agreement, but America has a vital role to play 
as an energetic and effective broker, ensuring that both sides 
make good-faith proposals that bring the parties closer to 
peace. And at the right moment, we will have a role to play in 
bridging any gaps between the respective positions.
    Personally, I suspect that progress will likely come, 
first, on the combination of borders and security. And the 
reason is that they're closely integrated. Israelis cannot and 
will not accept a repeat of what happened when they withdrew 
from Lebanon and Gaza, and nor should they be expected to. And 
it is entirely anticipatable and expected and appropriate that 
the Prime Minister of Israel should have a concern about 
security, and needs that concern met.
    By the same token, as you resolve the issue of borders and 
you begin to build the security structure, you begin to give 
confidence on both sides about those issues. Focusing on 
borders and security initially, in my judgment, resolves the 
issue of West Bank settlements and lays the groundwork for 
reaching agreement on the other issues.
    While a final agreement may seem far off, remember, it was 
not so long ago that Israelis and Palestinians came closer than 
ever to comprehensive peace at Taba. And the Clinton Parameters 
included tough sacrifices, on both sides, as part of a 
compromise that was fair to all. A contiguous Palestinian state 
based on 1967 borders, with land swaps, security guarantees for 
Israel, a capital for both states in Jerusalem, significant 
compensation for refugees, with a right of return to Palestine, 
and any resettlement in Israel subject to negotiation--that was 
the framework. And they came this close. I remember having a 
luncheon, in Ramallah with Chairman Arafat, at which he said to 
me, very directly and boldly, that he regretted that he hadn't 
taken advantage of Taba.
    In 2002, the Arab Peace Initiative, endorsed by every Arab 
country, provided another key piece of the final puzzle: the 
promise for Israel that a comprehensive peace agreement would 
bring normalized relations with the Arab world, a regional 
shift more plausible at a moment when Israelis and Arab 
governments share profound concerns about Iran. And you need to 
focus on that. There's sea change in the discussions when you 
go over there. The first words out of the mouths of most of the 
leaders I met with in the region, and have over the last years, 
is not Israel; it's Iran.
    I still believe the Clinton Parameters and the Arab Peace 
Initiative provide the only realistic basis--basis, I 
emphasize--with changes to reflect where we are today--but the 
basis for lasting peace and security. And I am confident that, 
deep down, most of the Israeli and Palestinian people 
understand that, as well.
    America's role is vital, but we must all be partners in 
this effort. Prime Minister Fayyad has laid out a detailed plan 
for strengthening Palestinian institutions. And that effort, 
frankly, needs much greater support from the Arab world and 
from the West. I will never forget, being in Ramallah, the day 
he was elected--and I was the first person to meet with him--in 
2005--and he looked at me and said, ``Senator, I know exactly 
what you expect of me,'' meaning the United States, ``We need 
to disarm Hamas. Now, you tell me how I'm supposed to do that. 
I have no radios, no police, no cars, no capacity. Hamas can 
deliver services, on any given day, more easily than we can.'' 
And we were just absent for the next 4\1/2\ years, literally.
    So, we all must encourage Palestinians in this peace 
effort, and that's why the Arab League decision was really so 
significant. And I congratulate the administration, and those 
involved, in their efforts to help to bring about the kind of 
cohesion that was exhibited in that. I was particularly pleased 
to hear the Syrian Foreign Minister, Walid Mouallem, praise 
President Abbas's decision to enter proximity talks.
    Finally, even as we move ahead with negotiations and 
building capacity in the West Bank, we must address the dire 
conditions in Gaza. One year ago, I personally saw, firsthand, 
the devastation there. And it's a great disappointment that so 
little has been rebuilt since then. In Southern Israel, I also 
saw the toll that Hamas rockets had inflicted in a barrage that 
no country should or could endure interminably. I recognize the 
importance of Gilad Shalit to the Israeli people. But, our 
grievance, and theirs, is not with the people of Gaza. And 
based on my recent visit and discussions with all the parties, 
I believe there is a way to work with international 
organizations to get more construction material into Gaza in a 
way that empowers the Palestinian Authority, and not Hamas. And 
that will help the peace process significantly, in my judgment.
    We have a terrific panel today to bring a range of 
perspectives. Daniel Kurtzer is the former United States 
Ambassador to Israel and Egypt; Rob Malley directs the Middle 
East North Africa Program at the International Crisis Group; 
Ziad Asali is president of the American Task Force on 
Palestine; and David Makovsky is director of the Project on the 
Middle East Peace Process in Washington Institute of Near East 
Policy. So, we look forward to a frank and insightful 
conversation.
    And I will have to step out for a couple of phone calls 
during this, and I ask your indulgence for that during the 
process.
    And we also ask, if you could, to limit your prepared 
comments. We'll put your full testimony in the record as if 
read in full, but if you could summarize it in 5 minutes, then 
members would have a little more opportunity to be able to have 
a dialogue.
    Thank you very much.
    Senator Lugar.

          OPENING STATEMENT OF HON. RICHARD G. LUGAR,
                   U.S. SENATOR FROM INDIANA

    Senator Lugar. Thank you very much, Chairman Kerry, for 
convening this hearing, and I join you in welcoming our 
distinguished witnesses.
    The United States continues to support a negotiated 
Israeli-Palestinian peace agreement that would address Israel's 
security concerns and satisfy Palestinian aspirations for 
statehood, while resolving the full range of final status 
issues. I have welcomed the administration's efforts toward 
this end.
    On his second day in office, President Obama appointed our 
former colleague, Senator George Mitchell, as Special Envoy for 
Middle East Peace. I was pleased that Senator Mitchell was able 
to meet with members of the committee a few weeks ago to share 
his perspectives.
    The task before Senator Mitchell is daunting. Peace talks 
were suspended in the aftermath of the fighting in Gaza, and 
the parties have been at an impasse over the demand for a 
settlement freeze. Rhetoric on both sides remains incendiary. 
Whether through proximity talks, or some other mechanism, we 
are searching for a way to move forward. The question is, What 
can be done to build confidence and increase the likelihood of 
success?
    New York Times columnist Thomas Friedman suggested in an 
editorial last November that the United States approach to the 
Middle East peace process had reached a point of inertia that 
is contributing to bad behavior by the parties. He proposed a 
dramatic shift in strategy, saying that the United States 
should end our participation in the peace process, publicly 
informing the parties that we will come back when they get 
serious. Friedman argues that by continuing active United 
States mediation efforts regardless of the behavior of both 
sides, ``We relieve all the political pain from Arab and Israel 
decisionmakers by creating the impression in the minds of their 
publics that something serious is happening.'' This allows 
Israeli and Palestinian leaders to associate themselves with 
the peace process without making any political sacrifices or 
tempering their ideological agendas.
    I would not want to take the ball out of Senator Mitchell's 
hands at this time, but I share Tom Friedman's frustrations and 
believe we should be thinking beyond conventional mediation 
strategies. I'd be interested to hear our witnesses' views on 
the likely impact of the move suggested by Tom Friedman.
    Meanwhile, Palestinian Authority Prime Minister Salaam 
Fayyad has been working quietly to build governing institutions 
for the day when a Palestinian state is established. General 
Dayton, the U.S. security coordinator, and his international 
team have been helping to build the capacity of Palestinian 
security forces and the Interior Ministry. Substantial progress 
has been made, and the program merits continued support. Other 
ministries are making headway and becoming more accountable and 
transparent. But there is a limit to how much progress can be 
made absent results on the diplomatic front.
    The administration has not limited its ambitions to the 
``Palestinian track.'' It has articulated a vision for a 
comprehensive Middle East peace. I would appreciate hearing 
from our witnesses today about how we can best capitalize on 
regional dynamics to advance this goal. To what extent has the 
common threat of a nuclear Iran influenced calculations on the 
part of key regional actors?
    The administration has made overtures to Syria in recent 
weeks, including a visit to Damascus by Under Secretary William 
Burns and the nomination of a U.S. Ambassador to Syria, 
following a long hiatus. Nevertheless, the joint press 
conference last week by the Presidents of Iran and Syria 
produced provocative anti-American statements. What are the 
prospects, in the coming few years, for a meaningful 
advancement of United States-Syrian dialogue or of Israeli-
Syrian peace talks?
    I look forward to hearing the assessments of our witnesses 
regarding the situation on the ground in the Middle East and 
their prescriptions for making progress toward the goal of 
comprehensive peace.
    I thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Lugar.
    Mr. Ambassador, if you would begin first, and then we'll 
run down the table. We appreciate it. Thank you very much.

   STATEMENT OF HON. DANIEL KURTZER, LECTURER AND S. DANIEL 
 ABRAHAM PROFESSOR IN MIDDLE EASTERN POLICY STUDIES, PRINCETON 
    UNIVERSITY, FORMER U.S. AMBASSADOR TO ISRAEL AND EGYPT, 
                         WASHINGTON, DC

    Ambassador Kurtzer. Thank you, Mr. Chairman and 
distinguished members of the committee.
    I want to thank you, first of all, for the invitation to 
appear here today and to use this opportunity also to thank you 
for the support that you gave me during the years that I served 
as our Ambassador in Egypt and Israel. It was really quite 
remarkable that we were able to actually accomplish something 
during those years, with the cooperation of the Senate, and 
what we did in the field.
    Mr. Chairman, in some respects I could end my statement now 
by simply saying that I agree with everything that you and 
Senator Lugar said in introducing this subject. But, you asked 
us to address the question of ground truths and the challenges 
ahead, and I want to dig a little deeper, perhaps, in looking 
at both sides of those questions.
    First of all, I think it's quite imperative to remind all 
of us that the pursuit of peace in the Middle East is not a 
favor that we do for the parties in the region, but is an 
imperative of our national interests. We benefit immediately 
from the process of peacemaking, and, of course, we would 
benefit from the success of peacemaking. And this also touches 
on Senator Lugar's point, which is, to the extent that we are 
seen as conducting a strong policy in pursuit of peace in the 
Middle East, it helps us build alliances and conduct our 
diplomacy much more strongly, with respect to the threats we 
face in the region, including Iran.
    With respect to ground truths, there's no question that the 
situation on the ground today is challenging, and, as was 
indicated in the opening statements, this results from ongoing 
settlement activity, ongoing infrastructure of terrorism that 
exists, and incitement. There is a rightwing coalition in 
Israel which presents its own problems, with respect to 
developing its policies in favor of peace, and Palestinian 
governance is divided very badly, both politically and 
geographically.
    But, frankly, this is no more challenging an environment 
than we have faced in the past. Resolute, bold, creative, 
determined, persistent American diplomacy has succeeded in 
dealing with similar challenges in the past. The Egyptian-
Israeli Peace Treaty and the Madrid Peace Conference were not 
achieved in perfect environments for peacemaking, but required 
the kind of leadership that our leaders are capable of, and the 
kind of strong diplomacy of which we are capable, to try to 
translate potential opportunities into successes.
    In this respect, the ground truth is actually not as bad as 
some analysts would try to convince us. Violence is down. The 
Israeli security agency, the Shabak, indicated that 2009 was 
one of the best years in recent memory, with respect to 
violence conducted by Palestinians against Israel. The West 
Bank economy is in good shape, and it's growing. Public opinion 
polls, on both sides, indicate consistent support for peace and 
consistent support for a two-state solution. So, it's not just 
that determined leadership can overcome challenges; it's also 
that the situation on the ground is potentially conducive to 
exploiting opportunities for peacemaking.
    What's needed, then, is a U.S. policy and a U.S. strategy. 
I must say, as much as I hope for the success of what the 
administration is doing these days, I have been disappointed 
this past year with the lack of boldness and the lack of 
creativity and the lack of strength in our diplomacy with 
respect to this peace process. We have not articulated a 
policy, and we don't have a strategy. We pursued a settlements 
freeze, and then we backed away from a settlements freeze. We 
pursued confidence-building measures on the part of some Arabs, 
and we backed away from confidence-building measures. And in 
neither case were these initiatives seen within a context of a 
larger strategy of peacemaking.
    I would suggest, therefore, that we also reexamine this 
question of proximity talks. As much as I hope for their 
success, the very fact that we are conducting proximity talks 
these days, or thinking about conducting proximity talks, is a 
throwback to what we did 20 years ago. Palestinians and 
Israelis have negotiated, face to face, in direct talks for 20 
years. And it's not understandable why we would now have them 
sit in separate rooms and move between them. If we had strong 
terms of reference, perhaps we would need to conduct proximity 
talks, but there is, so far, no suggestion that the terms of 
reference for these proximity talks are strong enough to 
warrant the absence of face-to-face negotiations.
    Therefore, let me spend 2 minutes on what I think needs to 
be done, the challenges ahead.
    First of all, I think it's time, after 43 years from the 
1967 war, that the United States articulated our own views on 
the way this conflict should end. I'm not suggesting a U.S. 
plan, and I certainly am not suggesting that we try to impose a 
settlement. A settlement must emerge from negotiations between 
the two sides. But, we have views about how this conflict 
should end. We have views about territory, about Jerusalem, 
about settlements, about refugees, about security, about 
cooperation between the two sides with respect to economic and 
other matters. And it is really quite surprising that we are 
hesitant to express our views and let the sides in the Middle 
East understand where the United States is coming from.
    As we do so, we also need a strategy, which I would suggest 
needs to be multipronged; not simply getting to negotiations, 
but, rather, getting to negotiations on the basis of strong 
U.S. parameters so that the parties don't start from scratch, 
but, rather, pick up from where they left off. They 
accomplished a great deal, as Senator Kerry suggested, at Taba. 
They also accomplished a great deal between President Abbas and 
Prime Minister Olmert in 2008, and we should try to capture 
that progress in establishing parameters within which the 
parties should negotiate.
    If they choose to start with a negotiation on borders, 
which I support, then we need to articulate the principles, so 
that the parties don't wander into areas that are not going to 
be productive. We should also build regional and international 
support structures, including better use of the Arab Peace 
Initiative. We should revive the multilateral negotiations, so 
as to bring, again, the strength of Arab support for 
peacemaking. We should continue to advocate for a settlements 
freeze and for action by the Palestinian authority against 
incitement and against terrorist infrastructure. In other 
words, between having a vision and having a strategy, the 
United States will be back in the diplomatic game, something 
where we have been absent for too many years.
    Finally, I would suggest there are two contextual issues 
which need to be addressed. One question has been raised as to 
whether or not we should open up a dialogue with Hamas at this 
time. I think we should not. I have seen no indication on the 
part of Hamas that it's changed its policies or its practices, 
and therefore, it does not meet any of the conditions that are 
proper for the United States to engage in dialogue.
    And second, I think the humanitarian situation in Gaza, as 
Senator Kerry and Senator Lugar suggested, needs to be 
addressed immediately. There is no excuse for having 1\1/2\ 
million people suffer as a result of a failure of peacemaking, 
and we can find ways for the international community to deliver 
assistance in a manner that protects both Israeli and Egyptian 
security.
    Thank you.
    [The prepared statement of Ambassador Kurtzer follows:]

   Prepared Statement of Hon. Daniel Kurtzer, Lecturer and S. Daniel 
     Abraham Professor in Middle Eastern Policy Studies, Princeton 
 University, Former U.S. Ambassador to Israel and Egypt, Washington, DC

    Mr. Chairman, distinguished members of the committee, thank you for 
the opportunity to testify today about United States policy in the 
Arab-Israeli peace process. Let me take this opportunity to thank you 
for the support you gave me during my time as the United States 
Ambassador to Egypt and Israel. It was a real pleasure to work with you 
and the committee.
    I have devoted almost 40 years to the study and practice of 
American diplomacy in the Middle East. From this experience, I believe 
the pursuit of peace between Arabs and Israelis is as important to our 
country's interests as it is for the parties themselves. I believe 
peace will enhance Israel's security and well-being. And I believe 
peace will help the United States build stronger relations with our 
Arab friends in the region.
    You have asked this panel to examine ground truths and challenges 
ahead, and I will address both issues with candor.

                             GROUND TRUTHS

    The environment for peacemaking in the Middle East has almost never 
been ideal, and it is not ideal today. But, the challenge of leadership 
is not to await the perfect circumstances, but to build on the 
imperfect. Opportunities rarely present themselves; they almost always 
have to be created. The situation on the ground is hardly ideal, but it 
certainly is not as bad and the challenges to reviving the peace 
process are not as daunting as some analysts and pundits would want us 
to believe.
    Today, the Palestinians are divided geographically and politically. 
Hamas governs Gaza. Palestinian public discourse, including public 
education, about Israel and Jews is still infused with anti-Semitism, 
and the infrastructure of terrorism has not been dismantled. In Israel, 
a right-wing coalition governs, perceived by the Palestinians and 
others as more interested in enhancing Israel's grip on the West Bank 
than negotiating a peace settlement based on Resolution 242. Settlement 
activity continues, despite the highly conditioned and temporary 
moratorium on new housing starts. Some Israeli actions in East 
Jerusalem are provoking Palestinian protests that threaten to upset a 
relatively calm situation. So, this is not a perfect environment for 
peacemaking.
    But it is no more challenging an environment than U.S. diplomacy 
has had to cope with and operate in the past. Creative, active, 
sustained, bold and determined American diplomacy helped bring Menahem 
Begin and Anwar Sadat to agreement at Camp David in 1978 and to a peace 
treaty in 1979. Equally resolute U.S. diplomacy helped bring Yitzhak 
Shamir and the Syrians, Palestinians, Jordanians, Lebanese, and most of 
the Arab world to the Madrid Conference in 1991--launching bilateral 
and multilateral peace negotiations. Indeed, U.S. diplomacy has 
operated at times within far more complicated and challenging 
environments than the current situation and has transformed the 
imperative of peace into progress toward the achievement of peace.
    Today, the ground truth in the Palestinian-Israeli arena actually 
has some important positive elements. Violence is down. According to 
the Israel Security Agency (www.shabak.gov.il/English/EnTerrorData/
Reviews/Pages/terrorreport09.aspx), 2009 saw ``a significant decline in 
the amount of attacks coming from the Palestinian Territories as 
opposed to previous years.'' There were no suicide attacks in 2009. 
Perhaps most importantly, the Shabak attributes the main reason for the 
decline in terrorism to ``continuous CT (counterterrorism) activity 
conducted by Israel and the Palestinian security apparatuses''--i.e., 
those security forces trained by General Keith Dayton.
    President Mahmoud Abbas and Prime Minister Salam Fayyad are making 
serious efforts to build the institutional infrastructure necessary for 
statehood. Fayyad announced an expedited program of state-building, 
something that we and the international community have long advocated. 
The West Bank economy is in good shape and growing. I saw this 
firsthand recently in Ramallah.
    Public opinion polls in Israel and Palestine still favor a peaceful 
solution. According to the ``War and Peace Index'' compiled at Tel Aviv 
University, as of last October, ``about three-fourths of the Israeli 
Jewish public currently supports holding negotiations between Israel 
and the Palestinians--the highest level of support registered in recent 
years.'' And, according to noted Palestinian pollster Khalil Shikaki, 
``a majority of Palestinians (65-70 percent) support a two-state 
solution. Similarly, a majority (75-80 percent) supports efforts to 
negotiate a permanent agreement, a package deal, one that ends the 
conflict and all claims.'' The idea of a one-state solution does not 
enjoy significant support among Palestinians or Israelis; and proposals 
for doing nothing--often couched in language of ``managing'' the 
conflict--will accomplish nothing except to allow the situation on the 
ground to deteriorate further.
    Key leaders have spoken out in favor of the two-state solution. 
Prime Minister Netanyahu said last June 14, in a major policy speech: 
``In my vision of peace, in this small land of ours, two peoples live 
freely, side by side, in amity and mutual respect. Each will have its 
own flag, its own national anthem, its own government. Neither will 
threaten the security or survival of the other.'' On February 2 in 
Herzliya, Prime Minister Fayyad said the Palestinians want to ``live in 
freedom and dignity in a country of our own, yes indeed alongside the 
State of Israel, in peace, harmony and security.''
    For Israel, in particular, the choices have never been starker. 
Defense Minister Ehud Barak made this clear when he told the Herzliya 
Conference on February 2: ``As long as in this territory west of the 
Jordan River there is only one political entity called Israel, it is 
going to be either non-Jewish or nondemocratic. If this bloc of 
millions of Palestinians cannot vote, that will be an apartheid 
state.''
    The situation on the ground is not static. If it does not get 
better, it will get worse. Absent a dynamic peace process, violence 
could erupt yet again in the territories. The triggers for such 
violence are present in the territories, and will become more evident 
if the two peoples lose hope in the peace making process.
    So, the current ground truth in the Middle East is neither a self-
evident moment of opportunity, nor what the naysayers and pessimists 
would have us believe. It is a moment in which deterioration will 
surely accompany diplomatic stagnation, but also a moment in which 
strong and determined leadership can move the peace process forward. 
There is also substantial reason to believe that a most important 
element of success will be the role exercised by the United States. Let 
me then turn to the challenges ahead and the role of the United States.

                            CHALLENGES AHEAD

    I speak with great respect for President Obama and Senator George 
Mitchell, but also great disappointment over what can most gently be 
described as meager results of American diplomacy this past year. The 
President got it right, at the outset of the administration, in 
declaring that resolution of the Arab-Israeli conflict is a U.S. 
national interest, not a favor we do for the parties. He got it right 
when he said that helping to resolve the conflict would be among his 
administration's foreign policy priorities. And he got it right when he 
appointed Senator George Mitchell, a man of great character and 
integrity and with a proven record in international peace negotiations, 
as special envoy for the peace process.
    From that point on, however, the administration got everything 
wrong. In May, Secretary of State Clinton articulated a strong, 
insistent position on the need for an Israeli settlements freeze: the 
President, she said, ``wants to see a stop to settlements--not some 
settlements, not outposts, not natural growth exceptions. We think it 
is in the best interests of the effort that we are engaged in that 
settlement expansion cease. That is our position. That is what we have 
communicated very clearly, not only to the Israelis but to the 
Palestinians and others. And we intend to press that point.'' And yet, 
some months later, after prolonged discussions that resulted in a 
suspension of some Israeli settlement activity in only some part of the 
West Bank and for only a limited period of time, Secretary Clinton 
hailed this achievement as ``unprecedented.'' The fact is that 
settlement construction activity has not stopped for even one day in 
the West Bank or East Jerusalem. And Israel has even expanded economic 
benefits to out of the way settlements as a kind of ``compensation'' 
for the government's decision not to make new housing starts in 
settlements for 10 months. The U.S. diplomatic volte face was 
surprising enough in its own right; however, it also left the 
Palestinians in a lurch. President Mahmoud Abbas summed it up recently 
when he said that Palestinians could demand no less than the United 
States on settlements, and thus the U.S. abandonment of a total 
settlements freeze cut the legs out from under the Palestinians.
    The administration also tried to elicit confidence building 
measures from the Arabs, in particular to gain the agreement of Saudi 
Arabia for the overflight of Israeli civilian aircraft. The President 
sought this gesture from the Saudis with apparently no groundwork 
having been done in advance. The President traveled to Saudi Arabia, 
asked for the confidence-building step and was turned down. I want to 
make clear that I do not understand why, in 2010, the Saudis do not 
allow normal Israeli civilian air traffic over its territory. Boycotts 
and similar actions against Israel are unacceptable. But how did this 
issue rise to the level of personal Presidential attention? Why was 
there no preparatory work done to see how the Saudis would react and to 
condition the Saudis to be more receptive? Why wasn't this issue 
packaged as part of a larger strategy, instead of being advanced as a 
stand-alone measure?
    It would have made far more sense, in my view, for the President to 
talk to the Saudis about the Arab Peace Initiative, the Saudi-inspired 
plan that offers peace, security, and recognition to Israel in return 
for Israel's withdrawal from the territory occupied since 1967, the 
creation of a Palestinian state with Jerusalem as its capital and an 
agreed resolution of the Palestinian refugee problem. This statement of 
Arab policy--which need not be seen as the basis for negotiations and 
does not have to be formally endorsed by the United States or Israel--
represents a major advance in Arab thinking. And yet almost nothing has 
been done, by either the Arabs or us, to use it as a supportive element 
in the peace process. It seems to me the President should have had a 
deep discussion with the Saudis about their policy and ours, rather 
than ask for a single Saudi gesture.
    The administration also hastily arranged a trilateral meeting in 
New York in September with Netanyahu and Abbas, out of which nothing 
emerged and which sent Abbas home empty-handed. Since then, the 
administration has been trying to arrange proximity talks based on 
general terms of reference. The very idea of proximity talks is odd and 
disappointing. After 20 years of direct, face-to-face Israeli-
Palestinian negotiations, is this the best the United States can do? 
Equally, the absence of detailed terms of reference is also 
problematic. After Prime Minister Olmert and President Abbas have noted 
publicly that their talks in 2008 advanced peace issues rather 
substantially, are general terms of reference the best the United 
States can do? Indeed, from press reports, it appears that these terms 
of reference are based on statements made by Secretary Clinton to the 
effect that the United States would seek ``an outcome which ends the 
conflict and reconciles'' two competing visions: ``the Palestinian goal 
of an independent and viable state based on the 1967 lines, with agreed 
swaps, and the Israeli goal of a Jewish state with secure and 
recognized borders that reflect subsequent developments and meet 
Israeli security requirements.'' Also, as the Secretary has said, the 
United States believes ``that it is possible to realize the aspirations 
of both Israelis and Palestinians for Jerusalem, and safeguard its 
status as a symbol of the three great religions for all people.''
    These are not terms of reference. These don't reflect a U.S. vision 
of what needs to be done. These don't articulate a strategy for moving 
forward. They don't send a message to the parties that the United 
States is determined to try to make this effort a success. Strong terms 
of reference can help shape the negotiating process. They can define 
what needs to be done and can provide a specific set of guidelines and 
a compass for arriving at the sought-after destination. Combined with a 
determined leadership role by the United States, strong terms of 
reference can make the difference between negotiations that simply get 
started and negotiations that have a chance to end with success.

             A POLICY AND A STRATEGY FOR THE UNITED STATES

    To meet the challenges ahead, the United States must adopt a sound 
policy and commit to sustained diplomacy. We have known for years that 
interim, incremental or step-by-step approaches will no longer work. We 
know that confidence-building measures, in a vacuum, do not work and 
instead inspire lack of confidence. We know that building peace from 
the ground up, while important, cannot work in the absence of serious 
negotiations within which this edifice of peace will fit.
    There are, in my view, two critical ingredients for American 
policy--a clear vision of how the peace process should end; i.e., a 
U.S. view on the core issues in the negotiations; and a multipronged 
strategy for trying to achieve that vision. Even with these, we cannot 
assure success, but we would have a policy and a strategy which are 
sound, strong, and sustainable. I do not favor, and my views do not 
imply, a U.S. ``plan'' that would be imposed on the parties. Rather, 
the process needs a U.S. substantive set of ideas to get the parties 
focused on what we will support and what we will not support.
    First, the United States should articulate its own views on the 
shape and content of a final peace settlement. Our policy will not be a 
surprise to anyone, and many of our views will in fact reflect the 
positions of the parties themselves. These U.S. positions would 
constitute the substantive core of strong terms of reference:

   A territorial outcome based on the 1967 lines that results 
        in a 100-percent solution, that is, Israel would retain a 
        limited number of settlements in the major blocs (consistent 
        with President Bush's 2004 letter to Prime Minister Sharon) and 
        would swap territory of equal size and value to the 
        Palestinians in a manner that assures the territorial 
        contiguity and viability of the State of Palestine. Borders 
        would be demarcated to reflect these minor territorial 
        adjustments, in a manner that would also optimize security and 
        defensibility for Israel and Palestine.
   All Israeli settlements and settlers will be evacuated from 
        the area agreed as constituting the State of Palestine. The 
        Israeli army will be evacuated consistent with the timetable 
        and other provisions of the final agreement.
   In Jerusalem, outside the walls of the Old City, a division 
        of the city along demographic lines that will result in two 
        capitals for the two states. The border in Jerusalem, outside 
        the Old City, should be demarcated to reflect sensitivity to 
        religious and security issues affecting both sides.
   In the Old City of Jerusalem, the two sides should agree to 
        withhold claims of sovereignty and develop a common approach to 
        the management of the city that protects the claims of the two 
        parties and the interests of all stakeholders in the city.
   Palestinian refugees will be permitted to exercise their 
        ``right of return'' to the new State of Palestine, consistent 
        with the laws of that state. Israel will decide on how many 
        refugees will be permitted to move to Israel under family 
        reunification or humanitarian hardship considerations. The two 
        parties will establish a claims commission to reach agreement 
        on compensation for refugees whose status resulted from the 
        conflict. The two sides should examine whether a special 
        commission should be established to study the historical 
        grievances of the two peoples. The international community 
        should establish a fund to help the parties deal with claims.
   In the negotiations, priority should be given to security 
        concerns and measures that address the needs of both sides. The 
        parties should consider the range of mechanisms available to 
        assist this process, including international or multilateral 
        peacekeepers, observers and monitors; intelligence cooperation; 
        liaison mechanisms; and the like.

    These positions and others to be decided by the administration 
would constitute the vision of the United States regarding a final 
peace settlement. They would flesh out the ideas first enunciated by 
President Bush in 2004 and repeated by President Obama in 2009. They 
would represent a sound policy basis for our country.
    Once having decided on this vision, the administration should 
develop a strategy for trying to realize its vision of peace. This 
strategy will need to be multidimensional, and our diplomats will need 
to ``walk and chew gum'' simultaneously. This should also be 
incorporated into the operational part of the terms of reference.

    1. The United States should lay out a substantive negotiations 
agenda, drawn from the results of previous negotiations, that defines 
where the negotiations should begin and channels the negotiations 
toward possible agreements. This would constitute an action-focused 
negotiating framework that would launch negotiations from where they 
left off and avoid having the parties start from scratch.
          a. The United States should consider starting negotiations on 
        borders, since an agreement on borders would frame and resolve 
        many other issues.
          b. If the United States decides on a borders-first approach, 
        it should lay out the following principles to underpin the 
        negotiations:
                  i. A borders/territory agreement should reflect the 
                equivalent of 100 percent of the territory occupied in 
                1967;
                  ii. There should be territorial swaps of equal size 
                and quality based on a 1:1 ratio;
                  iii. There should be equitable sharing/allocation of 
                shared resources (water, minerals, etc.);
                  iv. The negotiations on territory should focus on a 
                narrow definition of settlement blocs which hold the 
                largest concentration of settlers;
                  v. The negotiations should avoid as much as possible 
                impacting on Palestinian daily life, should ensure 
                territorial contiguity and the viability of Palestinian 
                state, and should not include population swaps;
                  vi. Borders-first negotiations will need to be 
                complemented by simultaneous final status negotiations 
                on Jerusalem.
    2. Throughout the negotiations process, the United States would 
need to decide on a proactive, interventionist U.S. role in order to 
narrow gaps and bridge differences.
    3. The United States and others should work cooperatively to build 
regional and international support structures and ``safety nets'' for 
the process. In the region, the Arabs should be encouraged to activate 
the Arab Peace Initiative, to transform it from an outcome of 
successful negotiations into a living catalyst and support mechanism 
during negotiations. Outside the region, the United States should work 
closely with the many special envoys and international elements 
interested in supporting negotiations, so as to minimize duplication of 
effort and maximize benefits to the parties themselves.
    4. The United States should revive and restructure multilateral 
discussions on issues such as economic development, regional 
infrastructure, health, water, environment, security and arms control, 
and the like. These discussions should be led by strong chairs, involve 
primarily regional parties, and have action- and goal-oriented agendas.
    5. Palestinian state-building activities need to be encouraged and 
accelerated, using Prime Minister Fayyad's 2-year plan as basis. The 
United States and others should increase resources directed to building 
up Palestinian security capacity, and Israel should take steps to 
facilitate these efforts.
    6. Firm U.S. diplomacy should seek a complete cessation of Israeli 
settlement activity and sustained Palestinian action against terrorist 
infrastructure and incitement. The administration and the Congress 
should reach understanding on a set of calibrated consequences should 
one or both parties continue activities seen by the United States as 
inconsistent with the peace process.

    This vision and this strategy will put the administration's policy 
on strong footing. They are not a guarantee of success, and the 
diplomacy of getting the parties to the negotiating table will be 
arduous. But we have the diplomatic experience and expertise to make it 
work.
    As we engage in the period ahead, several contextual issues will 
need to be addressed. Some analysts believe that the United States 
should engage Hamas now and thereby help Palestinians achieve political 
reconciliation. I disagree. There is no evidence that I have seen 
indicating any change in Hamas' firm rejection of a negotiated 
settlement of the dispute or willingness to reconcile with Israel. 
There is no reason now to reward this radical behavior and ideology. To 
be sure, if an agreement is reached between Israel and the PLO, there 
will need to be a method for validating this outcome among 
Palestinians, for example, a referendum or a new election. At that 
time, against the backdrop of a successful negotiation, Hamas will have 
an opportunity to argue its views before the Palestinian public and 
before world public opinion.
    A second issue relates to United States-Israeli bilateral relations 
which have been strained during the past year. The Obama 
administration, and the President himself, need to do a better job of 
talking to the Israeli people. We need to explain our policies better, 
and we need to give Israelis a chance to see who our leaders are and 
how they think. Israelis need to feel confident that Americans will 
stand by Israel to assure its safety and well-being. At the same time, 
Israelis would be advised to dismiss the curious idea that Obama is not 
a friend of Israel's. He is, and he is a supporter of the idea of 
peace. Better dialogue and communications should remove this irritant 
from the atmosphere.
    Third, there is no reason for humanitarian stress to persist in 
Gaza or for the people of Gaza to suffer because of the misdeeds of 
Hamas. Both Israel and Egypt need to be encouraged to open Gaza's 
borders to necessary humanitarian relief and to the requirements of 
normal life, such as building materials and the like. Neither Israel 
nor Egypt needs to sacrifice its security interests in this regard, but 
they must apply those interests in a manner that don't further 
exacerbate the humanitarian distress of Gaza's population.
    Finally, there are two critical populations which have essentially 
been excluded from the peace process but whose views are critical for 
the process's success--namely, Israeli settlers and Palestinian 
refugees. There is little that the administration can do to persuade 
these constituencies of the long-term value of peace. But we can 
support Track II and people to people activities that encourage 
refugees and settlers to talk among themselves about these issues. Both 
of these communities need to move from the unrealities that they cling 
to and begin thinking about pragmatic outcomes that serve the best 
interests of their respective peoples.

                            ISRAEL AND SYRIA

    Before concluding, let me share one thought with respect to the 
situation between Israel and Syria. The ground truth on the Syria-
Israel front is equally complex but not a reason to avoid peacemaking. 
Syria continues to support terrorist groups, including Hezbollah, and 
has joined with Iran in threatening Israel's security and well-being. 
The Syrian alliance with Iran--which Syria argues helps to serve 
important Syrian interests--also poses challenges for the United 
States, for example with respect to Syrian behavior in Iraq and Syrian 
activities in Lebanon. Syria is also improving relations with Turkey at 
a time when Israeli-Turkish ties have become more complicated.
    However, there is no substitute for peace in breaking out of this 
negative downward spiral. At the Herzliya Conference several weeks ago, 
Defense Minister Barak emphasized that the failure to demarcate 
Israel's borders represents a bigger threat to Israel than Iran, and 
Barak warned against complacency in this regard lest the process of 
delegitimizing the State of Israel gain momentum.
    The time to act, therefore, is now. The four issues that divide 
Israel and Syria--borders, security, political relations and water--are 
not irresolvable. When the two sides last negotiated, indirectly under 
Turkish auspices, it was believed that further progress was made in 
narrowing differences.
    To be sure, I am not entirely persuaded that either party really 
wants to conclude negotiations, for the status quo, however fraught it 
is with the possibility of small actions escalating into large 
confrontations may be easier for both sides to handle than the ultimate 
concessions that would be necessary for peace. But this should be 
tested through quiet but sustained diplomacy. If it becomes clear that 
either or both are unwilling to proceed, then the United States can 
turn its attention elsewhere. Until that point, the Syrian-Israeli 
issues ought to figure prominently in our peace process strategy.

    The Chairman. Thank you very much. Very helpful, and 
obviously raises some questions. We'll come back.
    Dr. Malley.

 STATEMENT OF DR. ROBERT MALLEY, DIRECTOR OF MIDDLE EAST/NORTH 
   AFRICA PROGRAM, INTERNATIONAL CRISIS GROUP, WASHINGTON, DC

    Dr. Malley. Thank you, Mr. Chairman, members of the 
committee. Thank you for inviting me.
    In the 17 years since the peace process began in earnest at 
Oslo, there have been better times, and, as Ambassador Kurtzer 
said, there have been many worse times. I can't recall a time 
that was more complex, contradictory, and confusing. And the 
reason for that, I think, is that, since the last time that we 
were engaged in a genuine effort, a real diplomatic effort to 
achieve comprehensive peace--in 2000, at the time of the 
Clinton Parameters and of Taba--since that time, the ground 
beneath the peace process has changed and been transformed in 
radical ways.
    First of all, U.S. credibility, unfortunately, has 
decreased and diminished. And anyone who travels in the region 
hears that every day.
    Second, the entities, Palestinian and Israeli, have changed 
and have fragmented since the time that we were last involved, 
in the year 2000.
    Faith in the peace process, on both sides--there may be 
support for a two-state settlement, but belief in a two-state 
settlement, and even interest in plans, is waning in both 
Israel and on the Palestinian side.
    And finally, on the regional--in the regional landscape, 
we're seeing polarization, fragmentation between different 
camps, which is making it much harder to achieve a consensus on 
how to move forward.
    Now, U.S. efforts--and I agree with everything, Mr. 
Chairman, you said, and Senator Lugar, and Ambassador Kurtzer--
U.S. efforts need to be pursued. But, they have to adjust to 
these changing realities, and, so far, unfortunately, they 
haven't fully done so.
    Now, you've entitled the hearing, ``Ground Truths and 
Challenges Ahead,'' and I think that's the absolutely befitting 
title, because what we need to do is take a sober look at what 
the ground truths are today, what are these changes that have 
occurred over the last decade, and see how we adapt to them to 
overcome the challenges. And that's what I'd like to do now, 
just mention four areas in which I believe the situation has 
changed, and how we need to adapt.
    The first is waning U.S. credibility. We need to devise a 
policy that takes that into account and tries to restore our 
credibility. I think Ambassador Kurtzer just mentioned that 
what we need is a strategy that has a clear vision of what we 
want to accomplish, a realistic way of accomplishing it, and a 
strategy to deal with failure, in the event failure were to 
occur. That wasn't the case, so far, in the instance of the 
settlements policy, which serves as, sort of, a counterexample 
of what we ought to be doing, but now, if we're moving toward 
final status talks, then we need, at some point, as a number 
have already suggested, to put ideas on the table, but do it at 
a time when we actually think we could back them up, do it with 
international support, and do it in a way that will resonate 
both with the Israelis--Israeli and Palestinian publics.
    Senator Lugar, you asked about Tom Friedman's suggestion. 
My answer would be that certainly I wouldn't endorse it now, 
but if the United States were to put on the table clear 
principles for final status agreement--not an imposed solution, 
but just parameters--and one or both parties were to say no, it 
might then be time to reconsider our approach and tell them--
whichever party said no--that they have to reconsider their own 
position.
    Second, we need a policy that's going to take into account 
the changed political outlooks on both sides, what I call the 
dramatic loss of faith in the two-state settlement. These are 
not--it's not a personal issue. When President Abbas says he 
doesn't want to engage in direct negotiations, we may lament 
it, but this is the cry of the last true believer, on the 
Palestinian side, in negotiations. He is not expressing a 
personal view. What he's doing is, after long years of being a 
true believer, expressing a much more deeply held belief by the 
vast majority of Palestinians that talks at this point would be 
for naught. He is the most moderate expression of that deeply 
held and deeply entrenched collective disillusionment.
    Likewise, on the Israeli side, when Prime Minister 
Netanyahu calls for Palestinian recognition of a Jewish state, 
or when he calls for much more stringent security measures than 
had been in place--than had been contemplated, even in Taba or 
Camp David, these may be his personal thoughts, but they go 
well beyond. They express deep disillusionment on the Israeli--
on the part of the Israeli public, and the need that the 
Israeli public have today to believe that the Arabs truly 
recognize their right to exist as a Jewish state, and for 
security measures that would deal with the kind of 
unconventional threats that emerge in Gaza and South Lebanon. 
So, let's understand what we're dealing with, that these are 
deeply held popular views.
    The third adaptation we need is to adapt to the growing 
fragmentation in both Israel and Palestine, and the fact that 
dynamic groups have emerged that we are not really equipped to 
deal with. And, in fact, the peace process today is doing the 
least, and matters the least to those who can do the most to 
disrupt it. I'm talking about settlers and the religious right 
in Israel, and I'm talking about Islamists, the diaspora and 
refugees on the side of the Palestinians. We need a process 
that reaches out to them and that tries to address some of 
their concerns.
    Ambassador Kurtzer mentioned the question of Hamas. I'm not 
going to advocate engagement with Hamas; the time is not ripe. 
I'm not even saying that the United States, at this point, 
should openly promote Palestinian reconciliation. But, I would 
ask a simple question: Do we truly believe that a Palestinian 
national movement, as divided, fragmented, and unwieldy as it 
is today, is in a position to sign a historic agreement, to 
implement it, and to sell it to its people? I believe not. And 
so, I think we need a policy that at least does not object to 
efforts by Palestinians to come together.
    Fourth, and last, we need a policy that reflects and adapts 
to the changed regional landscape. Today, the Palestinians 
cannot make peace on their own. It's not clear whether they 
could have in the year 2000. Today, they're too weak, they're 
too fragmented, and too subject to foreign interference to do 
so.
    That brings me directly to the question of Syria. If we 
want to have peace between Israelis and Palestinians, I 
believe, today, moving toward peace between Israelis and 
Syrians is not an obstacle, it's a precondition.
    Bringing Syria in would do three things. First, it would 
provide cover to the Palestinians, and they need it. Second, it 
would provide a real incentive to Israelis, who would know that 
if they reach peace with Palestinians, Syrians, and Lebanese, 
they would get full recognition and normalcy with all Arab 
States, which is the real incentive. Much more than a piece of 
paper they would sign with the Palestinians. And third, if the 
Syrians were engaged and involved, and if progress was made 
toward peace, other actors in the region--Hamas, Hezbollah, and 
perhaps even Iran--would have to read the writing on the wall 
and adjust their own behavior.
    So far, the engagement with the Syrians has produced mixed 
results, as both sides see it. Both sides are disappointed. 
But, we shouldn't have the unrealistic expectation that Syria 
would break with Hamas, Hezbollah, or Iran, certainly not in a 
time of great uncertainty. What we ought to be doing is having 
a genuine conversation with the Syrians, a strategic 
conversation, on a blueprint for future bilateral relations, 
and doing everything we can to relaunch Israeli-Syrian talks.
    Finally, one word about Gaza. And, Mr. Chairman, you were 
there, and I think that was absolutely the right thing to do. 
And I would hope that members of the administration would visit 
Gaza, as well. It is a humanitarian and political catastrophe, 
both.
    I don't need to get into the details of the humanitarian 
situation, which you saw firsthand. But, politically, it is 
completely self-defeating. Yes, Hamas is being weakened in 
Gaza. We have people who work with the international crisis 
group, there, and they testified to Hamas's dwindling--dropping 
popularity. But, Hamas is not going away. It controls Gaza. And 
the more the siege remains, the more we're bringing up a 
generation of Palestinians who are going to be tempted by more 
radical forms of behavior. The economy is falling, in the hands 
of Hamas, because the private sector is being dried up. And who 
knows, if the situation continues, whether Hamas will be 
tempted with a new round of violence, which would bring to 
naught all our efforts on a peace process. So, we need a new 
policy toward Gaza, a more energetic policy that opens it up to 
normal trade and traffic. It's also in our interest. You were 
in Doha, Mr. Chairman. You know how Gaza has become the lens 
through which so many Arabs view United States policy.
    My recommendations, obviously, entail a long haul, revising 
our approach toward Israelis, Palestinians, and the region. 
There are no shortcuts, but I also think we have no choice, 
because our credibility and national interests are at stake.
    Thank you.
    [The prepared statement of Dr. Malley follows:]

 Prepared Statement of Dr. Robert Malley, Middle East and North Africa 
      Program Director, International Crisis Group, Washington, DC

    Mr. Chairman, first, let me express my appreciation to you for the 
invitation to testify before the Senate Foreign Relations Committee. In 
the 17 years since it was first launched, the peace process has gone 
through times that were better and through times that were worse, but 
none that were more complex, confusing, or contradictory as today. That 
is because of late so much that had been relatively stable--in terms of 
the character of local actors, shape of the regional landscape and 
assessment of the U.S. role--has undergone dramatic shifts. Only a 
handful of these recent transformations need mention: the death of 
Yasser Arafat, father of Palestinian nationalism, and incapacitation of 
Ariel Sharon, Israel's last heroic leader; Fatah's crisis; Hamas's 
electoral triumph and takeover in Gaza; the 2006 Lebanon and 2008 Gaza 
wars, which shook Israel's confidence and bolstered that of Islamist 
militants; the failure of the Abbas-Olmert talks; U.S. regional 
setbacks in Iraq and diplomatic disengagement elsewhere; Iran's 
increased influence; and the growing role of other regional players. 
This is not a mere change in scenery. It is a new world. As the ground 
beneath the peace process has shifted, U.S. efforts have yet to fully 
adjust.
    This hearing is entitled ``Ground Truths, Challenges Ahead,'' and 
there could not have been more fitting title. Only by taking a sober, 
honest look at where things stand today might we have an opportunity to 
overcome the challenges and begin to reshape the region in ways that 
serve our national interests.
    Mr. Chairman, at the outset it is important to acknowledge several 
stark, uncomfortable realities.
    Among Palestinians, the national movement, once embodied by Fatah 
and led by Arafat, is in deep crisis, weakened, fragmented, and without 
a compass. Fatah is divided, lacking a clear political program, prey to 
competing claims to privilege and power. Rival sources of authority 
have multiplied. Mahmoud Abbas is President, though his term has 
expired; he heads the PLO, though the organization's authority has long 
waned. Salam Fayyad, the effective and resourceful Prime Minister, 
cannot govern in Gaza and, in the West Bank, must govern over much of 
Fatah's objection. Hamas has grown into a national and regional 
phenomenon, and it now has Gaza solidly in its hands. But the Islamist 
movement itself is at an impasse--besieged in Gaza, suppressed in the 
West Bank, at odds with most Arab States, with little prospect for 
Palestinian reconciliation and with internal divisions coming to the 
fore. Meanwhile, diaspora Palestinians--once the avant-garde of the 
national movement--are seeking to regain their place, frustrated at 
feeling marginalized, angered by what they see as the West Bankers' 
single-minded focus on their own fate.
    Both symptom and cause of Palestinian frailty, foreign countries--
Arab, Western, and other--are wielding greater influence and in greater 
numbers. All of which leaves room for doubt whether the Palestinian 
national movement, as it currently stands, can confidently and 
effectively conduct negotiations for a final peace agreement, sell a 
putative agreement to its people, and, if popularly endorsed, make it 
stick. There is insufficient consensus over fateful issues, but also 
over where decisions should be made, by whom and how.
    To this must be added more recent travails: the Goldstone affair, 
which damaged President Abbas's personal credibility; the U.S. 
administration's course correction on a settlements freeze, which 
undercut Palestinian as well as Arab trust in America; and steps as 
well as pronouncements by the Israeli Government, which depleted what 
faith remained in Prime Minister Netanyahu.
    The backdrop, of course, is 17 years of a peace process that has 
yielded scant results, not a few of them negative, and has eroded 
confidence in negotiations as a means of achieving national goals. The 
Palestinian people, as much as its political elite, sees no real 
alternative option, and so for now will persist on this path. The 
acceptance of indirect talks, after some hesitation and after rejecting 
their direct version, is the latest indication. But the acceptance is 
grudging rather than heartfelt, and resigned rather than hopeful. They 
are hoping for guarantees now, a sense that talks will not last forever 
even as facts on the ground change in their disfavor.
    In far less pronounced fashion, Israel too has witnessed a 
fragmentation of its political landscape. Endemic government weakness 
and instability as well as deepening social splits have combined with 
the rise of increasingly powerful settler and religious constituencies. 
Together, these developments call into question the state's ability to 
achieve, let alone carry out, an agreement that would entail the 
uprooting of tens of thousands of West Bank settlers.
    Nor has disillusionment with the peace process been an exclusively 
Palestinian affair. Israelis too are losing hope; fairly or not, they 
read Abbas's rejection of former Prime Minister Olmert's offer as a 
sign that peace will remain elusive. Instead, they focus on the violent 
aftermaths of their withdrawal from South Lebanon and from Gaza; on the 
rise of militant forces in Palestine and throughout the region that 
reject their nation's very existence; on those groups' acquisition of 
ever more deadly and far-reaching weapons. Although still confident in 
their military superiority, Israelis have begun to doubt. The Lebanon 
and, to a lesser degree, Gaza wars were warning signs to a nation for 
whom the security establishment has from the start been a pillar of 
strength even amid political turmoil. The threat to Israel, real or 
perceived, from Iran, Hamas, and Hezbollah, supplants much else. 
Israelis are looking for security guarantees that take into account 
these broader regional shifts in any eventual agreement; they also are 
looking for signs of genuine acceptance of, rather than temporary 
acquiescence in, their existence.
    Political fragmentation has hit the regional scene as well and the 
balance of power has been one victim. So-called moderate Arab regimes 
on which the United States long relied no longer can dictate or expect 
compliance from their counterparts. They too have suffered from the 
peace process dead-end, the Lebanon war and the conflict over Gaza 
which exposed them to their people as impotent or, worse, on the wrong 
side of history. Increasingly, they appear worn out and bereft of a 
cause other than preventing their own decline and proving their own 
relevance. Gradually, they are being upstaged or rivaled by other, more 
dynamic players, states (such as Iran, Syria or, to a lesser degree, 
Qatar) or movements (most notably Hamas and Hezbollah). They still can 
carry the day--witness the Arabs' decision to back proximity talks. But 
they do so with greater difficulty and so with greater reservations, 
feeling the pressure of dissenters both domestic and regional.
    The final change, and one that arguably must concern us most, is 
the United States loss of credibility and influence. There are many 
reasons for this--setbacks in Iraq; Iran's rise; the failure of 
diplomacy in the 1990s and the disengagement from diplomacy in the 
decade that followed; and the unavoidable disappointment of 
unreasonably high Arab expectations coupled with the avoidable U.S. 
missteps that followed President Obama's election among others. The 
bottom line is that large numbers in the region wonder what the United 
States stands for and seeks to achieve and that--an evolution far more 
worrisome--growing numbers have begun not to care.
    U.S. peace efforts toward a two-state solution have a chance to 
succeed only if they take into account these profound alterations and 
adapt to them. They cannot assume that our credibility, the outlook, or 
nature of the Israeli and Palestinian polities, or regional dynamics in 
2010 are even remotely similar to what they were in 2000. In this 
sense, the fate of some of the administration's early efforts should 
serve as a warning sign.
    1. Any approach must take account of reduced U.S. credibility and 
influence while seeking ways to restore them. The first lesson, self-
evident but too often honored in the breach, is to define a clear and 
achievable goal, assess what actions are required--domestically, 
regionally, and internationally--to realize it and make sure there is a 
strategy to cope with the fallout in the event one or both parties 
resist. It means avoiding high stakes risks at a time when neither the 
United States nor the region can afford another high-level failure. It 
means avoiding raising expectations and allowing actions to speak for 
themselves. And it means working closely with others to increase our 
leverage.
    One particular idea that receives regular attention is for the 
United States to unveil a set of parameters that can serve as its terms 
of reference for negotiations--e.g., a Palestinian state on the 1967 
borders with one-to-one swaps; Jerusalem as the capital of two states 
based on demographic realities; a third party security presence in the 
West Bank. I believe the time for such an initiative almost certainly 
will come. It would not be a concession to either of the parties but 
rather the prudential step of a mediator seeking to narrow negotiation 
positions within realistic bounds; if such terms cannot be agreed upon, 
it is hard to see what purpose negotiations might serve or how they 
could possibly succeed. Nor would it be dictating a specific outcome so 
much as defining a zone of possible compromise, making clear to leaders 
on both sides what the United States believes to be a reasonable 
outcome, giving their publics something to debate and rally around, and 
suggesting the costs of forfeiting this chance. But this should be done 
only at the right moment, in the proper context. It should only be done 
with strong regional (especially Arab) and international backing. And 
it should be done only if the United States is prepared to deal with 
the prospect of either or both sides saying no.
    2. Our strategy must be mindful of, without being captive to, both 
sides' politics and the mutual, collapsing faith in the old plans and 
formulas. Mahmoud Abbas's refusal to engage in direct talks under the 
auspices of a more sympathetic and engaged administration was, seen 
from the United States, frustrating and puzzling almost to the point of 
incomprehension. Much of it was explained on account of his personal 
trauma--what the Goldstone humiliation meant to him and his close 
ones--and anxiety. Yet the impasse must be understood as going far 
beyond personal pique (though there is some of that) or the 
apprehensions of a single man (though he has a considerable amount of 
that too).
    Abbas's reaction is, above and beyond all, a reflection of an 
enormous popular disappointment in the process that began in 1993. He 
is, in a sense, the last true believer, holding out hope in the promise 
of a negotiations strategy of which, among his colleagues, he was the 
first and most ardent supporter. But even he could no longer ignore 
that he sits at the centre of three concentric circles of failure: 16 
years since the Oslo accords, 5 since he was elected President and 1 
since Barack Obama took office. And so it has become that much harder 
for him to justify or defend a process that is deprecated in Ramallah, 
whether to a skeptical population, to his Fatah movement or even to 
himself. His demands for a settlements freeze (prompted, he believes, 
by the U.S.), then for robust terms of reference are not a sign that he 
has given up on negotiations. They are a sign that he wants to enter 
them under conditions that, in his mind, offer a chance of success. It 
would be a mistake for us, or for Israel, to see Abbas as a temporary 
obstacle rather than as the more moderate expression of a deeply 
entrenched collective disillusionment.
    The same is true on the Israeli side. Benjamin Netanyahu can be 
maddening in his grudging acceptance of a two-state solution, numerous 
caveats, political maneuvering and foot-dragging. His coalition 
partners--a mix of right wing, xenophobic, and religious parties--
certainly complicate the path toward a peace agreement. But Netanyahu's 
insistence on Palestinian recognition of a Jewish state as much as his 
demands for far more stringent security--and thus, territorial--
arrangements--are not mere pretexts to avoid a deal and are far more 
than the expressions of a passing political mood. They reflect deep-
seated popular sentiment regarding the yearning for true Arab 
recognition and acceptance and fear of novel, unconventional security 
threats. New coalition partners or new elections might change the 
atmosphere. They are not about to change the underlying frame of mind. 
In short, we should no more underestimate how deep runs Palestinian 
skepticism than we should downplay how broadly Netanyahu's positions 
resonate.
    3. A successful strategy must reflect the changing nature--and 
increased fragmentation--of both Palestinian and Israeli politics. New 
actors and forces have emerged on both scenes. As a result, we need to 
find a way to reach out to skeptical constituencies that often are the 
most energized, the most dynamic and the most indifferent to talk of a 
two-state solution. These include settlers and religious groups on the 
Israeli side; the diaspora, refugees, and Islamists on the Palestinian. 
This will entail finding ways to communicate with them, but also to 
reflect some of their concerns in an eventual peace deal.
    Mr. Chairman, any talk of inclusiveness inevitably raises the 
difficult, controversial question of Hamas and how the United States 
ought to deal with it. I have long believed that the issue of direct 
U.S. engagement with the organization is a distraction, a diversion 
that prevents us from thinking clearly and rationally about a more 
basic issue--namely, whether we believe a politically and 
geographically divided Palestinian national movement is in a position 
to reach, implement, and sustain a historic deal.
    My view is that it cannot. By challenging President Abbas, Hamas 
can make it more difficult for him to resume direct negotiations. By 
resuming rocket attacks from Gaza, it can once again disrupt talks 
should they begin. By mounting a campaign in the territories and 
refugee camps, it can torpedo the chance of passage in a referendum, 
should a deal be reached. And, throughout--by its activities, rhetoric 
and presence in Gaza--it lowers the Israeli public's belief in peace. 
Hamas almost certainly has lost popular support and its freedom of 
maneuver in the West Bank has been sharply curtailed. But it remains a 
powerful political and military presence, with strong domestic backing 
and the capacity to act. Conventional wisdom has it that Hamas should 
be dealt with only once the peace process has shown significant 
progress; the theory neglects the Islamist movement's ability to ensure 
that it does not.
    It ought not to have escaped notice that, amid the flurry of 
discussions between Abbas and Olmert and then the drama surrounding the 
initiation of direct or indirect talks between Abbas and Netanyahu, 
some of the more practical, implicit arrangements and serious 
negotiations have been struck between Israel and Hamas--over Gaza for 
example, or the prisoners exchange. That does not mean that Hamas--any 
more than Fatah--can claim to represent the Palestinian people or speak 
on their behalf. It does not mean that the United States must deal 
directly with Hamas. And it does not mean that the United States should 
openly promote Palestinian unity, a Palestinian decision that they need 
to take themselves. But at a minimum, the United States should stop 
standing in the way of a possible reconciliation agreement and signal 
it would accept an accord to which President Abbas lent his name.
    4. A successful strategy must adapt to changing regional dynamics. 
The Middle East is far more polarized and decentralized than a decade 
ago and our traditional partners no longer have the power they once had 
to carry the region with them. With too many actors able and willing to 
intervene, an Israeli-Palestinian track cannot proceed on its own, let 
alone succeed on its own.
    Syria is not a central or perhaps even decisive actor in the 
Israeli-Palestinian conflict. But it undoubtedly is a crucial one, and 
its importance has risen as the regional landscape has changed. In 
particular, its allies--Hamas and Hezbollah--have gained considerable 
power. Damascus can take on a spoiling role or a stabilizing one. It 
can facilitate Middle East peace or retard it. How United States-Syrian 
relations evolve will go a long way toward determining what part the 
Syrian regime ultimately chooses to play.
    Improved relations between the United States and Syria as well as a 
resumption of Israeli-Syrian peace talks are, in this respect, of 
critical importance. It used to be feared that movement on the Syrian 
track would impede progress on the Palestinian one. No more. There are 
several reasons. On its own, an agreement between Israel and the 
Palestinians, but without agreement with Syria or Lebanon, would not 
produce peaceful relations between Jerusalem and the rest of the Arab 
world. Without Syria, in other words, the most powerful incentive for 
Israelis to make the compromises required for a peace deal--recognition 
and normalcy--would be lacking. Nor would Syria see any reason to 
discourage its allies in Palestine from undermining the deal or 
Hezbollah from maintaining military pressure in the north. In other 
words, the benefits for Israel of a Palestinian deal are partial and 
political costs are high. A comprehensive accord, by contrast, would 
magnify the payoff: Arab States would establish normal relations with 
Israel; Hezbollah and Hamas would have to readjust their stance; even 
the Iranian leadership would be compelled to adapt.
    Progress on the Syrian track also would bolster the Palestinians' 
ability to move in their talks. Palestinians need Arab backing and 
cooperation to legitimize compromises, most notably on issues that are 
not strictly Palestinian--the status of Jerusalem or the fate of the 
refugees--and for which Damascus's acquiescence would make a 
difference. This is all the more true given the state of Palestinian 
politics, weak, divided and susceptible to outside interference. Should 
Syria feel excluded, it could undermine the accord and mobilize its 
allies to do the same.
    Finally, U.S engagement with Syria could be put to use to seek to 
establish new redlines between Israel and Hezbollah. The border between 
Israel and Lebanon might seldom have been calmer, but the threshold for 
renewed--and large-scale confrontation--rarely has been lower.
    To date, the Obama administration's experience with the Syrian 
regime has left many doubtful. Despite signs of engagement, including 
high level visits and the decision to dispatch an ambassador, 
Washington sees little evidence of reciprocity. To the contrary, it 
sees are signs of deepening ties to Hezbollah and Iran and, most 
recently, opposition to indirect Israeli-Palestinian talks.
    It was always to be expected that engagement with Syria would be an 
arduous, painstaking affair; prospects remain uncertain. But to judge 
results at this stage or on the basis of its ties to traditional allies 
is to misunderstand the regime and how it makes its decision. Syria 
itself sees little of value emerging from the first 14 months of the 
administration--continued sanctions; repeated calls for it to sever 
ties to reliable allies; paralysis on the peace process; and lack of 
cooperation on regional issues.
    There is a broader point. In Western capitals as well as in Israel, 
considerable time and energy is spent on the question whether Syria is 
genuinely interested in a peace deal; whether it would be prepared to 
fundamentally shift is strategic orientation--shorthand for cutting 
ties to current allies; and, if so, what it might take (returning the 
Golan, neutralizing the international tribunal on the murder of former 
Lebanese Prime Minister Hariri, lifting U.S. sanctions, or providing 
vast economic support) to entice Damascus to make that move.
    At its core, the question is ill-directed and the conceptual 
framework underpinning it is flawed. However much Syria aspires to 
these political or material returns, and notwithstanding the importance 
it places on the bilateral U.S. relationship, the key for the regime 
relates to its assessment of regional trends, domestic dynamics as well 
as the interaction between the two. The end result is a debilitating 
perceptions gap: whereas outsiders ponder how far Syria might be 
willing to go in helping reshape the region, Damascus considers where 
the region is headed before deciding on its next moves. What Washington 
can do for Damascus matters; what it can do in and for the region may 
matter more.
    The temptation in Washington so far has been to test Syrian 
goodwill--will it do more to harm the Iraqi insurgency, help President 
Abbas in Palestine, loosen ties to traditional allies or stabilize 
Lebanon? On its own, that almost certainly will not succeed. The United 
States is not the only one looking for evidence. So too is Syria--for 
proof that the risks it takes will be offset by the gains it makes. The 
region's volatility drives them to caution and to hedge their bets 
pending greater clarity on where the region is heading and, in 
particular, what Washington will do.
    Ultimately, we do not know how far the Syrian leadership can or 
will go. It likely will make up its mind only when it deems it 
absolutely necessary--when it is faced with a concrete and attractive 
alternative strategic role in the region and peace offer. Today, 
Syria's incentives--strategic, economic, and social--to adjust its 
posture and policies are high but uncertain; the risks are profound and 
tangible. In particular, as long as the current situation of neither 
peace nor war that defines Syria's relations with Israel endures, 
Damascus most likely will seek to maintain--and play on--the 
multiplicity of its relations and will continue to use its ties to 
Hezbollah, Iran, and Hamas to provide it with what it considers a form 
of leverage and deterrence. For Washington, the challenge was and 
remains to adopt regional and bilateral policies that help Syria's 
calculations in the right direction.
    One thing is clear: Syria will be careful not to move prematurely 
and risk alienating current allies without at a minimum having secured 
complementary ones (regional or international). In this sense, Syria's 
ability to adjust its strategic stance also will be, in part, a 
function of its allies' situation and perceptions at the time. The more 
Iran, Hezbollah, or Hamas feel pressured, the more they interpret 
Syrian moves as betraying them at a critical juncture, the harder it 
will be for Damascus to display signs of greater autonomy or distance 
from them. As a result, the more Syria's historic partners are 
embattled and the United States clamors for a break between Syria and 
them, the more Damascus will redouble signs of loyalty toward them. The 
recent summit meeting between Presidents Assad and Ahmadinejad, and the 
highly dismissive tone adopted toward the United States are exhibit A.
    Because sanctions will not be lifted until Syria changes its 
relations with its allies and because Syria will not modify these 
relations in the absence of far more substantial regional changes, a 
wiser approach would be for the United States and Syria to explore 
together whether some common ground could be found on specific issues 
and work on a blueprint for their relationship. If successful, this 
could provide a more realistic test of both sides' intentions, promote 
their interests and start shaping the Middle East in ways that can 
reassure Syria about what the future holds. On Iraq, Damascus may not 
truly exercise positive influence until genuine progress is made toward 
internal reconciliation. The United States could push in that 
direction, test Syria's reciprocal moves and, together with the Iraq 
Government, offer Damascus the prospect of stronger economic relations 
with its neighbor. In Palestine, Syria claims it can press Hamas to 
moderate its views but again only if there is real appetite in the 
United States for an end to the internal divide. Likewise, both 
countries could agree to try to immunize Lebanon from regional 
conflicts and push the state to focus on long-overdue issues of 
governance. Given the current outlook and suspicion in Damascus and 
Washington, these are all long shots. But, with little else in the 
Middle East looking up, it is a gamble well worth taking.
    One cannot conclude an overview of the situation in the Middle East 
without warning about real and potential flashpoints, either one of 
which risks steering the region in unpredictable--but predictably 
perilous--directions. There are many--the explosive situation in 
Jerusalem is one, the tense situation on Israel's northern border 
another--but I will focus briefly on one.
    Mr. Chairman, you have visited Gaza recently and so there is no 
need to describe the appalling humanitarian conditions of a population, 
40 to 60 percent of whom are unemployed, in excess of that living 
beneath the poverty level. Israel has legitimate security concerns; it 
also has an interest in obtaining the release of Corporal Shalit, held 
in captivity in Gaza for over 1,300 days.
    But to inflict collective punishment on the people of Gaza is both 
morally unconscionable and politically self-defeating. Hamas has lost 
backing as a consequence of the siege, it is true, but at what price 
and to what end? It is nowhere nearer losing control over Gaza and 
elections are nowhere in sight. The end of all legal commerce and 
flourishing of a tunnel-based economy is destroying the business class 
and granting more power to those who currently hold it. A generation of 
Gazans is being brought up knowing nothing but want and despair. 
Hamas--although hardly eager for renewed confrontation after Operation 
Cast Lead--might soon conclude its best bet is to provoke a new 
escalation in order to break out of its current impasse. Arab public 
opinion, which harbored such high expectations for President Obama, 
increasingly is viewing U.S. policy through the lens of Gaza's ordeal 
and Washington's seeming obliviousness to this plight.
    It is hard to see how any of this is good for Israel's security or 
U.S. national interests. There are options for opening Gaza up to 
normal trade--through Israel, through Egypt, or by sea--in ways that 
meet Israel's legitimate security concerns. We should press for them 
and help put them into place.
    Mr. Chairman, at the dawn of this new Presidency, my colleague 
Hussein Agha and I wrote: ``so much of what the peace process relied 
upon has been transfigured. It was premised on the existence of two 
reasonably cohesive entities, Israeli and Palestinian, capable of 
reaching and implementing historic decisions, a situation that, today, 
is in serious doubt; continued popular faith and interest in a two-
state solution, which is waning; significant U.S. credibility, which is 
hemorrhaging; and a relatively stable regional landscape, which is 
undergoing seismic shifts.''
    The challenge for the administration is to devise a strategy that 
strives for our traditional goals but in a radically transformed 
environment. It will take persistence and flexibility, determination 
and creativity, a retooled approach toward local parties and the 
region. It likely will take time. There are no shortcuts. There is no 
choice.

    The Chairman. Thank you very much, Dr. Malley.
    Dr. Asali.

STATEMENT OF DR. ZIAD ASALI, PRESIDENT, AMERICAN TASK FORCE ON 
                   PALESTINE, WASHINGTON, DC

    Dr. Asali. Mr. Chairman, Senator Lugar, I wish to thank you 
and the esteemed members of your committee for the privilege of 
testifying before you.
    The situation facing Israel, the Palestinians, and all 
other interested parties, especially the United States, is 
difficult, but it also presents new opportunities. I'm 
confident that negotiations will resume soon with measures in 
place to maximize the possibility of success.
    Yesterday's Arab League's decision facilitates Special 
Envoy Mitchell's efforts to bring the parties together. 
Proximity talks, regional cooperation, and more constructive 
rhetoric by the parties will all help. But, past experience 
should temper our expectations for the immediate future.
    The PA has initiated an important innovation with regard to 
Middle East peace: the program issued last August by Prime 
Minister Fayyad under the leadership of President Abbas. 
Palestinians plan to build the institutional, infrastructural, 
and economic foundations of their states while under 
occupation, to end the occupation. All parties, including 
Israel, say it is their intention to realize a two-state 
solution.
    The Palestinians are taking up the responsibilities of 
self-government as they continue to insist on the right of 
self-determination. In extemporaneous remarks at the Herzliya 
conference last month, Fayyad explained this, and the Israeli 
leadership applauded. He addressed accusations of unilateralism 
by noting that only Palestinians can build up their own state. 
It must be clearly stated that the Palestinian state can only 
be established through a negotiated agreement. The Israeli 
establishment, that understands that a peace agreement with the 
Palestinians is a strategic imperative, should recognize this 
program as a serious pathway to that end. And there should be 
no doubt about the negative strategic consequences of thwarting 
it.
    Institution-building is not a substitute for diplomacy. 
They support each other. The PA innovation is to add a bottom-
up approach, based on palpable achievements, to top-down 
diplomacy. Convergence between these two will result in a 
mutually reinforcing dynamic toward peace.
    At the heart of the state-building enterprise are the new 
Palestinian security forces. The restoration of law and order 
and increased security cooperation, along with Israel's removal 
of several checkpoints, has led to an economic upturn in the 
West Bank. This demonstrates what Palestinians can accomplish 
and how Israeli concerns can be overcome, given appropriate 
levels of coordination, international aid, technical support, 
and sustained political engagement. It is vital that 
Palestinian security forces are allowed access and mobility. 
Israeli incursions undermine the legitimacy and effectiveness 
of these forces as state-builders. Despite the harsh realities 
of life under the occupation, conditions have improved under--
areas in--under PA control. But, significant challenges remain.
    Last week tensions were raised by Israel's decision to add 
holy sites in the occupied territories to its international 
heritage registry. Continued settlement activity, 
confrontations in East Jerusalem, excavations near holy sites, 
evictions of Palestinian families, travel and visa 
restrictions, belligerent conduct by extremist settlers, and 
sporadic violence by individual and organized Palestinian 
extremists, all undermine the viability and credibility of 
negotiators and negotiations. In this context, I acknowledge 
Prime Minister Netanyahu's intervention to defuse a crisis over 
building plans in Silwan.
    The situation in Gaza is dire. Israel's blockade has 
produced a humanitarian tragedy without weakening Hamas 
control. Isolation helps Hamas increase its hold on the long-
suffering people of Gaza, and to create a totalitarian 
theocracy that systematically takes over civil society and 
harasses international NGOs, the very organizations best placed 
to lead the reconstruction effort. In short, the people suffer 
while Hamas benefits politically from this unconscionable 
blockade. I strongly recommend that reconstruction commence 
soon, and that legal and orderly operations of the crossings be 
resumed.
    I also call for ending the frankly mystifying and 
counterproductive pattern of Israel preventing Gaza students 
from traveling to study abroad.
    I commend Congress for the substantial aid it provided to 
the Palestinians last year. This positive trend needs to be 
expanded by offering the necessary financial and political 
support for the PA to successfully pursue the state- and 
institution-building program. This is not simply a development 
project, it is a serious political program that advances a key 
American national interest. I believe that this program should 
be funded by Congress, and that the United States Government 
should lead others to fund and support it, as well. I look 
forward to Special Envoy Mitchell's enlisting necessary 
partners to achieve coordinated political, economic, and 
security progress.
    The United States is the indispensable partner that can 
bring all parties to negotiations and agreement. And in this, I 
see the answer to Tom Friedman's suggestion. The United States 
is the indispensable partner that can neither outsource this 
issue, nor can let anybody else handle it alone. The regional 
alliances needed to be formed, considering the challenges of 
this year and next year, can only be dealt with by a 
coordinated effort through the United States diplomacy.
    I thank you for the opportunity and look forward to 
answering questions.
    [The prepared statement of Dr. Asali follows:]

Prepared Statement of Dr. Ziad J. Asali, President, American Task Force 
                      on Palestine, Washington, DC

    Mr. Chairman, I wish to thank you and the committee's esteemed 
members for the privilege of testifying before you. The bipartisan 
leadership of this committee has for many years been a bulwark for all 
those seeking peace and compromise in the Middle East.
    The situation facing Israel, the Palestinians and all other 
interested parties, especially the United States, is difficult but also 
presents important new opportunities for moving forward.
    I am confident that negotiations will resume soon, with the 
appropriate measures in place to maximize the possibility of success 
and minimize the consequences of stalemate. Yesterday's Arab League 
decision will facilitate Special Envoy George Mitchell's efforts to 
bring the parties together in the near future. Proximity talks and 
regional cooperation will all be helpful in resuming negotiations.
    It is also extremely important that the parties employ more 
constructive, positive messaging aimed at each other and their own 
constituencies, and avoid incitement and provocative, belligerent or 
counterproductive rhetoric. Words matter. It is unacceptable for 
officials and political figures on either side to pander and try to 
score cheap debating and political points at the expense of 
jeopardizing the serious effort to resume the negotiations and to end 
the conflict. There should be political consequences, short of 
censorship, for individuals and organizations on both sides that engage 
in provocative and belligerent rhetoric. We strongly encourage the 
United States Government to pay more attention to this serious problem, 
and to become more engaged in public diplomacy on Middle East peace.
    In addition to the vital diplomatic track, the Palestinian 
Authority has initiated the most important innovation in many years 
with regard to Middle East peace: the program of the 13th Palestinian 
Government issued last August by Prime Minister Salam Fayyad and his 
Cabinet, under the leadership of President Mahmoud Abbas. The plan is 
for Palestinians to build the institutional, infrastructural, economic 
and administrative framework of their state in spite of the occupation 
with the intention of ending the occupation. All parties, including 
Israel, say it is their intention to realize the two-state solution. By 
adopting this program, Palestinians are taking up the responsibilities 
of self-government as they continue to insist on the right of self-
determination.
    The document, entitled ``Palestinian National Authority: Ending the 
Occupation, Establishing the State,'' \1\ affirms that, ``The 
establishment of an independent, sovereign, and viable Palestinian 
state is fundamental for peace, security, and stability in our 
region,'' and pledges that, ``Palestine will be a peace-loving state 
that rejects violence, commits to coexistence with its neighbors, and 
builds bridges of cooperation with the international community. It will 
be a symbol of peace, tolerance and prosperity in this troubled area of 
the world.''
---------------------------------------------------------------------------
    \1\ ``Palestine: Ending the Occupation, Establishing the State.'' 
Palestinian National Authority. Aug 2009. Accessed 1 March 2010. 
.
---------------------------------------------------------------------------
    Prime Minister Fayyad explained this policy at the annual Herzliya 
security conference in Israel a few weeks ago. His extemporaneous 
remarks reflected his determination and the logic of these policies, 
and the Israeli political and security leadership in attendance 
applauded. He addressed the charge that this program is inadmissible 
because it is unilateral by pointing out that only Palestinians can 
build their own state and develop their society. This has to be a 
Palestinian program. It has to be conceived by the Palestinians and 
coordinated by a Palestinian central nervous system in order to channel 
global donor assistance in a purposeful and meaningful way that has 
political and economic coherence and impact. The Prime Minister cited 
numerous examples of what this means in practice, including more than 
1,000 community development projects that have already been completed, 
the implementation of a transparent and accountable public finance 
system, the creation of the nucleus of a Palestinian central bank and 
the performance of the new Palestinian security services.
    It must be clearly stated that the actual establishment of a state 
can only be the consequence of a negotiated agreement based on the 1967 
borders. The Israeli national security establishment that understands 
that a peace agreement with the Palestinians is a strategic imperative 
should recognize this program as a serious pathway to that end. As 
Israeli Defense Minister Ehud Barak noted here in Washington just last 
week, ``A successful peace process--especially with the Palestinians--
is not just in the interest of Israel. It is a compelling imperative 
for the state of Israel. And that's why I say it's the uppermost 
responsibility of any Israeli Government. Not as a favor to the 
Palestinians, but out of our own interests--out of strength and without 
compromising our security.'' \2\ Therefore Israel too has a vital 
interest in the success of the Palestinian state and institution 
building project. And there should be no doubt about the consequences 
of thwarting it. That would play into the hands of extremists 
throughout the region and beyond, and promote and accelerate the 
process of radicalization. Indeed, it would have a powerful negative 
impact on the strategic balance in the region.
---------------------------------------------------------------------------
    \2\ Barak, Ehud. ``Unedited Transcript,'' The Washington Institute 
for Near East Peace. Washington DC. 26 Feb 2010. Accessed 1 March 2010. 
.
---------------------------------------------------------------------------
    The state and institution building program is not a substitute for 
diplomacy, it compliments and supports it. The PA innovation is to add 
a bottom-up approach to the top-down diplomatic track, adding 
substance, credibility and political momentum based on concrete, 
palpable achievements that are especially important when diplomacy 
seems to be moving too slowly. What is needed is convergence between 
the bottom-up and top-down approaches. Strategically significant, 
positive, changes on the ground and diplomatic progress should be 
mutually reinforcing.
    However, the Palestinians will not be able to fully realize this 
ambitious and potentially transformative program on their own. It will 
require a sustained global effort to provide the PA with the financial 
and technical support and the sustained political engagement that will 
be required for it to succeed. The Obama administration, the Middle 
East Quartet, Arab Governments and the Israeli Government all have a 
stake in the creation of a Palestinian state. Now is the time for them 
to act.
    In January 2010 the Ministry of Finance and the Ministry of 
Planning and Administrative Development issued a new budget document, 
``Palestine: Moving Forward, Priority Interventions for 2010,'' \3\ 
which spells out priorities for the Palestinian Government in the 
coming year, and includes cost estimates and funding status. The 
document lists the following priorities:
---------------------------------------------------------------------------
    \3\ ``Palestine: Moving Forward, Priority Interventions for 2010.'' 
Palestinian National Authority. Jan 2010. Accessed 1 March 2010. 
.

   Finalize the building of central and local government 
        institutions that are essential to the establishment of a 
        modern and sovereign State of Palestine on the June 1967 
        borders.
   Upgrade public service delivery to all citizens throughout 
        the Palestinian territory occupied in June 1967.
   Launch major projects to build strategically significant 
        infrastructure throughout the Palestinian territory occupied in 
        June 1967.
   Improve and promote the image of Palestine internationally 
        and the role which the State of Palestine will play in bringing 
        stability and prosperity to the region.

    Building on the August 2009 Cabinet document, this detailed 
financial agenda is a clear guide to what the Palestinian Government 
seeks to accomplish in 2010 and how this can be supported financially, 
technically and politically by all those seeking to promote peace based 
on the creation of a Palestinian state alongside Israel.
    The program is ambitious, but those who closely follow events on 
the ground in the occupied West Bank will know that projects are 
already under way and things are beginning to happen in both the public 
and private sectors. Public/private partnerships are also being 
developed with international support. The U.S. Overseas Private 
Investment Corporation and the nonprofit Middle East Investment 
Initiative, together with U.S., international and Palestinian partners, 
have established a loan guarantee program that is helping to generate 
$228 million in lending to small- and medium-sized Palestinian 
businesses; are launching a half-billion dollar lending facility that 
will provide Palestinians living in the West Bank with access to 
affordable mortgages for home ownership; and are creating a risk 
insurance product to protect Palestinian businesses against losses 
resulting from trade disruption and political violence. The Palestine 
Investment Fund concentrates on placing new strategic investments in 
Palestine, including companies such as PALTEL, PADICO, Palestine 
Electricity Company, the Palestine Commercial Services Company, the 
Arab Palestinian Investment Company, and Salam International Investment 
Limited. Its current major projects include the $200 million Ersal Land 
Development Project to develop a new commercial center in the heart of 
the Ramallah-Al-Biereh Metropolitan Area, the PIF Housing Program which 
aims at developing 30,000 housing units in all of Palestine during the 
next 10 years beginning with the Al-Reehan neighborhood of northern 
Ramallah, and the Wataniya Palestine Mobile Telecommunications Company. 
The first planned Palestinian city in the West Bank, Rawabi, is 
underway. The Palestinian Investment Promotion Agency will be hosting 
the 2nd Palestine Investment Conference on June 2-3, 2010 in Bethlehem, 
entitled ``Investing in Palestinian Small and Medium Businesses: 
Empowerment of SMEs.''
    However, in spite of these important public and private initiatives 
and partnerships, the PA budget document contains too many line items 
that are either unfunded or have funding pending.
    Conditions in the occupied West Bank remain difficult, with 
restrictions imposed by Israel's occupation that limit the ability of 
Palestinians to have a normal life and that complicate state and 
institution building and economic development. The problem of access is 
improved but not yet resolved. Travel restrictions include onerous 
required permits and military closures. Checkpoints, though 
significantly reduced, continue to add to unpredictability and delay in 
travel. Israeli-only highways which Palestinians are not allowed to 
approach are a further restriction. In a recent and welcome decision in 
December 2009, Israel's High Court ruled that Palestinians should no 
longer be prevented from access to Israeli Highway 443 that runs 
through the occupied West Bank.\4\ Finally, Israel's West Bank 
separation barrier cuts many Palestinians off from each other and, in 
some cases, their relatives and even their own privately owned land.
---------------------------------------------------------------------------
    \4\ Zarchin, Tomer, ``High Courts Allows Palestinians To Use 
Israeli highway,'' Haaretz.com. 29 Dec. 2009. Accessed 1 March 2010. 
.
---------------------------------------------------------------------------
    The occupation involves significant disparities in resources and 
social services provided to settlers and Palestinian residents. 
Settlers are Israeli citizens living under Israeli civil law, with all 
the rights and protections accruing from that status. Palestinians in 
the occupied territories are not citizens of any state, and are dealt 
with by Israeli authorities through civil administration regulations 
that are separate from Israeli civil law. Such disparities are too 
numerous to list in this written testimony. But these fundamental 
realities define the hardships of daily life under the occupation and 
demonstrate the moral and political necessity of Palestinian statehood.
    Despite these harsh realities, conditions have been improving in 
the areas under PA control. At the heart of the state-building 
enterprise are the new Palestinian security forces. Their restoration 
of law and order and coordination with Israeli authorities, along with 
Israel's removal of several checkpoints, has led to an economic upturn 
in the West Bank. This model demonstrates what Palestinians can 
accomplish, and how Israeli concerns can be overcome, given appropriate 
levels of coordination, international aid, technical support and 
sustained political engagement, and this process can be repeated in 
sector after sector. It is vital that Palestinian security forces are 
allowed access and mobility. Israeli incursions undermine the 
legitimacy and effectiveness of these forces as state builders.
    The most recent State Department Country Report on Terrorism noted 
that, ``In the West Bank, PA security forces (PASF) followed up on 
efforts to establish law and order and fight terrorist cells with 
security deployments to Jenin, Bethlehem, and Hebron. All observers, 
including Israeli security officials, credited PASF with significant 
security improvements across the West Bank.'' \5\ Dov Weissglas, a 
former senior advisor to Prime Minister Ariel Sharon, noted that the 
new Palestinian security forces ``are efficient, disciplined and 
determined, they have good working relations and coordination with 
their Israeli counterparts and their performance is immeasurably better 
than it was in the past.'' \6\
---------------------------------------------------------------------------
    \5\ United States State Department, ``Country Reports on Terrorism 
2008,'' Office of the Coordinator for Counterterrorism. 30 Apr. 2009. 
Accessed 1 March 2010. .
    \6\ Weissglass, Dov, ``Working with the PA,'' Yedioth Ahronoth 29 
Dec. 2009. Accessed 1 March 2010. .
---------------------------------------------------------------------------
    But significant challenges remain, and a number of Israeli actions 
in the occupied territories are complicating both the situation on the 
ground and the prospects for renewed, successful negotiations. 
Belligerent conduct by extremist settlers, confrontations in occupied 
East Jerusalem, and travel and visa restrictions, along with sporadic 
violence by both individual and organized Palestinian extremists, 
undermine the viability and credibility of negotiators and 
negotiations.

   New claims on holy sites in the occupied West Bank: Last 
        week tensions were raised by Israel's decision to add holy 
        sites in the occupied West Bank to its national heritage 
        registry. On February 21, 2010, Prime Minister Netanyahu 
        announced that Rachel's Tomb/Bilal ibn Rabah Mosque in 
        Bethlehem and the Tomb of the Patriarchs/Al-Haram Al-Ibrahimi 
        in Hebron would be included in an Israeli-government $107 
        million ``national heritage'' restoration program.\7\ Both 
        sites are considered holy by both Jews and Muslims. The U.N. 
        and several European countries expressed serious concerns about 
        the move, and State Department official Mark Toner called it 
        ``provocative.'' \8\ Anger about the announcement, combined 
        with the commemoration of the 1994 massacre of 29 Palestinian 
        worshipers at a mosque by the Israeli settler Baruch Goldstein, 
        led to significant clashes between Palestinian protesters and 
        Israeli troops in Hebron and other West Bank cities over 
        several days last week.\9\
---------------------------------------------------------------------------
    \7\ Mitnick, Josh, ``Israel Names Two Biblical Tombs in West Bank 
Heritage Sites,'' The Christian Science Monitor. 23 Feb. 2010. Accessed 
1 March 2010. .
    \8\ ``Hebron Clashes Over Israel's West Bank Heritage List,'' BBC 
News. 26 Feb. 2010. Accessed 1 March 2010. .
    \9\ Berger, Robert, ``Israeli Troops Clash With Palestinians in 
Biblical Hebron,'' Voice of America News. 26 Feb. 2010. Accessed 1 
March 2010. ; see 
also Mitnick, Joshua, ``Israeli Settlement Freeze Shields Dismantling 
of Illegal Outposts,'' The Christian Science Monitor. 11 Dec. 2009. 
Accessed 1 March 2010. .
---------------------------------------------------------------------------
   Continued settlement activity: Settlement activity is 
        continuing, especially in and around occupied East Jerusalem, 
        in spite of the partial moratorium, both by the Israeli 
        Government's own admission and according to numerous credible 
        reports from NGOs, journalists and others. The Israeli 
        Government itself has identified 28 \10\ settlements that are 
        continuing construction in defiance of the partial moratorium, 
        and the Israeli NGO Peace Now has said the actual number is 
        33.\11\ This does not include areas specifically excluded from 
        the partial moratorium, including Jerusalem in which hundreds 
        of new settlement housing units are planned.\12\ State 
        Department spokesman Philip Crowley said the recent approval of 
        600 new settler housing units in the Pisgat Ze'ev neighborhood 
        of occupied East Jerusalem is ``counterproductive and 
        undermines trust between the parties.'' \13\ A February 2010 
        report by Chatham House warns that, ``The settler-driven 
        entrenchment of the Israeli Government in East Jerusalem is 
        reaching the point at which a peaceful division of the city 
        between Israel and a future Palestinian state may no longer be 
        possible.'' \14\ A March 2010 study by the Applied Research 
        Institute--Jerusalem found that ``during the years 2006 and 
        2009, Israel escalated its settlements construction activities 
        in the Occupied Palestinian Territories, particularly in and 
        around East Jerusalem, in an attempt to change realities on the 
        ground.'' \15\ On January 7, 2010, Defense Minister Barak 
        issued additional construction exemptions easing restrictions 
        even in areas where the moratorium does apply.\16\ Moreover, 
        data compiled by Brigadier General (res.) Baruch Spiegel on 
        behalf of the Israeli Ministry of Defense reportedly 
        demonstrates that about 75 percent of all Israeli settlement 
        construction has been carried out either without the 
        appropriate permits or in violation of permits that were issued 
        by the government.\17\ This suggests that historically and 
        typically, settlement activity has proceeded outside of the 
        control of formal Israeli government regulations. The database 
        also reportedly confirms that at least 30 percent of Israeli 
        settlements are built on privately owned Palestinian land. None 
        of the data cited above includes so-called ``illegal 
        outposts,'' which further complicate the problem, many of which 
        are not being dismantled by the Israeli authorities.\18\ 
        According to a report in the Israeli newspaper Ha'aretz just 2 
        days ago, ``Under the cover of the partial and temporary 
        freeze, the outposts are putting down deeper roots.'' \19\ In 
        another troubling move, in December 2009 the Israeli Government 
        added many settlements throughout the occupied territories to 
        the list of ``national priority areas,'' providing Israelis 
        with special benefits and incentives to stay in or move to 
        these settlements.\20\
---------------------------------------------------------------------------
    \10\ Levinson, Chaim, & Haaretz Service, ``Defense Ministry Reveals 
West Bank Settlement Freeze Abuses,'' Haaretz.com. 15 Feb. 2010. 
Accessed 1 March 2010. .
    \11\ Ofran, Hagit, ``Ministry of Defense Acknowledges: One Quarter 
of all Settlements Breached the Settlement Freeze'' Peace Now. February 
2010. Accessed 1 March 2010. .
    \12\ Hasson, Nir, ``Israel Planning To Build 600 More Homes in East 
Jerusalem,'' Haaretz.com. 26 Feb. 2010. Accessed 1 March 2010. .
    \13\ ``U.S. Slams New East Jerusalem Homes,'' Ynetnews.com. 3 Feb 
2010. Accessed 1 March 2010. .
    \14\ Dumper & Pullan, ``Jerusalem: The Cost of Failure,'' Chatham 
House. Feb 2010. Accessed 1 March 2010. .
    \15\ Isaac & Khalilieh, ``Jerusalem Governorate: Israeli Occupation 
Practices in Jerusalem Governorate,'' Applied Research Institute-
Jerusalem (ARIJ). 2 March 2010.
    \16\ Levinson, Haim, ``6 Weeks Into Settlement Freeze, Barak Eases 
Restrictions,'' Haaretz.com. 8 Jan. 2010. Accessed 1 March 2010. 
.
    \17\ Blau, Uri ``Secret Israeli Database Reveals Full Extent of 
Illegal Settlement,'' Haaretz.com. 1 Feb. 2009. Accessed 1 March 2010. 
.
    \18\ Mitnick, ``Israeli Settlement Freeze Shields Dismantling of 
Illegal Outposts.'' 2009. Accessed 1 March 2010.
    \19\ Eldar, Akiva, ``Supreme Court Abetting, Not Curbing, Illegal 
Settlements,'' Haaretz.com. 2 March 2010. Accessed 2 March 2010. 
.
    \20\ Ravid, Barak, ``Netanyahu Extends Benefits to Isolated West 
Bank Settlements,'' Haaretz.com. 9 Dec. 2009. Accessed 1 March 2010. 
.
---------------------------------------------------------------------------
   Excavations near holy sites: Archaeological excavations 
        conducted by the Israeli Government in the occupied 
        territories, especially in the so-called ``Holy Basin''--the 
        area of and surrounding the Old City of occupied East 
        Jerusalem--are another significant source of anxiety and 
        tension. Excavations beneath the Mugrabi Gate,\21\ underneath 
        the ``Isaac's Tent'' structure which is adjacent to the Temple 
        Mount/Haram al-Sharif,\22\ and underneath Palestinian homes in 
        the Silwan neighborhood \23\ have all proven highly 
        controversial.
---------------------------------------------------------------------------
    \21\ ``The Mugrabi Gate,'' Ir-Amin. N.D. Accessed 1 March 2010. 
.
    \22\ ``Excavations at `Isaac's tent','' Ir-Amin. N.D. Accessed 1 
March 2010. .
    \23\ ``Excavations at Silwan,'' Ir-Amin. N.D. Accessed 1 March 
2010. .
---------------------------------------------------------------------------
   Evictions of Jerusalemite Palestinian families: The most 
        noteworthy recent case reflects ongoing disputes in the Sheikh 
        Jarrah area of occupied East Jerusalem. On August 2, 2009, two 
        Palestinian families (al-Hanoun and al-Ghawi), consisting of 53 
        persons, were evicted from two homes in Sheikh Jarrah, a move 
        that was officially protested by the United States 
        Government.\24\ Jewish settlers immediately seized control of 
        and moved into the residences. The Palestinian families have 
        been keeping a Friday vigil outside the homes ever since. 
        Israeli authorities in Jerusalem have repeatedly announced 
        plans for additional settlement housing units in the area.\25\ 
        Tensions in the area are running high, as indicated by a 
        violent confrontation on February 24, 2010, between Palestinian 
        residents and ultra-Orthodox Jews which left a Palestinian 
        woman and child hospitalized.\26\ In this context, we 
        acknowledge Israeli Prime Minister Benjamin Netanyahu's 
        intervention to defuse a crisis over building plans in 
        Silwan.\27\
---------------------------------------------------------------------------
    \24\ Eldar, Akiva, ``U.S. Protests Eviction of Arab Family From 
East Jerusalem Home,'' Haaretz.com. 27 July 2008. Accessed 1 March 
2010. .
    \25\ ``Sheikh Jarrah,'' Ir-Amin. N.D. Accessed 1 March 2010. 
; see also ``Evictions 
and Settlement Plans in Sheikh Jarrah: The Case of Shimon HaTzadik,'' 
Ir-Amin. 25 June 2009. Accessed 1 March 2010. ; see 
also Hasson, Nir, ``Jerusalem to turn Sheikh Jarrah land into parking 
lot near Jewish Tomb,'' Harretz.com. 1 March 2010. Accessed 1 March 
2010. ; see also U.N. Office for the 
Coordination of Humanitarian Affairs: Occupied Palestinian Territory, 
``Sheikh Jarrah,'' United Nations Information System on the Question of 
Palestine. 15 Aug. 2009. Accessed 1 March 2010. .
    \26\ Hasson, Nir, ``Ultra-Orthodox Jews, Palestinians Clash in 
Sheikh Jarrah,'' Haaretz.com. 24 Feb. 2010. Accessed 1 March 2010. 
.
    \27\ Sofer, Roni, ``Barak To Suspend Silwan Plan at PM's Request,'' 
Ynetnews.com. 3 Feb. 2010. Accessed 1 March 2010. < http://
www.ynetnews.com/articles/0,7340,L-3856753,00.html>.

    The situation in Gaza is dire. Israel's blockade has produced a 
humanitarian tragedy without weakening the political grip of Hamas. In 
January 2010 the World Health Organization said Gaza was facing an 
``on-going deterioration in the social, economic, and environmental 
determinants of health,'' and outlined a generalized health care crisis 
involving all levels of care, the increasing unsuitability of the 
drinking water supply, and the serious impact of lack of building 
materials on public health and the health care system.\28\ The 
findings, which incorporate the work of 80 NGOs, concluded that, ``the 
economy of Gaza is in virtual collapse with rising unemployment and 
poverty which will have long-term adverse effects on the physical and 
mental health of the population. The environment is also in decline 
including water quality, sewage and waste disposal and other 
environmental hazards.'' The WHO also pointed out that, ``Rising 
unemployment (41.5 percent of Gaza's workforce in the first quarter of 
2009) and poverty (in May 2008, 70 percent of the families were living 
on an income of less than $1 dollar a day per person) is likely to have 
long term adverse effects on the physical and mental health of the 
population.''
---------------------------------------------------------------------------
    \28\ ``Gaza Health Fact Sheet,'' World Health Organization. 20 Jan 
2010, Accessed 1 March 2010. .
---------------------------------------------------------------------------
    A March 2009 report \29\ by the EU listed the following priorities 
for reconstruction in Gaza:
---------------------------------------------------------------------------
    \29\ ``Damage Assessment and Needs Identification in the Gaza 
Strip,'' European Network of Implementing Development Agencies 
(EUNIDA). March 2009. Accessed 1 March 2010.

---------------------------------------------------------------------------
    (a) Short term:

   Rubble removal is a priority as reconstruction cannot start 
        if the rubble is not cleared. This operation should take place 
        together with the clearance of UXOs, for the sake of safety;
   Private sector as it is the key to economic recovery and job 
        creation;
   Agriculture to reduce the risk of food insecurity;
   Water, wastewater, and solid waste as there are a number of 
        critical health related issues and a looming environmental 
        crisis;
   Housing is one the basic needs of the population, although 
        Arab States have shown interest in financing this sector 
        entirely.

    (b) Medium term:

   Public buildings, particularly schools, health care 
        facilities, and buildings providing social services.

    (c) For the longer term, infrastructure rehabilitation will be 
essential for economic development:

   Energy, as there is no economic recovery without access to 
        energy, for both the population and the private sector;
   Roads, to increase access to social services and improve 
        movement of persons and goods.

    A February 2010 letter \30\ to President Barack Obama signed by the 
Foundation for Middle East Peace, Americans for Peace Now, the Arab-
American Institute, J Street, Churches for Middle East Peace, B'Tselem 
and Rabbis for Human Rights--North America points out that:
---------------------------------------------------------------------------
    \30\ ``Letter to President Obama on Israel's Gaza Closure Policy,'' 
Foundation for Middle East Peace. 4 Feb. 2010. Accessed 1 March 2010. 
.

   850 trucks daily with food, goods and fuel entered from 
        Israel, preclosure; 128 today.
   The closure and the war have virtually halted manufacturing 
        and most agricultural exports. Before 2007, 70 trucks a day 
        carried Gazan exports for Israel, the West Bank and foreign 
        markets valued at $330 million, or 10.8 percent of Gaza's GDP.
   11 percent of Gazan children are malnourished, to the point 
        of stunting, due to poverty and inadequate food imports. Infant 
        mortality is no longer declining.
   281 of 641 schools were damaged and 18 destroyed in the war 
        because of the closure. Few have been rebuilt, and thousands of 
        students lack books or supplies. There are daily 8-hour power 
        shortages.
   The war and Israel's refusal to allow imports of cement and 
        material to rebuild 20,000 destroyed or damaged homes have left 
        many more thousands of Gazans in tents, temporary structures, 
        or with other families.
   Many war-damaged or deteriorating water and sewage 
        facilities are health and environmental hazards, for lack of 
        rebuilding supplies and equipment.
   The war damaged 15 of 27 hospitals and 43 of 110 clinics. 
        Imports of medicine and equipment are delayed. Doctors cannot 
        leave for training, and patients face long delays to visit 
        Israeli hospitals; 28 have reportedly died while waiting.
   Movement of people in and out of Gaza, including students, 
        aid and medical workers, journalists, and family members, is 
        severely limited.

    The main issue holding back an effort to engage in the necessary 
reconstruction has been the legitimate concern that measures benefiting 
the long-suffering people of Gaza will advantage the de facto Hamas 
rulers. However, we believe that as long as Gaza is cut off from the 
outside world, Hamas will use smuggling to increase the people's 
dependence on it. Gaza's isolation has allowed Hamas to increasingly 
move from an authoritarian regime to a totalitarian theocracy that 
harasses international NGOs--the very organizations best placed to lead 
a reconstruction effort--and that systematically takes over civil 
society organizations. Over the past year or so, Hamas has been 
increasingly imposing ultraconservative social restrictions in Gaza, 
particularly impacting the rights of women. Campaigns to enforce the 
Muslim headscarf and other forms of ``modest dress,'' prevent women 
from riding on the back of motorcycles, ban ``improper'' literature and 
similar measures suggest a creeping fundamentalism of Hamas rule in a 
Gaza Strip cut off from the outside world. Even more alarmingly, under 
these circumstances Hamas itself is being increasingly challenged by 
even more radical armed groups of Muslim extremists, including a 
violent clash at a mosque in August 2009 between Hamas fighters and al-
Qaeda-like fanatics which left 24 Palestinians dead and 130 injured. 
The bottom line is, the people suffer while Hamas and other extremists 
benefit politically from this unconscionable blockade. We strongly 
recommend that reconstruction commence as soon as possible, and it is 
vitally important that the legal and orderly operation of the crossings 
is resumed.
    I'd like to emphasize the plight of Gaza students, and the 
counterproductive and frankly mystifying pattern of Israel denying them 
the ability to travel to study abroad. To illustrate the extent of this 
problem, in September 2009 the Palestinian Interior Ministry said that 
of 1,983 students who were accepted by universities abroad and applied 
for the necessary permits, only 1,145 were cleared to travel through 
the Rafah crossing. \31\ According to Israeli press reports, ``Since 
June 2008, Gaza students are required to be accompanied by an official 
diplomatic delegate from the county they are bound to. The complexities 
of coordinating such efforts, as well as the fact that the Rafah 
crossing is mostly closed, have resulted in only 12 percent of students 
having been able to cross through it.'' \32\ I have been personally 
involved in efforts to encourage the U.S. consulate in Jerusalem to 
escort Gaza students as required for their visa interviews, and I can 
attest to this complexity. Some students had to wait for over a year, 
sometimes meaning their scholarship opportunity had expired. I'd like 
to thank the consulate and the State Department for their efforts to 
deal with this difficult complication and their efforts to encourage 
Israel to drop its onerous requirement. However, a systematic solution 
clearly needs to be found. It is imperative that this unacceptable 
practice ends.
---------------------------------------------------------------------------
    \31\ Zelikovich, Yaheli Moran, ``Gaza Students Stuck in Strip,'' 
Ynetnews.com. 21 Oct. 2009. Accessed 1 March 2010. .
    \32\ Zelikovich, Gaza students stuck in Strip. 2009.
---------------------------------------------------------------------------
    There is also the deeply troubling case of Berlanty Azzam, a 21-
year-old student at Bethlehem University who was arrested and removed 
to Gaza by the Israeli military in October 2009. Azzam was completing 
her last semester of a bachelor's degree program in Business 
Administration, with a minor in Translation, and was 2 months away from 
graduation. She was blindfolded and handcuffed during her expulsion 
from the West Bank.\33\ The U.S. Consulate in Jerusalem said it was 
``very concerned'' by this troubling incident.\34\ Azzam, a practicing 
Christian, said she made the decision to study in the West Bank because 
she was concerned about possible discrimination in Hamas-controlled 
Gaza.\35\ In December 2009 the Israeli High Court ruled that she would 
not be allowed to return to the West Bank.\36\ On February 4, 2010, she 
participated in a panel discussion on ``The Right of Palestinians to 
Study and Travel'' at the Carnegie Endowment for International Peace, 
but had to do so via telephone as Israeli authorities refused to allow 
her to leave Gaza for the event.\37\ We should all carefully consider 
what the likely consequences will be of policies that in effect deny 
Gaza students the chance at a decent education.
---------------------------------------------------------------------------
    \33\ ``As Military Lawyer Gives False Promise, Bethlehem University 
Student is Blindfolded, Handcuffed, and Taken to Gaza by Force,'' 
GISHA: Legal Center for Freedom of Movement. 29 Oct. 200. Accessed 1 
March 2010. .
    \34\ Bekker, Vita, ``U.S. `Very Concerned' About Palestinian 
Student Deportation,'' The National. 12 Nov. 2009. Accessed 1 March 
2010. .
    \35\ Bekker, ``U.S. `Very Concerned' About Palestinian Student 
Deportation.'' 2010.
    \36\ Tang, Anne, ``Israel Expels West Bank Resident to Gaza,'' 
English.news.cn. 4 Feb. 2010. Accessed 1 March 2010. .
    \37\ ``BU Student Recounts Forced Deportation to Carnegie Endowment 
in DC,'' Ma'an News Agency. 5 Feb. 2010. Accessed 1 March 2010. 
---------------------------------------------------------------------------
    I would like to conclude by commending Congress for the substantial 
aid and support it provided to the Palestinians last year. This 
positive trend needs to be expanded and developed by offering the 
necessary financial, technical and political support for the PA to 
successfully pursue the state and institution building program. This is 
not simply a development project but a serious political program that 
advances a key American national interest. Therefore this program 
should be funded and supported by Congress as well as the executive 
branch. The United States Government as a whole and with its full 
weight should lead and encourage others to shoulder their own 
responsibilities by embracing, funding and supporting the program as 
well. We look forward to Special Envoy Mitchell enlisting necessary 
partners to achieve coordinated political, economic, and security 
progress.
    Convergence between the top-down diplomatic track and the bottom-up 
state and institution-building program constitutes the best prospect 
for realizing a two-state agreement. A conflict-ending agreement 
negotiated on the basis of the 1967 borders is vital to Israeli and 
Palestinian interests, but, more importantly, it is in our own national 
interest.
    The United States is the indispensible partner that can bring all 
parties to negotiations and to an agreement. This role can neither be 
relinquished nor outsourced.

    The Chairman. Thank you, Dr. Asali. I appreciate it.
    Mr. Makovsky.

 STATEMENT OF DAVID MAKOVSKY, ZIEGLER DISTINGUISHED FELLOW AND 
   DIRECTOR OF THE PROJECT ON THE MIDDLE EAST PEACE PROCESS, 
    WASHINGTON INSTITUTE OF NEAR EAST POLICY, WASHINGTON, DC

    Mr. Makovsky. Thank you, Mr. Chairman, Ranking Member 
Lugar, and distinguished members of the committee. Thank you 
for the opportunity to appear before this committee this 
morning.
    I'd like to just briefly touch upon some of the key points 
of my written testimony.
    To date, the Israeli-Palestinian issue has not worked out 
as the Obama administration had hoped. While the developments 
on the ground in the West Bank have shown great promise, as 
we've all agreed upon here this morning, the top-down political 
negotiations have not only made little progress, but have even 
regressed. While proximity talks will commence very soon, they 
can only be effective as a transition to direct talks between 
the parties themselves, or as a political cover for those 
talks, or they are bound to fail. It's impossible for any party 
or country to make the requisite vital decisions without the 
confidence of dealing directly with the other side.
    Is there a role for the United States? Surely, there will 
come a time for a U.S. bridging proposal. But, as you know, you 
can bridge over a river; you can't bridge over an ocean. Until 
the parties come close enough, it seems to me a bridging 
proposal by the United States will fail.
    The issue, then, is where to focus the talks now. I believe 
the prospects of Israelis and Palestinians reaching a grand 
agreement on all the core issues is very unlikely at this time. 
The four core issues are known: the rights of refugees; 
Jerusalem; security; and territory borders. Refugees and--the 
refugees and Jerusalem are narrative issues. Both are tied to 
the historic connection of the people to this conflict. And, in 
my opinion, both are unlikely to be resolved anytime soon. 
Leaders have not conditioned the societal landscape for 
accommodation and breakthrough.
    We should, instead, focus these coming talks on what is 
attainable in our quest for a two-state solution. And the issue 
where the gap between the parties is narrowest is land. And, of 
course, security and land go together. In negotiations between 
Olmert and Abbas in 2008-2009, their differences were only over 
4\1/2\ percent of the land. Both said that any land taken by 
Israel could be swapped for an equal amount of land inside 
Israel. This narrow percentage difference, coupled with the 
fact that both parties agreed to the idea of equal land swaps, 
suggests that the differences regarding land are bridgeable. 
And I was happy, Chairman Kerry, that you made your comments 
this morning, as you did in Doha.
    Moreover, a successful deal on borders would be a major 
victory for all the concerned parties. The Palestinians would 
obtain 100 percent of the land they seek through negotiations, 
undermining Hamas's rejectionist narrative.
    With a demarcation of the border, the settlement issue 
would become moot. Therefore, Israelis could annex the majority 
of the settlers, which live in less than 5 percent of the land 
and largely adjacent to Israeli urban areas, and finally 
resolve their different--their difficult legal status. They've 
been in a legal limbo for 40 years.
    For our part in the United States, we would be free of the 
thorny issue of settlements disrupting American-Israeli 
relations and the idea of a two-state solution would look to be 
a reality.
    Now, what are the challenges to this negotiating strategy 
on borders/territory/security? The first is the deferral of the 
issue of Jerusalem. While no border can be complete without 
dealing with Jerusalem, it is interesting that the Oslo 
Declaration of Principles of 1993 made clear that Jerusalem was 
a separate final-status issue from territory. If the 
disposition of the West Bank could be worked out, the city's 
municipal border--boundary--should be the line until an 
agreement on Jerusalem is ultimately reached.
    However, to allay Palestinian concerns that ``deferring the 
issue is now tantamount to conceding the issue,'' there would 
have to be a baseline agreement now, between the parties, where 
it is understood that Jewish and Arab neighborhoods in east 
Jerusalem will not expand into each other.
    A second challenge to the borders-first approach will be 
the timetable for implementing it. It would be up to the 
parties to decide whether they would implement it immediately 
or wait until an overall agreement is reached. Some would say 
nothing should be agreed until everything's agreed. But, in the 
Middle East, when it's all or nothing, it often tends to be 
nothing.
    Implementation of a territorial agreement before solving 
all the core issues would cause considerable pain for Israeli 
leaders, as this would mean they'd have to evacuate tens of 
thousands of settlers--maybe 60,000 of them--without 
guaranteeing a final peace treaty. To alleviate this problem, 
the parties could agree to a nonbelligerency agreement, and a 
statement could be made by both sides, in which Israel would 
accept the idea of a Palestinian state as a homeland for the 
Palestinian people, and the Palestinians would accept the idea 
of Israel as a homeland for the Jewish people, with equal 
rights for all its citizens.
    A third set of challenges are related to security. Much has 
changed since President Bill Clinton convened Camp David summit 
of 2000. Since then there's been a Palestinian intifada, a 
Hamas coup in Gaza, and the introduction of stand-alone 
rockets. Furthermore, many Israelis see the Gaza withdrawal in 
2005 as triggering thousands of rockets, which culminated in 
the Gaza war of 2008-2009.
    While Palestinians have been despairing about the 
enterprise of peacemaking because they see it as producing 
insufficient results, Israelis have been equally despairing as 
they increasingly equate withdrawal with vulnerability, and not 
with security. Therefore, the security dimension needs to be 
handled very carefully.
    Another set of challenges deals with Iran, and that's 
regardless of what issue is first on the agenda. It's been 
mentioned here. I think it's clear, if Iran has nuclear 
weapons, the prospects for Middle East peace are very bleak. 
Rejectionists will be emboldened, and moderates will be 
intimidated.
    A fifth challenge will be the role of the Arab States. You 
correctly point out, the Arab Peace Initiative has been 
constructive compared to the past, but I think we need to be 
clear that it is completely backloaded. Just as it would be 
unacceptable for it to be completely front-loaded, for Israel 
to receive the benefits without getting--paying the price; so, 
too, the reverse is not acceptable. Israel can't be asked to 
give all the land--West Bank, East Jerusalem, Golan Heights--
before the Arabs do anything. For the Arab Peace Initiative to 
have real impact, it must be done in parallel, that Israeli 
moves to the Palestinians are matched by moves by Arab States 
toward Israel.
    It's been stated here about all the economic progress of 
Prime Minister Fayyad and Lt. Gen. Keith Dayton. They've done 
an excellent job. Indeed, Fayyad's approach of institution-
building is nothing short of a new paradigm for Palestinian 
nationalism. His idea of a--of building an accountable, 
nonviolent movement as the ticket to statehood is a dramatic 
departure from Yasser Arafat's sense of entitlement.
    The relationship between Fayyad and Israel will be 
important. Ziad touched on some of the issues of unilateralism. 
Ultimately, bottom-up cannot be done without top-down. They 
must go hand in hand.
    And therefore, to conclude, I would just say, as 
negotiations begin, direct talks will need to come forward. 
Time is not on the side of moderates, but if they--the 
moderates do not come together, it will not be surprising if 
extremists exploit the situation for their own benefit.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Mr. Makovsky follows:]

Prepared Statement of David Makovsky, Ziegler Distinguished Fellow and 
     Director of the Project on the Middle East Peace Process, The 
       Washington Institute for Near East Policy, Washington, DC

    Mr. Chairman, Ranking Member Lugar, and distinguished members of 
the committee, thank you for the opportunity to appear before this 
committee this morning to discuss a subject whose future holds great 
importance for U.S. foreign policy.
    To date, the Israeli-Palestinian issue has not worked out as the 
Obama administration had hoped. The picture is mixed. While the 
developments on the ground in the West Bank have shown promise and 
hope, the top-down political negotiations have not only made little 
progress, but have even regressed. We have gone from a point where 
Israeli Prime Minister Olmert and Palestinian President Mahmoud Abbas 
were at advanced stages of negotiations, to a point where there have 
been no negotiations at all between the parties for nearly a year. 
There may be several reasons for this, yet as President Obama himself 
has publicly admitted, it is due in no small measure to an early 
miscalculation by Washington that triggered a series of events and 
expectations that could not be overcome during the administration's 
first year.
    On Wednesday March 3, Arab Foreign Ministers gave their long-
awaited support for Abbas to participate in proximity talks, whereby 
Senator Mitchell will shuttle between Israelis and Palestinians. Such 
talks must be a transition to direct talks between the parties 
themselves. In contrast, if these talks become an alternative to direct 
talks, they will fail. It is impossible for any party or any country to 
make the most vital decisions possible without the confidence of 
dealing directly with the other side.
    The issue is where to focus on the substance of talks. My point of 
departure on this issue is that I think the prospect of the Israelis 
and Palestinians reaching a grand agreement on all the core or so-
called final status issues is very unlikely at this time. The four core 
issues are: the rights of refugees, control of Jerusalem, security and 
territory/borders. The first two issues seem unlikely to be resolved 
anytime soon.
    Refugees and Jerusalem are narrative issues, and both are tied into 
the historic connection of the people to this conflict. Jerusalem has 
both religious and nationalistic dimensions for Israelis and 
Palestinians and for key constituencies in and outside the region. The 
refugee issue taps into the self-definition of Palestinians, including 
many Gazans. Yet, neither Israeli nor Palestinian leaders have 
conditioned their respective publics to deal with these third rail 
issues. In the case of refugees, many of the descendents come from 
Gaza, which is not even under the control of the Palestinian Authority 
at this time, but rather is controlled by Hamas. This even further 
complicates the refugee issue. In short, whenever it is all or nothing 
in the Middle East, it is always nothing. We should not set ourselves 
or the parties up for failure. Too much is stake. Hamas rejectionists 
are waiting in the wings for pragmatists like Abbas to fail. 
Furthermore, Israel will be facing demographic challenges, which will 
threaten its goal of ensuring its future as a democratic and Jewish 
state. With these increasingly high stakes, it is vital that we 
concentrate our efforts on areas that are amenable to progress.
    Instead, we should focus on what is attainable. The issue where the 
gap between the parties is narrowest is land. This might sound 
counterintuitive to some because many think the conflict is only about 
land, but this is not the case. This is why I have advanced the idea of 
``borders first'' for the past year, and was delighted to see that 
Senator Kerry endorsed it in a recent speech in Qatar. In a press 
conference in November, Senator Mitchell said, ``My personal and 
fervent wish is that we will during this process at some point have a 
resolution of the issue of borders so that there will no longer be any 
question about settlement construction, so that Israelis will be able 
to build what they want in Israel and Palestinians will be able to 
build what they want in Palestine.'' \1\
---------------------------------------------------------------------------
    \1\ From Senator Mitchell's press conference on Nov. 25th, 2009; 
found at: http://www.
america.gov/st/texttrans-english/2009/November/
20091125160029ihecuor0.3026021.html.
---------------------------------------------------------------------------
    In negotiations between Olmert and Abbas in 2008 and 2009, their 
differences were over only 4.5 percent of the land. Olmert suggested 
retaining 6.4 percent of the West Bank in return for equivalent land 
inside Israel. In a November 2009 interview Olmert stated, ``It might 
be a fraction more, it might be a fraction less, but in total it would 
be about 6.4 per cent.'' \2\ Abbas thought the figure should be 1.9 
percent. Both said any land taken by Israel could be swapped for an 
equal amount of land inside Israel. The narrow percentage differences 
coupled with the fact that both parties agreed to the idea of landswaps 
suggests that the differences regarding land are bridgeable. For 
example, 80 percent of all Israeli settlers, which is approximately 
240,000 people, live in less than 4.5 percent of the territory being 
negotiated, largely adjacent to the pre-1967 boundaries. The remaining 
60,000 settlers live in the 95.5 percent remainder of the West Bank. As 
these statistics illustrate, the so-called insurmountable obstacle of 
settlements is actually relatively open to resolution.
---------------------------------------------------------------------------
    \2\ From Ehud Olmert's interview with The Australian, published 
November 28, 2009; found
at: http://www.theaustralian.com.au/news/opinion/ehud-olmert-still-
dreams-of-peace/story-e6frg
76f-1225804745744.
---------------------------------------------------------------------------
    The only way to deal with the settlement issue is to render it moot 
by subsuming it into peacemaking efforts and heading straight into the 
final negotiations on territory. There are three distinct advantages to 
focusing the negotiations on territory now. First, this approach allows 
the Palestinian Authority to tell its people that it has obtained the 
equivalent of 100 percent of the land to be part of a contiguous 
Palestinian state. As such, negotiations and not Hamas terrorism will 
be vindicated. The Palestinians can say they obtained what Anwar Sadat 
received in peace talks with Israel--full withdrawal. Second, Israelis 
will have something to gain and not just to give. Until now, no Israeli 
leader has succeeded in legally annexing a single settler, let alone a 
large majority of them. This approach would give many of the settlers 
who live in the major blocs a stake in being part of the solution, 
rather than being part of the problem. They would have their legal 
status normalized as part of Israel and they would no longer live in 
legal limbo, where they have been human bargaining chips for several 
decades. Their status will be clarified. Finally, for the United 
States, after many years, the settlements issue would no longer be a 
thorn in United States-Israel relations.
    This approach alone will not guarantee successful resolution of the 
Jerusalem and refugee issues. After success on land, these issues will 
have to be addressed and a timetable set. At that time, a conscious 
effort must be made by all parties, including Arab states, to condition 
public opinion to deal with the remaining contentious issues. Over 
time, Israel will need to make concessions on Jerusalem, and the 
Palestinians will need to concede that refugees can only return to the 
Palestinian state and not to Israel.
    The prioritization of land negotiations is not without its 
problems. I would like to address some of the challenges to this idea. 
One such challenge is Jerusalem. A Palestinian may ask if by deferring 
Jerusalem, one is actually conceding this issue. This is a fair 
question. Obviously nobody wants to trade a political conflict for an 
incendiary religious one. Moreover, no border can be complete without 
dealing with Jerusalem. Yet having written a book about the origins of 
the Oslo accord in 1993, it is not coincidental that Article V of the 
Declaration of Principles signed on the White House lawn and sealed 
with a famous handshake listed Jerusalem as a separate category from 
the issues of borders and settlements.\3\ The municipal border should 
be the line until an agreement on Jerusalem is ultimately reached. To 
allay Palestinian concerns about the changing character of the city, 
there should be a baseline agreement between the parties, perhaps with 
the assistance of the United States, whereby it is understood that 
Jewish and Arab neighborhoods in East Jerusalem will not expand into 
each other. A strict freeze has shown to be impractical, but a no-
expansion approach into the neighborhood of the other is something that 
should be attainable. An assurance that Jerusalem will be addressed in 
the future would be an important sign of confidence.
---------------------------------------------------------------------------
    \3\ The Oslo Declaration of Principles, Article V, Provision 3 
states: ``It is understood that [permanent status] negotiations shall 
cover remaining issues, including: Jerusalem, refugees, settlements, 
security arrangements, borders, relations and cooperation with other 
neighbors, and other issues of common interest.'' Full text can be 
found at: http://www.mfa.gov.il/MFA/Peace+Process/
Guide+to+the+Peace+Process/Declaration+of+Principles.htm.
---------------------------------------------------------------------------
    Another challenge will come from some Israelis who may ask whether 
such an approach will minimize their leverage in future talks, since 
they are playing their ``land card'' now, so to speak. Clearly, if a 
grand deal on all of the core issues could be struck it would be 
preferable, yet privately, many of the same hesitant Israelis are 
extremely dubious that a grand deal is achievable. Moreover, it is hard 
to escape the idea that there will be trade-offs between the narrative 
issues anyway. In other words, it is unlikely that playing a 
``territorial card'' will obviate the need of addressing Jerusalem.
    A third set of challenges will be the timetable of when a borders 
first approach will be implemented. This could be left to the parties. 
Some may say that a full agreement on the core issues is within reach 
and therefore, implementation should happen all at once. Others say 
full agreement will take considerable time, and therefore, it is best 
to implement the territorial dimension now. This second approach will 
create considerable political pain for Israel as it may mean Israel 
evacuating--many forcibly--at least 60,000 settlers when there is no 
guarantee of a peace treaty. (To give one a sense of context, this 
would be more than seven times the number of settlers who were 
withdrawn from Gaza in 2005. Moreover, the withdrawal would be taking 
place in the West Bank, which Jews deem as the heart of biblical 
patrimony.) In this context, it may be advisable to have not just a 
non-belligerency agreement, but also a statement by both sides that 
would have resonance. It would be useful for each side to agree in the 
borders negotiations that they recognize one other. Specifically, 
Israel would accept the idea of a Palestinian state as a homeland for 
the Palestinian people and Palestinians would accept the idea of Israel 
as a homeland for the Jewish people. Each has a historic claim to the 
land, but it must be shared for the benefit of each. Neither party 
should be seen as prejudicing in any way the full civil rights of any 
citizen of either country, nor should it prejudice negotiations over 
refugees.
    This will enable an Israeli leader who will lead such a very 
difficult withdrawal to tell the settlers that their mission is 
completed as there will be an acknowledgment of a historic Jewish 
connection to the land. (Some have argued that the settlers on the 
wrong side of the line should be allowed to stay within Palestine. This 
has surface appeal, but it will run into a host of problems. The 
Government of Israel will not want to leave behind settlers whom it 
cannot protect with its own security forces, especially given the 
trauma between the Palestinians and settlers over the last four 
decades.)
    A fourth set of challenges will be the issue of security. At the 
Camp David II talks in 2000 led by President Clinton, this was the most 
straight-forward issue that was technical in character. Much has 
happened subsequently. Security cooperation crashed in the second 
intifada between 2000 and 2004. Hamas came to power in Gaza, stand-
alone rockets became a factor, and the idea of borders management after 
Israeli withdrawal has been undermined by the expansion of cross-border 
tunnels under Gaza for rocket smuggling. Many Israelis see the Gaza 
withdrawal in 2004 as triggering thousands of rockets which culminated 
in the Gaza war of 2008-09. Therefore, as part of the growing cynicism 
of publics on both sides about the very enterprise of peacemaking, 
Israelis increasingly equate withdrawal with vulnerability and not 
security. (Palestinians and Israelis are equally jaded about the idea 
of grand peace conferences that do not yield results.) Therefore, the 
security dimension needs to be considered very carefully.
    A fifth set of challenges are not unique to a borders first 
approach, but will be present in any serious peace effort. These 
challenges are related to Iran's quest for a nuclear weapon. I recently 
wrote a book with Dennis Ross, who is currently a senior White House 
official in the Obama administration, entitled ``Myths, Illusions and 
Peace.'' In this book, we deal with the issue of linkage. There are no 
strict linkages between the Palestinian and Iranian issues. Regardless 
of progress on peace, Iran will seek a nuclear weapon. Moreover, senior 
Arab security officials say privately that they do not see progress on 
peace as decisive in influencing Arab efforts to halt Iran in any way. 
The Arabs face many problems, including domestic challenges, in this 
regard. However, a change in climate could at the margins make it 
somewhat harder for Iran to exploit this issue. Yet, if it is clear 
that Iran will have a nuclear weapon, the prospects for the Middle East 
peace process are very bleak. Rejectionists will be emboldened and 
moderates will be intimidated. Alternatively, there is no doubt that if 
the Israelis and the Palestinian Authority did not think Iran was on 
its way to being a nuclear problem and a regional power in a manner 
that will boost Hamas, their evaluation of risk would certainly drop.
    These challenges lead many to believe the current proximity talks 
will fail. In order for the talks to succeed, it is important that they 
are not pro forma and not just a means for the Palestinians to force 
the United States to put forward its own plan. Historically, the Arab 
states and the Palestinians have always hoped that the United States 
would ``deliver'' Israel, but this has virtually never materialized. 
Last summer, the Obama administration raised Arab expectations that it 
would deliver a settlement freeze, but it fell short. Obama did not 
even mention these negotiations in the State of the Union. The United 
States is smarting from the fact that the Arab states were supposed to 
match Israeli moves on settlements with gestures toward Israel, but 
failed to do anything. The Arab states may say that the settlement 
moratorium is not 100 percent of what they would like. No negotiation 
is what one side wants. Yet, even if they think Netanyahu only moved 70 
percent, they have responded with zero percent reciprocity. It is 
unlikely the United States will go down this road again.
    There is a big difference between the United States imposing a 
solution on the parties and the United States putting forward a 
bridging proposal after direct negotiations have brought the parties 
closer to a deal. It is possible to bridge over a river, but not over 
an ocean. A U.S. bridging proposal may occur, but only after direct 
negotiations have been tried in earnest. The Palestinians need to be 
careful what they wish for. If the Palestinians want the United States 
to be explicit in its views regarding the final disposition of 
Jerusalem, they will get a United States that is every bit as explicit 
about the Palestinian refugees returning to Palestine, and not to 
Israel.
    In short, the United States can supplement negotiations but cannot 
substitute for them. Speaking at the Washington Institute for Near East 
Policy last Friday, Israel's Defense Minister Ehud Barak said that 
Abbas should ``test'' Netanyahu's sincerity instead of presupposing any 
outcome. Netanyahu feels he has traversed an ideological distance over 
the last year as he overturned his own opposition to a Palestinian 
state.
    For all the problems of restarting peace talks during 2009, there 
was an important bright spot between Israelis and Palestinians. There 
were signs on the ground in the West Bank of economic progress, as well 
as heightened security cooperation between Palestinians and Israelis. 
Of course, economic development is not a substitute for political 
progress, but it is a key component that could facilitate steps forward 
and moderation. Economic progress enables the public to gain faith that 
the future can be better, and it creates political space for the 
leadership to gain more political capital with success. The hope is 
that economic improvement facilitates political moderation as people 
develop a stake in success. Palestinian polls consistently show that 
Gazans living under Hamas and West Bankers alike would prefer to live 
in the West Bank where there is economic progress, rather than living 
under the repressive hand of Hamas in Gaza.
    International Monetary Fund officials report that economic growth 
in the West Bank is making major strides despite a worldwide recession. 
They say that growth could reach as much as 7-8 percent in 2010 if 
Israel continues its current policy of relaxing security restrictions, 
most notably the removal of roadblocks. It is estimated that Israel has 
removed all but a dozen of the 45 roadblocks that were in place to 
prevent suicide bombers. Among the benefits of the relaxation of 
restrictions is that it enables Israeli Arabs to enter the West Bank, 
engage in commerce and generate jobs. Unemployment in the West Bank may 
be high by American standards, but it has been cut by a third in the 
last few years.
     The following examples of growth provide a glimpse of the changes 
occurring in the West Bank. There have been an approximately 2,000 new 
Palestinian small businesses and other companies registered with PA 
since 2008. A second new cell phone company in the West Bank, Wataniya 
Palestine, was recently launched. The introduction of this second 
mobile phone company is expected to inject US$700 million investment 
into the Palestinian Territory and to generate $354 million in fiscal 
revenue for the PA. It will also create thousands of jobs. Another 
project underway is Rawabi, or ``hills'' in Arabic, which will be the 
first-ever planned Palestinian city. Located about 5 miles north of the 
Palestinian provisional capital of Ramallah, it is expected to have 
40,000 residents at its formation. In Bethlehem, the rise of tourism 
has already yielded 6,000 new jobs, and tourists are filling up hotels 
in the city, marking a significant change. Previously, due to an 
uncertain security situation, tourists feared staying overnight in the 
West Bank, but the security is indeed improving. Palestinian security 
forces have been trained with American and European money and guidance. 
In 2002, it is estimated that 410 Israelis were killed in attacks 
emanating from the West Bank. In 2009, the figure was five.
    Barak has publicly stated that a key factor in this improved 
situation is Israeli-Palestinian security cooperation. This dramatic 
drop in deaths from attacks originating in the West Bank has allowed 
Israel to take more risks than it would have even 2 years ago. The 
improvement in security has not just facilitated economic progress, but 
has meant that chaos no longer reigns in the West Bank. In a sharp 
departure from the past, Palestinian polls show that most Palestinians 
feel safe in their towns. For the first half of the decade, Israeli and 
Palestinian officials shot at each other, but now they are working 
together to prevent Hamas from expanding a foothold in the West Bank. 
Beyond the security establishments of both sides, there are other 
factors at play. Palestinian President Mahmoud Abbas and Palestinian 
Prime Minister Salaam Fayyad have a set an antiviolence tone. Fayyad 
has worked very closely with his commanders on the ground to ensure 
coordination with Israeli counterparts. Added special mention should be 
given to the excellent work of U.S. Lt. Gen. Keith Dayton and his team. 
Dayton has spearheaded the training of over 2,000 Palestinian troops in 
a bid to professionalize the Palestinian security services. Netanyahu 
also deserves credit in prioritizing economic growth by lifting some 
key restrictions. Israeli military officials say that their cushion to 
lift such restrictions as West Bank roadblocks is a function of the 
Israeli security barrier, which limits the amount of suicide bombers 
who can penetrate into Israel.
    Perhaps the most exciting idea that emerged from the West Bank in 
2009 is Fayyad's idea of state-building or creating institutions as a 
precursor to Palestinian statehood. Fayyad has won over the 
international community during the last few years with his focus on 
transparency and his opposition to corruption. He has a doctorate in 
economics, and excelled at the World Bank/International Monetary Fund 
before first becoming Palestinian Finance Minister and now Prime 
Minister. The U.S. Congress, which was reluctant during the Arafat 
period to give any money to the PA, no longer worries that its 
financial assistance will go to private coffers. This is a tribute to 
the stature of Fayyad.
    Fayyad's idea of state-building is a departure from the approach 
favored by his predecessor Yasser Arafat. Fayyad's approach is nothing 
short of a new paradigm for Palestinian nationalism. Arafat always 
defined Palestinian nationalism in revolutionary terms--physical 
defiance, armed resistance, while Fayyad seems to be identifying 
institution-building as the ticket to statehood.
    There are profound implications to these very different approaches. 
Arafat viewed the Palestinian condition as guaranteeing a sense of 
victimhood and entitlement--Palestinians were responsible for nothing. 
The world owed them. In contrast, Fayyad seems to see institution-
building as a way of creating a culture of accountability among 
Palestinians. In the Arafat era, airports, railroads, and sea ports 
seemed like adornments of a sovereign state, not central vehicles to 
achieving statehood. In contrast, Fayyad has said that building the PA 
institutions is important ``to gain the international community's 
respect and pass its unjust test of building these institutions under 
occupation.'' While Fayyad has yet to fully elaborate about how state-
building would be accomplished beyond using donor aid from around the 
world to assist the formation of legal, economic and security 
institutions, he wants to maintain the momentum of his previous 
economic plans until a political breakthrough occurs. This way he can 
keep his security plans in place during a time of political void that 
might devolve into unpredictable violence.
    It is said that after George Bush visited Israel for its 60th 
anniversary in May 2008, Fayyad told him that he should look to the 
example of the Zionists, meaning to point out that the Israelis built 
the institutions of their state for 30 years before they declared it. 
While Fayyad certainly would not accept that timetable, he accepts the 
principle that statehood should be earned. In general, these economic 
and security developments provide hope of a brighter future for both 
peoples in 2010.
    While my remarks make abundantly clear that I have a favorable view 
of Prime Minister Fayyad for the important new elements that he has 
introduced to the political equation, I would be remiss if I did not 
voice caution about two sets of relationships that will be important to 
focus on in the future. One is the Abbas-Fayyad relationship. On one 
hand, Abbas's veteran credentials in the Fatah party provide cover for 
Fayyad as he pursues his course. Yet, there have been clear differences 
between the two over appointment of personnel and even a sense that 
Abbas may be somewhat envious at times of the international attention 
showered on Fayyad.
     The second set of relations that merits attention is Fayyad's 
relations with Israel, which have cooled somewhat of late. 
Specifically, Israel is unsure if Fayyad's focus on nonviolent protest 
will spill over in an unintended violent direction. Moreover, in a bid 
to cool episodic tensions on the ground, Fayyad has on several 
occasions in the last few months visited families of Palestinians whose 
sons have been involved in fatal violent actions against Israel. 
Israelis see this behavior as sending the wrong signal to the 
Palestinian people especially because it is coming from someone 
identified with nonviolence. At least, in one of the two incidents 
Palestinians claim the violence was not premeditated. Finally, the 
third source of concern in the Fayyad-Israel relationship is his sense 
that institution-building is a unilateral enterprise that is part of a 
2-year sprint toward statehood. Israelis suspect that this bottom-up 
state-building is a unilateral move coming at their expense. The irony 
is that the only way for Fayyad to deliver on institution-building is 
by working with Israel, given the security dimension of proposed 
projects and Israel's control over West Bank land. A good working 
relationship is key for the Fayyad plan to succeed. In short, there are 
no substitutes for negotiations.
    This is precisely why the bottom-up approach cannot substitute for 
top-down negotiations. The two must go together. Without a top-down 
approach, the bottom-up approach will be unsustainable over time. 
Palestinian soldiers will think security cooperation is designed to 
make Israeli control more palatable, and Israelis will harbor doubts 
about Palestinian state-building intentions.
    While there have been important signs of progress on the ground in 
the last few years, one must be careful not to extrapolate too much in 
looking ahead. Much is at stake. If moderates on the Palestinian and 
Israeli sides do not come together, it will not be surprising if the 
extremists discredit the moderates and exploit time for their own 
benefit.

    The Chairman. Well, thank you. Thank you, all of you.
    We have a good summary of complexity and of hurdles that 
can always be put in the way.
    One of the things that strikes me, as you listen to all of 
that--and it has struck me for some period of time--is that 
these hurdles underscore the need to get to final status talks 
as fast as you can. Would you all agree with that?
    Dr. Asali, go ahead.
    Dr. Asali. Yes, sir.
    I think that getting to a final status is crucial and 
important. The question of timing is a major issue. At the 
present time, as we speak, with the present political standings 
of the Israeli and the Palestinian entities, it is hard to see 
meaningful progress done right away. I think some other things 
have to be done first.
    The Chairman. Let's be more articulate about that, because 
I understand and to some degree I share, Ambassador Kurtzer, 
your comments about the disappointment of being where we are, 
based on 20 years ago. I mean, obviously it is a 
disappointment. It's almost pre-Madrid, in terms of having a 
proximity talk. On the other hand, because of the Goldstone 
report, and because of the way in which the settlement issue 
was handled, publicly hanging President Abbas out to have an 
expectation that that was the standard, and then going back 
from it, left him weakened. Would you agree with that?
    And therefore, the reality is, you've got to find a way to 
get him back. So, I think what happened with the Arab League is 
a big deal, in terms of opening up this process. I think, once 
you've begun that, the sooner you get concrete things 
happening, of one kind or another, in the privacy of the talks, 
the faster those talks can expand.
    Ambassador Kurtzer.
    Ambassador Kurtzer. Mr. Chairman, while I would like to see 
success in proximity talks, there's a relationship between the 
methodology of negotiations and the substance of what's being 
negotiated. Now, if there are strong terms of reference that 
have been put before the two sides, then maybe proximity talks 
can help narrow differences, because it would be impossible to 
bring them to the table on the basis of very strong terms of 
reference without such talks.
    But, frankly, I haven't seen any indication of strong terms 
of reference. Secretary of State Clinton has talked about 
finding a way to reconcile the views of the two parties. Well, 
that's the natural purpose of diplomacy. It's not a strategy, 
it's not a U.S. policy. Where is it that we say to the parties, 
``We think you ought to be considering X, Y, and Z''--a full 
return to the 1967 lines with swaps, a solution on Jerusalem 
based on demography outside the old city, and so forth?
    The Chairman. If I can interrupt you just one second, to 
pursue that. I mean, timing is important in those things. If 
you lay that out publicly, which we could do--I certainly, in 
Doha, said some things that could create a framework. I can say 
them. I'm chairman of this committee. I'm not in the talks, and 
I'm not the administration and the executive that's responsible 
for leading those talks. But, if you are that entity leading 
them, and you put it out there yourself as the stated position, 
it's a big move in the context of all the other perceptions. 
And if it were to be refused because, in terms of the politics 
of one side or the other, it's simply unacceptable, you've 
actually done more damage than good at that point in time.
    Ambassador Kurtzer. Mr. Chairman, I'm not persuaded that 
you do more damage by putting out U.S. views, and I'll explain 
why. We've been at this business----
    The Chairman. But, isn't timing important?
    Ambassador Kurtzer. Timing is critical, but----
    The Chairman. We know what U.S. views are.
    Ambassador Kurtzer. We've been at this business of 
intermediation now for more than 30 years. And the parties keep 
turning to us. And yet, in a sense, what we do is try to 
provide auspices. What we do is set the table. We cater for 
peace. And I think it's important, both for our own people, but 
also for the people in the region, for the Israeli public and 
the Palestinian public, to understand what it is that the 
United States believes.
    Now, I don't see this as an action-forcing event. In other 
words, this is not a U.S. plan that's ``take it or leave it.'' 
But, it gives our diplomats a tremendous amount of material to 
work. And I wouldn't expect that we would demand from the 
parties a ``take it or leave it'' response, but, rather, an 
ongoing set of diplomatic contexts to try to reach some kind of 
understanding.
    The Chairman. Well, I have urged, and I am for, putting out 
what we believe ought to happen at the right moment. I think 
the right moment is going to be soon. But, I do believe that 
the mistrust on both sides has been expanded over the course of 
the last months to such a degree that the first thing you've 
got to do is get people back to the table to see what room 
there is to really have that discussion. Prime Minister 
Netanyahu was very clear to me. He wants to talk about 
security. You know, President Abbas was very clear to me. He 
wants to talk about a bigger picture of what final peace is 
going to be. So, there's a difference, in terms of those terms 
of reference, right now. And you've got to get something 
cooking here that I think we need to encourage, since we're not 
brokering it in that way at this point. But, I think one can 
move very quickly to a better term-of-reference basis on which 
you are then proceeding.
    Yes, Mr. Malley.
    Dr. Malley. Mr. Chairman, I mean, you touch on a--something 
that I think is very important, which is--I was involved in the 
last grand effort at Camp David. I don't regret it. But, there 
are consequences to failure. And I think we have to be very 
mindful--if we were to now rush, for example, to direct talks--
at what would happen if, in fact, those talks were to fail. So, 
I've--I'm not as perturbed by the notion that we're going to go 
through proximity talks if we use them smartly to probe the 
parties, to push our ideas, but also to get a sense, What is 
the realistic achievement that we could--that's possible? 
Because the worst thing would be to have something that ends in 
failure.
    And I also agree, in terms of putting ideas on the table--
I've been a strong advocate of it over the years. Right now, I 
think timing is critical. Content matters--context matters just 
as much. And if we were to put ideas on the table and they were 
rejected by one or both sides, then the good ideas could be 
discredited--and could have been more useful in the future, but 
discredited now because the timing wasn't right.
    I think we need to work with the parties, I think we need 
to work with Arab countries and the international community to 
make sure that, when we put those ideas on the table, we 
maximize the chances of a positive reception.
    The Chairman. There is always the potential that, in the 
privacy of a room, without the public forces that pull this 
apart continually--you may be able to have some much deeper 
discussions that actually advance things, providing you can 
keep that privacy. And I think that's a concern I heard 
expressed on both sides. And particularly, there are concerns 
of one party about the other party leaking a lot more, and that 
that then clouds the atmosphere within which they're trying to 
have a negotiation.
    I was particularly struck, Dr. Asali--you mentioned these 
groups that are out there--if you look back at Oslo, Oslo set 
out, ``You do this, we'll do that, then this'll happen, and 
we'll do this.'' You go that route, and you leave extraordinary 
opportunity, every step of the way, for the people who don't 
want anything to happen to blow it up. And we've learned enough 
about that now. And that is a critical reason for why you want 
to get to the big pieces as privately as you can, and get them 
done. If you get them done, you have stripped those people of 
their power to pull it apart.
    Mr. Makovsky.
    Mr. Makovsky. I just wanted to endorse what you said on 
timing, too. Because I think that that's crucial, what you 
said, that--look, if we learned something in 2009, it is that 
there are consequences when America raises expectations. That's 
why, I think--respectfully--Ambassador Kurtzer and I may 
differ, because I believe we raised expectations too high on 
settlements, and we couldn't deliver on those expectations, and 
the net effect was we hurt our relations both with the Israelis 
and with President Abbas, who said in two interviews, with 
Asharq Alawsat and Der Spiegel, that left alone, he wouldn't 
have gone that way, but now he was out on a limb. So, I think 
we've got to be very careful when we put forward an American 
bridging proposal. That doesn't mean we shouldn't probe. And 
our mediator will be active, I'm sure. Senator Mitchell will do 
that very well. But, I think timing is everything, and I think 
that's one of the lessons of 2009.
    The Chairman. Senator Lugar.
    Senator Lugar. Let me just follow through on the themes 
that have already been expressed in Senator Kerry's questions. 
I agree with your view, Ambassador Kurtzer, that the importance 
of stating United States views is really paramount in this. Now 
there's some modification necessary, as I heard Mr. Makovsky 
and others saying, but it's very important for it to be clear 
as to what the views are, and maybe when they are stated. We 
did state a view on settlements fairly early on, although, for 
a variety of reasons, to date this has not worked out as well 
as we had hoped.
    Let me just question you all further about this issue, but 
in a different way. Let's state, for the sake of argument, we 
finally decide, as an administration and as a country, when the 
timing is right to clearly state our views. Now, some of you 
would say, ``Well, you've got to prime this to find out when 
the timing is right. You can't simply observe and say this is 
about the time.'' I understand that. But, let's say that we've 
come to some conclusion that the timing is right for the United 
States to state very strong views; in other words, to adopt a 
strategy, on our part, which states, essentially, how we 
believe things ought to come out, or what the parties ought to 
do.
    Ambassador, after we have done that--and this presumes the 
timing is right--let's say it turns out that--perhaps due to 
the fragmentation of authority in Israel or on the Palestinian 
side, or maybe other events in the Middle East that have 
arisen--the parties, although aware of our views and knowing 
that we are committed to a strategy that has staying power and 
is meaningful, still do not really come to a conclusion. Now, 
for the sake of argument, in this instance, should we state the 
consequences if there is not some assent to our strategy on the 
part of the actors involved? In other words, not that we've 
been involved in amateur hour with others trying to do the very 
best they can, talking a bit here or there--but, if we take 
ownership of and lend our prestige to this stragegy and say, 
``This is what needs to happen if we are to be a party to 
this,'' and if it doesn't happen, what sort of consequences 
should we state so that the seriousness of the effort is 
apparent?
    Now, having heard the consequences, the parties may still 
say, ``This is just too much for us. Politically we can't get 
it done. There are other forces that intrude upon us. You don't 
understand.'' Well, in response, we say, ``We do understand. 
We've been at this for a number of years and enough is enough. 
You know, get on with it, because the peace of the world 
depends upon it. Our security depends upon it. Our commitment 
of Armed Forces and all the infrastructure depends upon it. 
This is expensive for us. So it's not, once again, incidentally 
one of five or six things we send envoys to do. American 
interests are at stake here. We need to get on with it.''
    What would be the consequences that we could state?
    Ambassador Kurtzer. Senator, when I had the privilege of 
serving our country as Ambassador in both Israel and Egypt, one 
of the most critical lessons I learned was that, when the 
United States speaks its views, people actually pay attention. 
Sometimes we indicate what consequences are, and sometimes we 
don't. Sometimes we articulate those views to initiate 
prolonged periods of diplomatic contact. But, the point is that 
we deal every day, not only with governments, but we deal with 
publics. And until the Israeli public and the Palestinian 
public, and the Arab public generally, understand what it is 
that the United States stands for in this conflict, I think we 
do our diplomats a disservice.
    Now, there's a difference between articulating our views on 
how the conflict should end and putting them out as a ``take it 
or leave it.'' And I do not advocate the latter. I do not 
advocate saying that this is a U.S. plan to be imposed. I don't 
advocate putting it out for a period of time and then 
withdrawing it or somehow taking our plan and going home. But, 
rather, using it as a means for our diplomats to actually work 
this issue.
    There are elements of what we would articulate that should 
have consequences for the failure of the parties to agree, and 
I would suggest that those be confined to what I would call 
behavioral issues--settlements, on the one hand, and 
Palestinian violence and incitement on the other hand. I think 
on behavioral issues, we should make clear to the parties--
privately at first; if necessary, publicly--that there are 
consequences for behaviors that don't contribute to peace. But, 
with respect to substantive issues, our views on Jerusalem or 
on settlements, these are our views. And it gives our diplomats 
something to argue and to try to bring the parties closer 
together.
    Senator Lugar. Let me just add, anecdotally, because--this 
is far away from this--but, at the time of the Ukraine 
elections in 2004, 3 days or so before the second election, 
President Bush asked me to go to Kiev and to carry a letter 
from him to President Kuchma. Basically, the letter said that, 
``We want a free and fair election--unlike the one you just 
had, in essence--and ultimately there will be consequences if 
this does not occur.''
    President Bush didn't state in his letter what the 
consequences were going to be. But, after I gave President 
Kuchma this letter, and he sort of wearily dropped it to the 
side, I heard fairly quickly, within hours, from those who were 
very important to him. As a result, they invited me to appear 
on Ukraine television to at least give the American point of 
view. Someone even asked me, ``Would the consequences be lack 
of visas and passports, and so forth?'' In any event there was 
an inquiry right away.
    Now, that was just one situation. It was an election. It 
was a pointed affair. The issue at hand today has assumed all 
sorts of manifestations. But, I'm attracted by your idea that 
we keep sending envoys, and they keep having talks, visiting 
with various parties, and exploring options. But, in terms of a 
decision to enunciate very clearly the strategy of our country, 
this may lead people to ask, ``What are the consequences?'' 
Well, the consequences might be that, ``You really don't 
receive our support. For a while, you're on your own. Take it 
or leave it.''
    Some may say, ``Well that's impossible. Our relationship 
with Israel is something in which you just can't say, `Take it 
or leave it.' '' Likewise, the Palestinians are important with 
regard to everybody we're dealing with in the Middle East, and 
have been for 50 years.
    But, at some point, there really has to be a concentration 
of the minds. Why in the world would the fragmentation or the 
politics ever change? I mean, you know, there are no 
imperatives here at all. Why wouldn't intrusion by Syria or 
Iran always outplay what seems to be an indecisive lack of 
strategy on our part?
    And so, I don't mean to pin you down from your testimony. 
I'm just saying, in the event we do come forward with this--not 
necessarily through a ``take it or leave it'' approach--but, 
the consequences of failure to move ahead have to be evident at 
some point. Somebody has to worry about this. If they don't, 
then we're in trouble. We will continue to consult, to send 
folks back and forth, thus making this a profession for tens of 
folks. But, really, without taking any steps related to the 
formulation of the consequences that we want, I don't foresee 
the parties taking the necessary steps forward to pursue a 
lasting peace.
    Ambassador Kurtzer. Senator, I couldn't agree more. And 
that's why I would distinguish between what I think should be 
consequences for behavioral misdeeds, as opposed to policy 
issues.
    Israel and the Palestinians have every right in the world 
to hold to their views with respect to territory in Jerusalem, 
as we will have a right to hold to our views. But, there are 
behaviors that are matters of choice, not matters of necessity, 
that need to change. And, in that respect, any implicit U.S. 
support for settlements should come to an end; any means by 
which American citizens may be funding settlements and getting 
tax breaks should come to an end. In other words, there are 
steps that can be contemplated, short of the ``nuclear 
option,'' which we wouldn't want to do anyway, with our friend 
Israel--but, there are steps that need to be contemplated on 
behavioral issues, as opposed to issues where we differ on 
policy terms.
    The one issue that I would fence off in all of this 
discussion has to do with Israel's security. I think none of 
the discussions about consequences should touch on that issue. 
Our strategic and intelligence cooperation with Israel has 
proved beneficial to both sides, and should continue. But those 
are matters of necessity--where I would build a fence; on 
matters of choice that involve the bad behaviors, I think there 
are options before us with respect to those consequences.
    Senator Lugar. Well, then, in that case, you've stated a 
policy of Israeli security, so the other side understands the 
consequence of continuing whatever lack of dialogue there is. 
It is still going to be the United States that defends Israel, 
and therefore they'll need to accept that. Now, that is an 
important factor all by itself. It doesn't fence off Israel 
from bad behavior, as you're suggesting. But, on the other 
hand, it does, perhaps, slant the dialogue somewhat, because we 
haven't said we're going to come to the defense of the 
Palestinians, or necessarily defense of anybody else who 
happens to be in this process.
    Yes, sir.
    Mr. Makovsky. Senator, I would agree with some of the 
points that Dan made on security and behavior. I think the 
following, though. Where I might, respectfully, disagree with 
you is to suggest that, if there's not external pressure of 
some kind, however we define that--it might be walking away--
and you could argue, ``Well, if the U.S. makes best-faith 
efforts and it doesn't work, the U.S. will definitely put in 
less resources in the future.'' But, I think I disagree with 
the premise that there's no internal drivers for a solution--
that if there's no external pressure, it's not going to work. I 
think what Senator Kerry said about the demographic challenges 
to Israel and, I think, the fact that people like Abbas know 
that, if they don't succeed, you have Hamas waiting in the 
wings--those two challenges alone are what are going to drive 
this process. And frankly, I think that external pressure could 
be counterproductive. I mean, it could be natural that, after 
making the best efforts we decide, ``Well, we can't try as 
hard, because we tried.'' But I don't--respectfully, I don't 
think I accept the premise.
    Senator Lugar. My time is over. I'm sorry not to be able to 
recognize others, but the chairman has asked me to pass things 
along to Senator Dodd.
    Senator Dodd [presiding]. Well, thank you, Senator Lugar. 
And I apologize being a little late getting here. We had a 
hearing on--in the Labor Committee. In fact, Senator Casey was 
there briefly on health-related matters. So, I apologize for 
not being there at the outset to hear all of your opening 
comments.
    And found this exchange, as I always do--Senator Lugar 
always asks great questions, and I find myself very comfortable 
with your questions, as well as the answers you solicit.
    Let me ask about the Gaza, if I can. And I don't know who 
wants to respond to this, but--what's our end game here, in a 
sense? I mean, it seems to me--and I guess this--you're at a 
different level, I guess, than this question. I'm going to 
bring you back down to Earth, in a way, here. Given the 
conditions in the Gaza, at some point, it seems to me, we've 
got to go beyond what has been the policy, right now, of just 
allowing, basically, I guess, some foodstuffs in, and so forth, 
but not much more than that. Now, the danger of this--of 
course, people assume that, by saying this, you're somehow 
endorsing Hamas, which is hardly the case. But, the conditions 
are dreadful, and the reconstruction efforts just don't exist. 
And I wonder if you might comment on what is going on there and 
how would you assess the political strength of Hamas in Gaza at 
this point? And how much aid is getting in? What more should be 
done, in your views, with regard to Gaza? Because it seems to 
me this is just a festering situation that needs to be 
addressed in some way.
    Yes.
    Dr. Malley. Well, Senator, I agree with what you said. I 
think, first of all, what's happening in Gaza is both morally 
unconscionable and politically self-defeating. And I think I 
want to focus on the politics. The humanitarian side, we all 
could sympathize with, but I think the politics are what are--
somewhat get lost.
    If the notion was to weaken Hamas's hold of--in Gaza, I 
think one thing is clear. We have people who work with us at 
the International Crisis Group who live in Gaza, and they 
testify that Hamas's popularity has fallen, and in some cases 
quite significantly. But to what end? It's not as if there are 
going to be elections in Gaza anytime soon. It's not as if 
people are going to rise up to overthrow Hamas. So, Hamas's 
ability to control the situation has, in fact, not only not 
lessened, it has increased. The blockade has meant that the 
formal economy has dried up. All of the goods come in through 
tunnels. Hamas can exact a tax on that, it can control the 
tunnels. It becomes, as in many cases of sanctions, the sole 
provider of the people. So, Hamas's grip on Gaza has increased, 
even as its popularity has decreased. But, that has no 
relevance today, unfortunately, because there are no elections 
or no way to gauge popular support.
    What's happening, as--the future of Gaza is being held 
hostage. The business community is drying up, the civil society 
is drying up, as Dr. Asali said. And what we're seeing also is 
a generation of Gazans--1.5 million Gazans--who have known 
nothing but deprivation, want, and humiliation. I'm not sure 
that's best for Israel's security, in the long term. And there 
are articles now--and we see it, as well, on the ground in 
Gaza--of more radical groups that are challenging Hamas. That's 
not good for Israel's security either.
    It seems to me what we need to do is devise a plan--and 
there are many ideas out there--about how you can get normal 
traffic resumed in Gaza, but make sure that weapons don't get 
smuggled, and make sure that the money doesn't get diverted 
into the wrong hands. The U.N. has plans to go that way, other 
organizations have developed plans.
    The two--there are two legitimate--or two Israeli 
counterarguments. One is security. There, you need real 
monitoring. The other is the fate of Corporal Shalit. Now, we 
all would like to see a prisoner exchange take place, but I 
don't see--there's no evidence that, over the last years, the 
fact that we've held Gaza in the situation it is today has led 
Hamas to be more flexible on the issue of the prisoner 
exchange, and punishing a million and a half people because of 
that issue, I think is--again it's--it doesn't stand up to 
moral scrutiny, it doesn't stand up to political scrutiny 
either.
    And I would add one point, which is, in terms of our own 
credibility in the region. This has become one of the filters 
through which--the prisms through which U.S. policy is viewed 
in the region. People say, ``If the U.S. can't do anything to 
lift the siege of Gaza,'' what good are we? And I think we have 
to be front and center on this issue, work with the Israelis 
and the Egyptians to make sure that Gazans can recover as 
normal a life as possible.
    Senator Dodd. Yes.
    Ambassador Kurtzer, do you have any comments on that?
    Ambassador Kurtzer. I would add one historical context to 
what Rob Malley has said, and that is, there's no proven 
experience that imposing this kind of a siege, of a closure, 
actually affects political views or behavior in Gaza. I had 
discussions, during the course of the intifada, with Prime 
Minister Sharon all the time on this issue. Something would 
happen, a terrible terrorist event in Israel, and people would 
get killed and injured, and the Israel military would shut Gaza 
down. And I would then go see the Prime Minister, and we'd have 
a conversation that basically went as follows: ``The terrorists 
did something terrible, and the punishment is now being felt on 
the part of a population whose views you should want to affect 
to isolate the terrorists; but, by, in fact, isolating the 
population, you are simply creating solidarity between them and 
the terrorists.''
    The Prime Minister had a different view. He felt that this 
was a way to enhance Israeli security; it was a way to put some 
burdens on the part of the population to pressure the 
terrorists to not act. It never worked.
    So, I would be extraordinarily sympathetic to Israeli 
security concerns with respect to any desire on the part of 
Gazans to export something out of Gaza. That's where security 
is most directly affected. And I'd be very careful with respect 
to what, besides humanitarian goods, go into Gaza, so that you 
don't have dual-use items. But, the idea of somehow affecting 
political views in Gaza by maintaining this tight grip makes no 
sense, and it has never proved to be correct in the past.
    Senator Dodd. Let me ask you quickly, about something Dr. 
Malley said here, and that is that the--at least the 
appearance, absent an election, that the popularity of Hamas 
has declined, as has the conditions in the Gaza declined. It 
seems to me one might draw the conclusion that, in fact, we are 
having a political impact on what's happening in the Gaza. I'd 
like to ask the other two members of the panel to comment.
    Dr. Asali. Yes, Hamas has benefited from the blockade, the 
siege, whatever you call it, and it has benefited politically, 
while the people of Gaza suffer. There is no question that this 
policy is unsustainable, on not just moral and political and 
human conditions, it's just not sustainable.
    So, we have to divide it into specifics. What can be done? 
What can be done? One thing is to look at the crossings. The 
crossings have to be open. The crossings have to be open. The 
management of the crossings is something that can be worked out 
between the United Nations, the PA, et cetera, and the 
Egyptians and the Israelis, to allow goods in, to allow more 
goods in.
    And the other thing is the reconstruction business. The 
reconstruction issue is a very sensitive issue. This is 
rebuilding after the damage. And this also has been resisted, 
primarily by Israel, for a long time. Not for security reasons, 
obviously, alone; for other considerations. This has to--this 
has to be ameliorated.
    There are other things that can be done to combat Hamas, 
politically. This is--as long as Hamas stands up for the 
Palestinians, heroic defense against everybody else, it will 
score political points, even though it has been a political 
failure as a manager. So, that issue, in itself, has to be open 
to eventual elections. Elections have to take place at some 
point in time, and elections start by influencing the hearts 
and minds of the people. The policies of the United States, in 
coordination, in this particular case, with the Palestinians, 
the Israelis, and the Egyptians, will determine the outcome of 
the elections, whenever that takes place.
    Senator Dodd. Mr. Makovsky, do you want to comment?
    Mr. Makovsky. Thank you, Senator Dodd.
    Look, I think the question is--we all agree that we would 
like to see some humanitarian approach on Gaza. The question 
is, How do you craft it in a way that--as I think your question 
implied--that Hamas doesn't benefit?
    Because if you look at Khalil Shikaki's polls--that's the 
Palestine Survey Research Polls in Ramallah--and you look at 
his last six polls, what you see is that Hamas is down by 20 
percentage points. They spiked up due to sympathy right after 
the Gaza war in late 2008-09. Now they're below where they were 
before the war. So, they're 20 points below Abbas. Everyone 
likes to say Abbas is weak, but Abbas is running 20 points 
ahead of Hamas.
    So--and Gazans say they'd rather live under Fayyad in the 
West Bank than live under Hamas--so there's something going on 
here that's interesting. So, I just think we have to be very 
careful. How do we craft this humanitarian approach, which we 
all favor, in a way that the Palestinian Authority in the West 
Bank gets the credit?
    By the way, another factor--a player we have to look at is 
Egypt. They're the ones building a wall on the Egypt-Gaza 
border. They're frustrated by their efforts to mediate with 
Hamas that have failed. So, they have to be approached, as 
well.
    It's not an easy solution, but we have to think creatively 
of how do you do something, in a humanitarian context, where 
it's the PA and Hamas that doesn't accrue the political credit?
    Senator Dodd. Well, thank you. Senator Risch, you're next.
    Senator Risch. I'm going to pass, Senator.
    Senator Dodd. You're going to pass?
    I should know the order of arrival, but I'll go to Ted 
Kaufman. Ted, are you--are you ready? OK.
    And the gavel's yours, Senator Casey. I've got to----
    Senator Kaufman. You mentioned that the United States 
should----
    Senator Dodd. Turn your mike----
    Senator Kaufman [continuing]. United States should get back 
in the diplomacy game. And I was just wondering, how would you 
characterize--you said some nice things about Senator Mitchell 
in your testimony--how would you characterize Senator 
Mitchell's efforts?
    Ambassador Kurtzer. Senator, I have great respect for 
Senator Mitchell, not only on the basis of his time served here 
in the Senate, but also his accomplishments diplomatically. I 
think this past year, however, our diplomatic efforts have 
fallen well short of the high expectations we all had.
    I think the President and Senator Mitchell got it right, at 
the outset of the administration, when the President said that 
the solution of the Middle East conflict is a United States 
national interest. That's exactly right. The President also 
said that he was going to make this one of his foreign policy 
priorities. None of us would expect that it would be at the top 
of the agenda, but that it would be on his desk. And third, the 
President decided on the appointment of a senior Presidential 
envoy of the stature of Senator Mitchell.
    But there were missteps this past year: miscalculations; 
the failure to articulate a clear strategy, and then to pursue 
it; the way in which we created situations in which we put 
Palestinians out on a limb on the question of settlements; or 
even on the question of convening a trilateral meeting in 
September that had no content and had no results. All of this 
suggests that we didn't do as well as we might have done.
    I am not suggesting that we can't do well. And I think that 
Senator Mitchell certainly has--and doesn't need me to say it--
certainly has all the capabilities and diplomatic strengths to 
accomplish this. But, I think we need to have a strong policy 
with which he will operate, and an integrated strategy, so that 
we're not pursuing this or that whim, and then deciding, at the 
last moment, that we don't see it through to a conclusion.
    Senator Kaufman. I would assume that Senator Mitchell will 
be doing exactly what you said. One of the questions that comes 
up is another issue you raise, which is the public statement of 
our views on how this peace process should end. I think there's 
a good reason why we haven't done that for 30 years, because I 
think--and I'd like your comment on it--you say, in a comment, 
you don't want this to become a U.S. plan imposed on the 
region. But, I'll tell you what, as soon as the United States 
announces where they want to go, folks on either end of the 
spectrum will usually take that and say, ``That's where the 
U.S. is going, when the U.S. is engaged in this, the United 
States is forcing this.'' And so, I think that's why we haven't 
done it for 30 years.
    It would seem to me that Senator Mitchell would be talking 
to the--he's talking to the parties all the time--that he can 
surely, I would assume, express to the parties what our 
position is.
    What's the advantage of going public with this, as opposed 
to just letting it be a back--in a diplomatic area, without 
making it public?
    Ambassador Kurtzer. Senator, let me first deal with the 
disadvantages of not going public. And we've seen them for the 
last 20 years. We've had opportunities to move this peace 
process forward, and in the Clinton administration, in the Bush 
administration, and now in the Obama administration, we've not 
been able to exploit those opportunities diplomatically.
    The interesting thing in this conflict is that most 
everyone knows approximately how this is going to end.
    Senator Kaufman. Right.
    Ambassador Kurtzer. Public opinion polls in both 
communities reveal no surprises.
    Senator Kaufman. Right.
    Ambassador Kurtzer. So, it will not be a surprise if the 
United States articulates our own views on how this will end, 
and uses that as a kind of galvanizing, or magnet force----
    Senator Kaufman. Right.
    Ambassador Kurtzer [continuing]. To bring the parties 
closer together.
    Senator Kaufman. Oh, I think it will galvanize--it'll 
galvanize the parties. I'm just afraid it's going to--everybody 
knows where we're going. I think publicly saying what we think 
we ought to do about Jerusalem would be a massive mistake. And 
I just really--I thought your comments--I agree with so much of 
what you're saying. I'm just trying to get that out.
    I mean, just going into the final process and saying where 
we think it ought to go--I mean, even--I don't even want 
anybody, kind of, saying that. We want to go through the 
proximity, kind of work it out, and then we get to the very 
end, and we all know what the issues are. I'm just trying to--
because I respect you so much--what is the advantage of saying 
to everybody how we would resolve this, at this particular 
point in the process?
    I guess I'm going back to Senator Kerry's comment, too, 
about timing.
    Ambassador Kurtzer. Senator, the advantage is based on the 
disadvantages of not doing it.
    Take, for example, the situation that Rob Malley mentioned, 
Camp David 2, where the United States did not articulate its 
views----
    Senator Kaufman. Yes.
    Ambassador Kurtzer [continuing]. Where we tried to bring 
the parties together.
    Senator Kaufman. Right.
    Ambassador Kurtzer. And only very late in the Clinton 
administration did the President put out the so-called 
parameters, which he then took off the table when the parties 
would not agree to negotiate on their basis.
    What would have happened, had the United States put those 
views out 6 months earlier?
    Senator Kaufman. Well----
    Ambassador Kurtzer. Might it have acted as this magnet to 
bring the parties together? And might it have had an impact, 
also, on public opinion in the two constituencies?
    Senator Kaufman. OK. We--and I think those are very, very 
good points. What I'd like you to focus on a second--what the 
impact would be on the region, on the parties, except extreme 
elements, in both Israel and the Palestinian movement, of us 
putting together what we think the final process should be--the 
final position should be? Just, if you could focus on that for 
a few minutes.
    Ambassador Kurtzer. Well, first of all, I think it would 
stimulate extraordinary public debate in every society in that 
region, particularly in Israel, where public debate is a 
national sport.
    Senator Kaufman. Absolutely.
    Ambassador Kurtzer. But also in Palestine, and in other 
places, as well. That will be a healthy public debate, because 
it will give public opinion, and those who articulate the views 
about public opinion--the editorial writers, and the think-
tankers, and the commentators--additional grist with which to 
fuel a very healthy discussion of how their respective 
societies should move.
    So, No. 1, it's to fuel a public debate. No. 2, it provides 
our diplomats with a significant, constructive grounding with 
which to argue our case.
    I don't doubt at all that Senator Mitchell, and anyone else 
who has been a special envoy in this conflict, has talked about 
final-status issues. But, not being able to talk about them as 
a ``United States position'' is a sign of weakness and it's a 
handicap to our negotiators, because the United States should 
stand for something. We carry weight. We are a major power, and 
yet our diplomacy sometimes doesn't conduct itself as a major 
power.
    Senator Kaufman. Just one final piece, then. I mean you 
have--and Dr. Malley--both have been critical of what the 
administration has done with the settlement policy. That seems 
to me to be Exhibit 1 of the problems of America stating where 
it is we're going to go. I mean, stating a settlements policy 
that doesn't declare--doesn't cause a problem--I mean, and I 
think you'd say, public debate in Israel doesn't need fueling. 
I mean, public debate in Israel right now is vigorous and 
ongoing. I think what this would do would cut down the debate, 
because it wouldn't be debating the issues; they'd be debating 
the fact that the United States is now getting involved in this 
process. And we would become the polarizing agent in the entire 
discussion. Instead of discussing what's right and what's 
wrong, the discussion would be, ``The United States says this. 
They should stay out of here. They shouldn't be doing this. 
This is not the way to go.''
    But, we can kind of agree to disagree.
    Dr. Malley.
    Dr. Malley. I always hesitate to take issue with what 
Ambassador Kurtzer says, but I do think I want to, sort of, go 
in--somewhat in the direction you're saying.
    The peace process is littered, literally littered, with 
the--with cases of projects and plans and--you know, from the 
Rogers plan to the Reagan plan to the roadmap, and on and on 
and on--that didn't have a positive effect; in fact, just 
stayed there. And the real--you know, it doesn't make any sense 
to put something on the table if nothing will happen the day 
after. The only thing that will happen at that point will--all 
those who disagree will come out, because they'll have a 
target, whereas those who agree won't have anything positive to 
show about it.
    And one example, although it's not--it's not exactly on 
point--the Geneva Accords, which I think really--done by civil 
society, Israel and Palestinian--I think everyone in this room 
would say this is more or less where it's going to end up--was 
put on the table, but it served as a magnet for all the 
opponents.
    Now, as I said earlier, I think this is not a matter of the 
content, it's a matter of the context. And I think there is a 
time where the United States can and should do--and there I 
agree entirely with Ambassador Kurtzer--but it has to be at a 
time when our credibility is restored in the region, where 
we've done all the groundwork we need to do with Arab and 
international partners so that when we put it on the table, the 
odds of the parties saying yes increase, and the cost for them 
of saying no decrease.
    On the settlements issue, you're right. There was no cost 
for Prime Minister Netanyahu, or very little, for him to say 
no. He got away with it. Our credibility was hurt.
    Senator Kaufman. Yes, Mr. Asali--Dr. Asali.
    Dr. Asali. The chances of arriving at an agreement--a final 
agreement--without the United States being in the mix, to the 
point of having its own views--are nil.
    Senator Kaufman. Right. I agree.
    Dr. Asali. The question is the timing. I agree with 
everybody else. Several things need to be done on timing. One, 
I think the two variables, one for the Palestinians on violence 
and for the Israelis on settlement, are all true.
    A third variable, which has just been introduced and should 
really deserve more attention, is what is happening on the 
ground, relevant to the subject here, Truth on the Ground. 
There is a state-building project that is happening on the 
ground, where the Palestinians and the Israelis have a chance 
to cooperate, and have to be held accountable to the United 
States in the meantime. This is one way of not testing the 
final understanding on the comprehensive agreement, but on 
changing enough facts on the ground, where parties can either 
help or thwart this effort. And I think this would be a measure 
to guide us to the timing as to where the parties could be more 
ready. And perhaps they would have more trust in each other by 
the end of that successful venture.
    Mr. Makovsky. I'll just say, Senator, I one hundred percent 
agree with you. As I tried to say before, I think there are 
real-world consequences. We saw, in 2009, what happens when we 
raise expectations of putting forward an American policy 
without thinking through the implications. And we lost on both 
sides in 2009, and I hope that's a cautionary tale for the 
future.
    Senator Kaufman. Thank you.
    Thank you, Mr. Chairman.
    Senator Casey  [presiding]. Senator Feingold.
    Senator Feingold. Thank you, Mr. Chairman.
    It's been almost a year since our last hearing on this 
issue, and while there have been positive developments in that 
time, there has also been, obviously, frustration about the 
pace of progress.
    I do know that Special Envoy Mitchell has been working 
tirelessly over the past months, meeting with leaders in the 
region, and I want to commend him and the administration for 
these efforts. I believe we need to reflect on the lessons 
learned over the past year, and redouble our efforts to bring 
the parties back to the table. And, obviously, challenges and 
obstacles remain, difficult compromises will have to be made, 
but achieving a lasting peace in the Middle East is essential, 
not only to the security of Israelis and Palestinians, but for 
others in the region, and, of course, for the national security 
of the United States.
    That's why it's imperative that we persevere in our efforts 
to work with the parties toward a resolution of this conflict.
    Ambassador Kurtzer, in your testimony you noted the 
importance that people-to-people exchanges can have in breaking 
down differences and building understandings between peoples, 
even when the governments of their countries may not get along. 
And so, while we continue to push for peace negotiations, what 
more should be done to build better relationships between the 
Israeli and Palestinian peoples? And how can the United States 
and other nations help support that?
    Ambassador Kurtzer. Thank you, Senator. There are at least 
two, if not more, very specific activities which the United 
States can foster to help stimulate and encourage people-to-
people activities. One is to revitalize the multilateral 
negotiations that began after the Madrid Conference in 1991, to 
bring people together on issues related to water, environment, 
economic development, security, and so forth, and then, after a 
few years, simply faded away.
    They didn't accomplish a great deal, but they left a 
lasting legacy of introducing Israelis and Arabs that goes on 
today. I travel around the region and still meet with people 
who remember having participated in such-and-such a meeting in 
such-and-such a location, back in 1994. So, first of all, we 
can simulate the renewal of even more action-oriented 
multilateral negotiations.
    I think, second, we and other external actors can provide 
seed money. And we're not talking about large amounts of money, 
but seed money for track-two people-to-people activities. There 
are health initiatives that are wanting for money, in which 
Palestinians, Israelis, and Arabs are trying to find ways to 
get together and share ideas about health.
    Water and the environment are always issues in which you 
can find professional audiences on both sides that want to get 
together.
    We had in the late 1990s, or early 2000 period, about $10 
million of American money to use for Israeli-Palestinian 
cooperative activities in the NGO sector. And that money was 
sucked up immediately by very good projects that brought 
Israelis and Palestinians together outside of government 
auspices.
    So, there's just a number of things, that are not high-cost 
items, that help translate peace into something meaningful on 
the ground, even while the diplomats argue about things at a 
different level.
    Senator Feingold. You may not know the answer to this, but 
with regard to those two examples you gave, do you know if--
even if the processes may not have continued--if the 
interpersonal contacts continued from those kind of talks?
    Ambassador Kurtzer. In some cases they did. In respect to 
the late-1990s funding, one of our conditions for giving out 
the funding, in fact, was sustainability. So, we were looking 
for projects that would live beyond the $10 million. And in 
some cases, they did.
    In the case of the multilaterals, there are some unintended 
positive consequences. There was not a multilateral 
negotiation, for example, on health, but a lot of people who 
watched the multilaterals thought it was a good enough idea 
that they came together and created, for example, a Middle East 
Cancer Consortium. There's also a Peace Through Health 
Initiative that's run out of Boston.
    So, this was something that, in fact, was not directly 
stimulated by us, but was an unintended and positive 
consequence.
    Senator Feingold. Offshoot of the other things that were 
done.
    Ambassador Kurtzer. I'm sorry?
    Senator Feingold. It was an offshoot of the other----
    Ambassador Kurtzer. Exactly.
    Senator Feingold [continuing]. Things that were done.
    Ambassador, you've suggested that President Obama should 
make the case directly to the Israeli public for United States 
efforts to restart the peace talks, akin to how he reached out 
to the Muslim publics in his Cairo address. So, I'd like to ask 
you to say a bit more on what steps should be taken to bolster 
our public diplomacy in the region, starting with Vice 
President Biden's trip to Israel next week. What do you think 
his key audience there should be? What are the most important 
points he needs to make? And will the Israeli public be 
receptive to it?
    Ambassador Kurtzer. Well, Senator, as I've said in the 
context of the earlier discussion about the substantive U.S. 
policy, one of the goals that we have to have in our diplomacy 
is also to affect public opinion. And I think the United States 
has not done an adequate enough job with Israeli public 
opinion. They have felt ignored, in very concrete terms. And 
not just because the President went to Cairo and went to 
Turkey, and didn't go to Israel, but also because there has 
been a relative lack of interviews, of appearances on Israeli 
television, a lack of opportunities for Israelis to kind of 
touch and feel our leaders.
    We know, from before the last election, that there were 
some doubts in Israel about President Obama's views on Israel. 
I'm being very blunt, but we know that to be the case. And I 
think one of the assets that we need to build for our diplomacy 
is to show the Israeli people that our leaders, both Democrat 
and Republican, form a consensus with respect to support for 
Israel, support for its security and well-being, and that this 
can only be done by, as I say, touching and feeling.
    In this respect, Vice President Biden's trip, and the 
likelihood of his both appearing on television but also 
delivering a major speech, will be such an opportunity to lay 
out, very clearly, for the Israeli people--including from a 
friend of Israel for 37 more years in his time in the Senate--
what it is that this administration stands for, and why the 
people of Israel can trust this administration, even if we 
articulate views, sometimes, with which they disagree.
    Senator Feingold. Ambassador, you said that the Syrian-
Israeli issues should play a prominent role in our peace 
process strategy. So, in that context, how do you view 
President Obama's decision to nominate a U.S. Ambassador to 
Damascus? And is there a role for the United States to play in 
the Syrian-Israeli negotiation?
    Ambassador Kurtzer. Well, I have believed, for a long time, 
Senator, that sending an ambassador to a country is not a favor 
we do for the country, but it's a national asset for ourselves. 
It gives us the eyes and ears that we need on the ground. When 
I served for a short while in our intelligence community, we 
did a study, whose results have been publicized, that indicate 
that a great deal of our intelligence analysis is based on 
embassy reporting and the embassy contacts that are then 
reported through diplomatic channels. In other words, our 
embassies, our ambassadors, serve our purposes. They allow us 
to argue our case before both the Syrian Government, in this 
instance, and the Syrian public.
    So, I think it's overdue that we're sending an ambassador 
back, but quite good that we're doing it now. And the 
designated choice, Robert Ford, is a very good man, and I think 
he'll do a good job.
    With respect to the peace process between Israel and Syria, 
one needs to distinguish between the four substantive issues on 
the agenda--security, the nature of peace, water, and 
territory--all of which are resolvable--and what I would call 
the contextual issues--Syria's relationship with Iran, which 
should be of great concern to us; its relationship with 
Hezbollah, which should be of great concern to us. And so, it's 
a far more complicated set of issues than simply resolving the 
proximate causes of the Israeli-Syrian conflict.
    But, nonetheless, these two sides have also talked to each 
other on and off, for about 20 years, and we certainly should 
make an effort to see whether we can narrow the substantive 
differences, and perhaps use progress on that to see whether 
Syria can be weaned--not totally away from its relationship 
with Iran, which I think is unrealistic, but certainly toward a 
more balanced position with respect to who it chooses as its 
friends.
    Senator Feingold. Thank you, Ambassador.
    Dr. Asali, we've heard a lot of positive comments from you 
and your fellow witnesses about the work of Prime Minister 
Fayyad and building up Palestinian institutions, 
infrastructure, and the economy. What can the United States do 
to best support these kinds of efforts? And do you have any 
concerns that the building of a de facto Palestinian state 
could be used by either side as a reason to delay direct 
negotiations?
    Dr. Asali. First off, this is--as Prime Minister Fayyad 
himself said, this has to be a unilateral effort, because the 
Palestinians are the only ones who can build their state.
    The other thing, the state of Palestine cannot be born 
without an agreement with Israel. So, that has to be clear.
    In the meantime, we're talking about the process of 
building institutions and state--many different levels of 
state-building exercises. For this--and this is the point where 
I think it is relevant--Israel is the occupying power. Israel 
has within its power all kinds of tools to make this exercise 
either go along and happen, and mature, or frustrate it and 
thwart it. This is one situation where the United States can be 
very effective in having a meaningful conversation with Israel 
as we encourage another conversation between the Palestinians 
and Israel to make this exercise work.
    There has been an unbelievable amount of cooperation on 
security. Most of it has gone unnoticed, but it has been real, 
and to the point where, I think, the Israeli security 
establishment acknowledges this openly.
    Now, this has been at a political price for the people who 
are involved on the Palestinian side. I think the economic 
progress that has been achieved, and the projects that have 
been done, and the initial improvements in the legal and 
government controls, are all things that need to be nurtured 
and helped by the United States, and at least not obstructed by 
Israel. I think this is where the Congress can continue its 
generous support for the Palestinian authority.
    And I want to mention, here, the issue of corruption that 
keeps coming up. The Palestinian Authority has, in fact, 
gotten, you know, high grades by PriceWaterhouse for its 
accountability. All the money that's under the Palestinian 
Authority is accountable for.
    So, we need to continue the political support, we need to 
continue the financial support, and we need to continue the 
policy coordination between the Israelis and the Palestinians 
on this one.
    Senator Feingold. Thank you.
    Thank you, Mr. Chairman.
    The Chairman [presiding]. Thank you very much, Senator.
    I'm going to recognize Senator Casey, but can you clarify 
that there were four--you had water, security----
    Ambassador Kurtzer. We had--there were five multilateral 
working----
    The Chairman. No, no, no. No. What you said with respect--
--
    Ambassador Kurtzer. Oh, with Syria, I'm sorry.
    The Chairman. I thought you were talking about peace with 
Syria.
    Ambassador Kurtzer. Yes. Yes, with Syria there are four 
core issues. One is territory----
    The Chairman. Right.
    Ambassador Kurtzer [continuing]. The withdrawal----
    The Chairman. Obviously the territory. And then the water 
and security----
    Ambassador Kurtzer. The second is security----
    The Chairman. I missed the fourth. I didn't hear what----
    Ambassador Kurtzer. Political relations.
    The Chairman. Political relations.
    Ambassador Kurtzer. Normalization.
    The Chairman. All right. Thank you.
    Senator Casey.
    Senator Casey. Thank you, Mr. Chairman.
    First of all, I wanted to, in the time that I have, raise 
maybe three or four issues. One that I'll start with is the 
question of talks. What kind of talks can occur in the next 
couple of months? But, I think, just by way of a statement of--
I guess, statement of an opinion that I have is--I think the 
Israelis have shown, certainly in the last year, that they've 
been willing to make real concessions. I can't say the same, in 
my judgment, about the Palestinians. I think there's been a 
real reluctance, or even refusal, to really engage in real 
negotiations. I'll invite people to comment on that.
    But, the two-part question I have is--in light of the fact 
that there has been face-to-face engagement recently--in the 
last year or so, if not prior to that--evaluate, if you can--
and I'll leave it for the whole panel--the question that some 
would raise is that--some may assert, I should say--that any 
kind of proximity talks would be a step backward. So, that's 
one basic question for the panel to evaluate. Maybe I'll go 
left to right.
    And then, the second related question is, What can the 
Obama administration or--and/or, I should say--the Congress do 
to move that forward or to--in particular, to put some--what I 
would argue would be appropriate pressure on the Palestinians 
to come to the negotiation table?
    Maybe start with Mr. Makovsky.
    Mr. Makovsky. Thank you, Senator Casey.
    Look, I think you're correct in pointing out--in 2009, 
you've seen some key moves on the Israeli side. You've seen 
Prime Minister Netanyahu, who, for much of his professional 
life has been opposed to a Palestinian state, give a speech at 
Bar-Ilan University, where he traversed, I think, a real 
ideological distance in supporting a Palestinian state. I think 
that was an important key move for him. He has also lifted many 
checkpoints in the West Bank--I think the number went from 42 
down to 14.
    You've seen, on the settlement moratorium, while it was 
qualified, more than any of his predecessors have been willing 
to do. I think Jimmy Carter got 3 months from Begin. There have 
been some steps.
    I don't want to minimize what my friend and colleague Dr. 
Asali says, which is that, on security issues, the Palestinians 
have been forthcoming. And that's part of the good news that's 
out there is the close coordination between Israeli and 
Palestinian security forces, which is not covered in the 
headlines. I even asked Israeli Defense Minister Barak, who 
appeared at my institute, the Washington Institute for Near 
East Policy, on Friday. I said, ``Do you think the tranquility 
could have happened without close security cooperation?'' He 
said no. It was crucial.
    So, I think that there is--that's where there've been 
hopeful moves. And the change of a paradigm, which is not just 
a favor to Israel, but a favor to the Palestinians themselves, 
is one of accountability and not one of entitlement.
    Are proximity talks a step backward? I mean, technically, 
yes, they are. They bring us back, as Senator Kerry said, to 
the pre-Madrid period. But, if it's a transition to direct 
talks, or a political cover for a back channel, it's a good 
thing. If it's an alternative to direct talks, it's going to 
fail. The parties have to sit directly and deal with their 
differences.
    And did you have--was there a final point with----
    Senator Casey. About pressure that can be applied by the 
administration or by Congress.
    Mr. Makovsky. Well, look, I endorse what my colleague Dr. 
Asali said about support for Salam Fayyad's government. You 
know, it's a real change. There was a time where the United 
States Congress could not give any aid to the Palestinian 
authority because of corruption. I am concerned, as I've tried 
to point out in my testimony, by a little rockiness--that we're 
entering a certain period between Fayyad and Israel that is 
new. And I think Members of the Senate need to be aware of that 
rockiness, because, on one hand, Fayyad is calling for 
nonviolent resistance, which is a real change, and, I think, a 
positive change, without question. But, there have been times 
where that spilled over into violence, even though that was not 
intended.
    So, I think anything that Congress could do to encourage 
Prime Minister Fayyad to work with Israel--not unilaterally, 
but together--I think that's crucial. But, I think we have to--
it's a tribute to the Congress and to its support for Prime 
Minister Fayyad and to General Dayton that there's been a real 
change in Congress's approach, and there's a greater sense of 
confidence, which has translated into a better situation on the 
ground. So, I would applaud the Congress, but just keep your 
eye on the situation.
    Senator Casey. Doctor.
    Dr. Asali. On the issue of the proximity talks, it's a good 
start. It's a good start. And I think that there will be a 
dynamic that will unfold in due time.
    On the issue of what is happening on the Palestinian side, 
I think it's important to know there are basically two things: 
the political management of the issue and then what you might 
call the state-building effort.
    What is of great concern to us is that the state-building 
effort has been a major success. It's been a cooperative effort 
between the Israelis and the Palestinians, it's been adopted by 
the United States, and the Congress has been very generous to 
support it. And it is very important for this effort not to be 
penalized, by the slowness, by the lack of development, the 
lack of any meaningful progress that has been taking place on 
the political front, and that might last for some time.
    Now, on the issue of the security that my friend David has 
raised, on the security questions about what Salam Fayyad is 
doing; he is laboring under an exceptionally difficult set of 
circumstances, where he gets a state security system that he 
has put together, on one doctrine, basically, ``We are building 
a state.'' So, if this security system, the security forces, 
are challenged by Israel, by incursions, by events that take 
place, that puts him in the most incredible position, vis-a-vis 
his own security forces, as to, you know, ``Are we 
collaborating with Israel against ourselves?''
    So, that puts him, personally, in situations, where I have 
personally known about, where he had to go to these places--
Nablus, Hebron, et cetera--after incidents where Palestinians 
were killed, and then perhaps contain the anger of the people 
and guide it into a peaceful kind of resistance building.
    I think, frankly, he needs to have some slack cut for him. 
And this is a conversation that we had with the Israelis too, 
about this. This is the only real program that's taking place 
on the ground now. Let us not jeopardize it by just going to 
our old think. There is a perestroika that's taking place now 
in Palestine. And, we hope, in Israel, too.
    Senator Casey. I just have about 2 minutes left. I want to 
make sure that I have an opportunity for the--our other two 
witnesses to either comment on this question--I also want to 
move to--and you can certainly jump to this question--about the 
elections in July--July 17--the--in terms if--in light of what 
Hamas will be doing, will you have a--or, it appears that we're 
going to have a--you know, voters in the--in Gaza 
disenfranchised. What does that all mean? Can you comment on 
the elections? And, if you have a moment, to respond to the 
first question.
    Dr. Malley. Thank you, Senator.
    I think it's important--what you said about Prime Minister 
Netanyahu's moves is important, and we need to take it into 
account. But, I think, to be effective diplomats, we have to 
see how it's viewed from the other side.
    The fact that Prime Minister Netanyahu has now endorsed a 
two-state solution, as Palestinians see it, is not an Israeli 
concession, it's the Prime Minister's conversion. Israelis have 
accepted a two-state solution beforehand. This is nothing new. 
And, in fact, Palestinians have accepted the two-state 
solution. So, they don't see what there is to cheer about. And 
the fact that Israelis are prepared to reduce the pace of 
settlement growth, they would view it as Israelis doing less of 
what they shouldn't be doing in the first place, under 
international law. So, it's--I don't think that a Palestinian 
would view the gestures that Prime Minister Netanyahu has taken 
as significant.
    I also think--and I said this in my testimony--that 
President Abbas is the most moderate expression of deep 
Palestinian disillusionment. In other words, most Palestinians 
would not want--you know, they think that this whole 
negotiation enterprise is a charade. He has been, from the 
first, among the Palestinian leadership to believe in 
negotiations. I believe he'll be the last to continue believing 
in them, if everyone else loses faith. But, he can't be--just 
as we have to be mindful of Israeli politics--and I emphasized 
that in my statement--we have to be mindful of Palestinian 
politics. There's deep disillusionment. If we don't want to 
lose Abu Mazen--President Abbas--and people always say, ``Let's 
not lose him''--we can't force him to do things that would cost 
him the credibility that he has with his people.
    I'm in favor of direct talks, but I think, right now, to 
have proximity talks is not the worst we can do.
    On elections, I don't think there will be elections, 
because, in order to have elections, you need some form of--
some form of agreement between Fatah and Hamas, which seems 
quite a ways off. And that's, maybe, unfortunate, but I think 
we're not--we're not going to see elections this July, and 
probably not this year.
    Senator Casey. Mr. Ambassador.
    Ambassador Kurtzer. Senator, on the second question, I 
would point out that, for more than 20 years, we've asked 
Palestinians to do three things: build institutions for 
statehood; build up an economy that assures that it's not a 
failed state, if it ever comes into being; and take 
responsibility for security. And, for the first time, this past 
year, they are doing it rather intensively. The Fayyad plan is 
indicative of an intention to build up credible institutions. 
The economy in the West Bank is moving along. I'm sure Senator 
Kerry saw it on his trip. I saw it a couple of months ago when 
I was there. And, with the assistance of General Dayton, there 
is now a growing Palestinian security force that is not 
beholden to a particular political party. Its mission is out to 
carry out the law-and-order functions of the Palestinian 
Authority.
    So, I would probably advise not using the word 
``pressure,'' with respect to Palestinians, but encouragement 
to keep moving in the direction that they are. I think support 
that we can provide to Prime Minister Fayyad and to General 
Dayton to continue building up this capability for statehood is 
going to be critical, even as we do the negotiations that try 
to create the state.
    I agree with Rob Malley, I doubt that elections will take 
place. They certainly will not take place, in my view, before 
there is reconciliation between Fatah and Hamas, and that seems 
to be experiencing the usual rocky road.
    And on the question of proximity talks--I've kind of beaten 
this horse pretty hard today--it all depends, in my view, if 
there's substance that's going on in the proximity talks. If 
there is strong substance, then this may be a way to get them 
back to the table. If not, then it really is a setback of great 
magnitude.
    Senator Casey. Thank you very much.
    The Chairman. Thank you, Senator Casey.
    I might just comment that the Fayyad plan is a really 
detailed, well-articulated, thoughtful document. And to a 
greater degree we can get that process accelerated--and there 
are some issues. Area C transformations into Area A's, and so 
forth, which really ought to be accelerated, in a good faith 
effort to build those Palestinian institutions.
    Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman.
    And thank you all for your patience this morning. You're 
almost through.
    We've talked a lot about the details of what's happening in 
the Middle East right now, and I'd like you to back up and take 
sort of a broader view.
    Earlier this year, General Jones--Jim Jones--said something 
like, ``If there's any one problem that I tell the President he 
should solve, peace between the Israelis and the Palestinians 
would be it.''
    So, you all are experts, not only on the Israeli-
Palestinian conflict, but also on the Greater Middle East. So, 
can you talk a little bit about what General Jones was trying 
to say with that comment, and what the impact of progress on 
the Israeli-Palestinian conflict might have on the anti-
Americanism that we see in some parts of the Middle East, and 
also the anti-Israeli sentiment around the world? And--yes.
    Mr. Makovsky. Thank you, Senator.
    I just wrote a book, with my colleague Dennis Ross, who's 
now in the Obama White House. And we did a few long chapters on 
that one question. Sometimes it's called ``linkage.'' And I 
think we feel you have to be very careful in how you look at 
that issue.
    We have no doubt--the book is called ``Myths, Solutions, 
and Peace.'' I'd be happy to send you one.
    Senator Shaheen. OK.
    Mr. Makovsky. Just to get in a plug.
    Senator Shaheen. This was not a planted question, just for 
the----
    Mr. Makovsky. OK. But, thanks for asking. [Laughter.]
    Look, we know that this issue is evocative in the region. 
And we know that it's exploited by extremists in the region, 
too. And we see value of taking a card out of the hands of the 
extremists. But, I think we're more humble in believing that 
somehow if you solve this conflict--and we all want to end this 
tragedy----
    Senator Shaheen. Right.
    Mr. Makovsky [continuing]. That's gone on for too long--
but, I think we also have to be humble in believing that 
somehow--that this is the ``open sesame'' move--that somehow if 
we solve this conflict, as some Arab leaders who have come to 
Washington say, then you solve the Middle East.
    I think all Americans have had a--like, a graduate seminar 
on the Middle East since 9/11, and the Iraq war, and how 
complicated it is, and all the ethnic differences of Sunni and 
Shia, and the difference between the Arabs and Persians, and--
so many different dimensions. And I think, once you know all 
that, you say, ``Well, good. Solve this conflict.'' It could be 
helpful for the American position in the region. And, in a 
sense, there's an American national security hope that if you 
do this, it will have some marginal impact.
    But, I think we have to be very humble, and not believe 
it's going to be transformative. Iran will still want a nuclear 
weapon. Shia and Sunni in Iraq will still have their 
differences. They're not going to look at television and say, 
``Oh, look, the Arabs and Israelis have made peace. We can 
solve all our differences.'' There are so many conflicts in the 
Middle East that have emerged that have nothing to do with the 
Arab-Israeli conflict.
    Will it have a marginal--yes, it could have a marginal 
focus. But, I don't think it'll be transformative. And I 
realize I'm saying something that's controversial, that will be 
disputed by a lot of my colleagues. But, I don't believe that, 
if we solve this conflict, it'll change the Arab dynamic toward 
Iran.
    I was sitting with the head of an Arab intelligence agency 
the day of Annapolis, the day of great hope. And this person 
ticked off for me all the reasons why the Arabs will not be 
decisive on the Iranian issue. It has nothing to do with the 
Arab-Israeli conflict.
    So, should we pursue it? Of course we should pursue it. 
Will it have marginal impact in taking a card away? Maybe. But, 
it won't end terrorism; it won't unlock all these other 
conflicts. But, even if it has a marginal role, we know it is 
evocative, and we should pursue it. And, of course, we should 
pursue it because--for the peoples themselves that have 
suffered so long.
    Senator Shaheen. Thank you.
    Dr. Asali. Thank you, David. I haven't written a book----
    Senator Shaheen. Would you like to disagree, Doctor?
    Dr. Asali. I haven't written a book about it, that's all I 
can say. [Laughter.]
    But, take what I say seriously. I think the problem between 
Palestine and Israel is essentially the ultimate symbol in 
world conflicts. Its impact goes way beyond--like Senator Kerry 
mentioned before, whenever he goes to Pakistan or to Morocco, 
you know, people tell him about this issue--it's precisely 
because of the many layers of symbolism involved. The North-
South, the haves and have-nots, the Christians and Jews, the 
Muslims. It is so many things, I don't want to take your time 
counting.
    The reason it is crucial to solve this is not it--that it 
will take all the problems away. It won't, of course. None of 
the other problems will go away. But, it will make them subject 
to a rational conversation. Right now, you cannot really 
discuss all of these issues, you know, reasonably, because of 
the passion that's surrounded because of this issue. And it is 
used. And of course it's used. It's used by the worst kinds, 
and it's used by the best kinds, in order to move it to 
resolution.
    I have a certain antenna that goes up whenever anyone says, 
``It's not a big deal.'' Well, ``it's not a big deal'' means 
continuation of the status quo. The status quo happens to be a 
descending curve. It is not a plateau. And that means across 
the Middle East, not just between the Palestinians and the 
Israelis.
    So, we need to change the status quo, and the status quo 
also means people living under occupation, whose pictures and 
lifestyles are shown on Al Jazeera and so many TV stations, 
daily, to keep all issues agitated. If anybody does not 
understand the value of symbolism in politics, then you take 
away the essence of politics.
    The other thing is that this is not nuclear physics, 
honestly. I mean, like, you--what is it? It's how, how to do 
it. It can be done, and it can be done in many ways. And I 
think we do have, now, the beginnings of a situation where the 
Palestinians are taken seriously, by Israel and by the United 
States, as having some people who really can--you can deal 
with. If we fail to take advantage of that, then we would have 
ourselves to blame.
    Senator Shaheen. Thank you.
    Dr. Malley or Ambassador Kurtzer, do either of you want to 
comment?
    Dr. Malley. I don't have much to add to what Dr. Asali 
said. I--you know, I recommend that people read David 
Makovsky's and Dennis Ross's book.
    But, that said, I think the argument, that solving the 
Israeli-Palestinian conflict would resolve all the issues in 
the Middle East, is a little bit of a strawman, or strawperson. 
Even if you resolved all the problems in the Middle East, you 
wouldn't have resolved all the problems in the Middle East. The 
question is whether it would be helpful, in a critical way, to 
U.S. interests, given, in particular, the way in which so many 
people have used our policy and our efforts, and our failed 
efforts and sometimes our nonefforts. Diplomatically, of course 
we're going to have to do many other things. The issues have 
become far more interrelated over the last decade or so, 
whether it's Syria, whether it's Iran, whether it's Lebanon, 
whether it's Iraq. And we're going to have to play on several 
fronts at once.
    But, I don't think that takes away from the fact that this 
is an issue that resonates probably more widely, not just in 
the Arab, but in the Muslim world, than any other one. And for 
that reason alone, it's reason to work on it.
    Senator Shaheen. Thank you.
    Ambassador Kurtzer. Senator, since we're shilling our 
books, I also wrote one----
    [Laughter.]
    Ambassador Kurtzer [continuing]. Which we talked about----
    Senator Shaheen. Are you going to send me one too?
    Ambassador Kurtzer. Yes, of course.
    Senator Shaheen. OK. [Laughter.]
    Ambassador Kurtzer. But I actually want to quote an Israeli 
Prime Minister and a Saudi king on this issue.
    Prime Minister Rabin came to Washington in the summer of 
1992, and told President George H.W. Bush that he felt it was 
imperative to resolve the Arab-Israeli conflict, not because he 
was a member of Peace Now, but because he saw the impending 
threat of Iran. And he understood that the peace process was a 
heavy weight around the neck of Israel in dealing with this 
imminent over-the-horizon threat.
    About 10 years later, the Saudi Peace Initiative--or the 
Arab Peace Initiative was put forward, and the same reasoning 
obtained in the thinking of King Abdullah, not that there's a 
linkage between the resolution of one and the resolution of the 
Iranian issue, but that the lack of resolution of the Arab-
Israeli conflict represented a dead weight on Arab policy and 
Arab politics, which was inhibiting their ability to join 
forces with the United States and others in dealing with a real 
threat to their security.
    Now, I agree fully with what my colleagues have said. 
``Linkage'' is a bad word, and it's been used very loosely in 
the past, in both directions. We had an argument a few years 
ago that said, ``Don't resolve the Arab-Israeli conflict at 
all. You fix the problem in Baghdad, that's where the road to 
Jerusalem runs through.'' And you had the other argument made, 
that, ``The road to Baghdad, or wherever, runs through 
Jerusalem.'' It's silly, because the linkage argument is the 
wrong way to phrase this. The Arab-Israeli conflict needs to be 
resolved because it's a critical issue for the United States 
and for the region, and the absence of a resolution hurts our 
ability to deal with other pressing issues.
    Senator Shaheen. Thank you.
    In the minute that I have left, since you're ending on the 
Arab perspective, we've talked about--you've talked about 
Syria, but--and I think the chairman mentioned the Arab Peace 
Initiative--are there other players in the region who are 
prepared to be constructive, who we could--who could be further 
engaged in what's going on in a way that would be helpful?
    Dr. Asali.
    Dr. Asali. Yes. I think the newcomer, the last decade at 
least, on the scene, an actively engaged new player, is the 
Turks--Turkey. And it has, in fact, made serious attempts to 
mediate, certainly between the Syrians and the Israelis, and it 
has been actively coordinating with the region.
    Senator Shaheen. Can--excuse me for interrupting, but I 
just want to pursue that a little bit, because I think there's 
really been a deterioration of that relationship, and I wonder 
if you could comment on that, in----
    Dr. Asali. Yes.
    Senator Shaheen [continuing]. Just the few seconds that I 
have left.
    Dr. Asali. Turkey has been actively engaged, is what I 
said. And I think that is exactly how it is. As far as whether 
people consider this a positive and--contribution that we would 
welcome, or whether it has been an erosion of Turkey's standing 
with its relation with the West, is an open question, in my 
mind. OK? I really do think I have, personally, some 
trepidations about an engagement of Turkey and--on the Middle 
East--that could take away the possibilities of further 
coordination. And I just want to mention that it has been more 
protective of Hamas's interest than I would like to see. I 
think we have enough problems without having Hamas being 
endorsed by Turkey.
    Senator Shaheen. Thank you.
    Can we take a final comment?
    Go ahead.
    Mr. Makovsky. I would just like to say, Senator, that I 
think there are actually interesting players in Western Europe. 
You have Gordon Brown in England, you've got Sarkozy in France, 
you've got Merkel in Germany. And I think, taken together, the 
three of them have shown more balance in the European position 
than we've seen in the past toward the Arab-Israeli conflict. 
And, as such, I think they've dealt themselves in, and there 
might be creative ways to really bring about a greater role for 
them, in the Quartet or elsewhere.
    Senator Shaheen. Thank you very much.
    Yes, Dr. Malley.
    Dr. Malley. Just one word to--maybe, to stand up a little 
bit more for Turkey's role. I think we would be making a 
mistake to write them off. They have--I think they're going to 
have to repair their relations with Israel. That's a critical 
step they have to take, and Israel--and we could help in that.
    But, they are a country that is Muslim, that is in Europe, 
that has reached out to virtually all parties in the region--
the Israelis, the Syrians, the Iranians--and that's the kind of 
player I think that we should be working with more closely at a 
time when the region is as polarized as it is and at a time 
when our relations with some of those entities are either very 
poor or nonexistent.
    Senator Shaheen. Thank you. Thank you all very much.
    Thank you, Mr. Chairman.
    Senator Lugar [presiding]. I'd like to just discuss one 
area that has not been explored. At some point, one of you--and 
forgive me for forgetting which one--indicated that one 
impelling reason for Israel to consider the two-state solution 
is that, over the course of time, Israel might be a state which 
is no longer a Jewish state because of current trends lending 
themselves toward substantial demographic changes in the 
country. Would any one of you describe the timetable in which 
these changes may take place? Additionally, what sort of trends 
are occurring with regard to current immigration into Israel? 
Are these changes being reflected now in elections, voting, or 
registration, and if they are, how so?
    Yes, Mr. Makovsky.
    Mr. Makovsky. Yes. I was the one, Senator Lugar, who 
mentioned demographics as a driver toward resolution. My point 
was that, if you have a situation that Palestinians--the West 
Bank, and Gaza added on to Israeli Arabs--and here you'll get 
into a demographic debate over what is the point that group 
becomes a majority. And it has something to do with projecting 
birthrates, and something to do with looking at the statistics 
of the Palestine Central Bureau of Statistics. I don't want to 
get into the weeds on all this. But, whether it's 10 years or 
more, then you may have more Arabs on the ground than you will 
have Israelis.
    Now, right now, Palestinians in the West Bank and Gaza 
don't vote, because the whole idea is to set up a two-state 
solution. Israeli Arabs do vote, they have full rights, they 
have representation in the Knesset. They often rail against the 
Israeli Government, more than they can probably do in any 
Parliament in the entire Middle East.
    But, the point is that the demographics is a driver. It 
isn't yet having an impact on coalition politics, because, for 
the most part, like I said, the Palestinians in West Bank and 
Gaza are not citizens. That's why we want to solve this 
conflict. That's why, I think, there's an urgency on the 
border/security issue, of at least nailing that down, and 
creating--setting up that two-state solution. Because I think 
demographics are looming on the horizon. And for the same 
point, Abbas, if he isn't successful, has got Hamas waiting in 
the wings, willing to pounce, and saying, ``You haven't 
produced results.''
    So, I think for both of these players, Israelis and 
Palestinians, there are internal drivers that mean it's 
critical that these peace talks happen, that they make 
progress, and that we have success.
    Senator Lugar. But, just to be a contrarian about this, 
let's say Hamas said, ``By and large, it is really not in our 
interests or those with whom we are allied, whether it be 
Iranians or elsewhere, for a solution to emerge.'' To express 
this in a different way, it's difficult enough getting Hamas 
together with other Palestinian actors. And we all hope that 
they will come together, because that's part of the eventual 
solution for the creation of a Palestinian state. But, let's 
say they're contrarians and their objective is really not 
unification, rather it is to maintain the antagonism that's 
involved. I'm still struck with the difficulties, given the 
players, as to how you finally get two parties that see some 
reason to move, particularly on the Palestinian side.
    Mr. Makovsky. I would just--if the question's for me, and 
I'm sure my colleagues have their own views--I just think that 
you could say, Hamas could spoil from the outside; but I think 
they could spoil from the inside in any, ``unity government''--
that they won't allow Abbas to make peace. And so, I think 
where Abbas is strongest is if he could demonstrate that 
diplomacy is vindicated, that there is something that he can 
tell his people. Because if you look at those Shikaki polls 
that we were talking about before, of where's the public, 70 
percent, perhaps, in each camp, say they want peace, but 
they're not convinced the other side wants it.
    So, the Palestinians are saying, ``We're for a two-state 
solution, but the Israelis don't want it.'' And the Israelis 
are saying, ``We're for a two-state solution, but the 
Palestinians don't want it.'' If there was actually something 
in his hand that he could say, ``I got it, diplomacy works. I'm 
a success,'' Hamas might try to spoil, but at least, I think 
with that middle opinion that could swing both ways, he'll be 
able to solidify that group and break through that paradigm, 
which is, ``Oh, we want peace, but you're going to fail because 
the other side doesn't want it.''
    So, I think there's nothing that succeeds like success. It 
doesn't mean that Hamas won't try to spoil, but Abbas will be 
in a much stronger position if he has something to point to in 
his hand.
    Senator Lugar. Yes, Dr. Asali.
    Dr. Asali. I agree with David, actually. I think the 
success of the moderates, in general, will determine the future 
of Hamas and the rejectionist, fundamentalist approach, across 
the Middle East. So, we have here more than one variable. It's 
what the Palestinian leadership wants to do, and what it can 
do. Here, again, we call on people to think strategically, in 
the region. Specifically on Israel, which, as far as we can 
watch, as closely as we can, it does not take long-term 
strategic considerations in decisions that it makes today and 
tomorrow.
    It is unfortunate that Hamas is the beneficiary of many 
policies in the region--including outcome of Israeli decisions, 
and, in fact, Palestinian decisions and American decisions--all 
built on the basis of the failure of the moderates to deliver. 
We need to have the moderates to deliver. And for this, there 
is a test, now, actually, that I want to come back, for the 
fourth time, perhaps during this hearing, which is, let us make 
the Fayyad plan in the West Bank a success, a cooperative 
success between the three main parties--the Israelis, the 
Palestinians, and the United States--and all the allies. And 
that would determine the future of Hamas, I think, more than 
anything else.
    Senator Lugar. Thank you.
    Well, let me just say, on behalf of the chairman and all of 
the members of the committee, how much we appreciate your 
coming today, in addition to how forthcoming you have been, as 
well as obviously well-informed by the years. And we thank both 
of you who are authors----
    [Laughter.]
    Senator Lugar [continuing]. So that we can read more of 
your views. And those of you who have not published books 
recently, you've published articles frequently, so we'll also 
be beneficiary of your wisdom beyond the hearing.
    The hearing is adjourned.
    [Whereupon, at 12:18 p.m., the hearing was adjourned.]

                                  
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