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[Senate Prints 109-36]
[From the U.S. Government Publishing Office]

109th Congress                                                  S. Prt.
                            COMMITTEE PRINT                     
 1st Session                                                     109-36
_______________________________________________________________________

                                     

 
                      ISRAEL'S DISENGAGEMENT FROM

                            GAZA AND SEVERAL

                         WEST BANK SETTLEMENTS

                               __________

                           STAFF TRIP REPORTS

                                 TO THE

                     COMMITTEE ON FOREIGN RELATIONS

                          UNITED STATES SENATE

                      One Hundred Nineth Congress

                             First Session

                              October 2005

                                     

                    U.S. GOVERNMENT PRINTING OFFICE
23-820                      WASHINGTON : 2005
_____________________________________________________________________________

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                     COMMITTEE ON FOREIGN RELATIONS

                  RICHARD G. LUGAR, Indiana, Chairman

CHUCK HAGEL, Nebraska                JOSEPH R. BIDEN, Jr., Delaware
LINCOLN CHAFEE, Rhode Island         PAUL S. SARBANES, Maryland
GEORGE ALLEN, Virginia               CHRISTOPHER J. DODD, Connecticut
NORM COLEMAN, Minnesota              JOHN F. KERRY, Massachusetts
GEORGE V. VOINOVICH, Ohio            RUSSELL D. FEINGOLD, Wisconsin
LAMAR ALEXANDER, Tennessee           BARBARA BOXER, California
JOHN E. SUNUNU, New Hampshire        BILL NELSON, Florida
LISA MURKOWSKI, Alaska               BARACK OBAMA, Illinois
MEL MARTINEZ, Florida
                 Kenneth A. Myers, Jr., Staff Director
              Antony J. Blinken, Democratic Staff Director

                                  (ii)

                            C O N T E N T S

                              ----------                              
                                                                   Page

Letter of Transmittal............................................     v

  I. Report of Kim Savit--Senior Professional Staff Member (Majority 
     Staff)...........................................................1

 II. Report of Puneet Talwar--Senior Professional Staff Member 
     (Minority Staff).................................................8

                                 (iii)

                         LETTER OF TRANSMITTAL

                              ----------                              

Dear Colleague:

    The Israeli withdrawal from Gaza and several West Bank 
settlements will shape the future of the peace process and the 
region for years to come. The committee recently sent two 
senior professional staff members, Ms. Kim Savit and Mr. Puneet 
Talwar, to the Middle East to assess U.S. assistance to 
Israel's disengagement from Gaza and several West Bank 
settlements.
    We are pleased to share with you their trip reports, which 
highlight concerns about the critical issues that will face all 
parties on the ``day after'' disengagement. The reports also 
provide a number of recommendations that may be helpful as the 
Committee on Foreign Relations considers these issues. As both 
authors indicate, there is much at stake in getting the ``day 
after'' Gaza disengagement right.
    We look forward to continuing to work with you on these 
issues and to any comments you might have on these reports.
            Sincerely,
                                  Richard G. Lugar,
                                                  Chairman.

                              Joseph R. Biden, Jr.,
                                   Ranking Minority Member.

                                  (v)

  ISRAEL'S DISENGAGEMENT FROM GAZA AND SEVERAL WEST BANK SETTLEMENTS:

                              ----------                              

  I. Report of Kim Savit--Senior Professional Staff Member (Majority 
                                 Staff)

    Israel's disengagement from Gaza and several West Bank 
settlements proceeded over the past two weeks without the 
anticipated Israeli-Palestinian violent clashes or deadly 
attacks by extremist Israeli settlers. Successful completion of 
this historic withdrawal of Israeli troops and settlers from 21 
Gaza and 4 West Bank settlements will shape the future of the 
Middle East region and the global war on terrorism. In meetings 
with U.S., Israeli, Palestinian and international community 
officials from July 24-31, 2005, I found that there was 
consensus on the short-term agenda to facilitate Israel's 
disengagement. Leadership provided by the U.S. under Lieutenant 
General William Ward as the U.S. Security Coordinator and Mr. 
James Wolfensohn for the Quartet has energized Israeli and 
Palestinian Authority coordination efforts. But, there are 
major differences and uncertainties over how to address 
critical issues that will face all parties on the ``day after'' 
disengagement. To sustain the positive momentum engendered from 
the disengagement effort thus far, the U.S. will need to 
intensify its support for efforts on the ground, in terms of 
both tangible material assistance and engagement with the two 
parties on issues that could derail progress.

                             key findings:

  1. U.S. leadership to support Gaza disengagement is critical, but 
        must be followed-up by delivering tough messages to both sides 
        and actions demonstrating the U.S. long-term commitment to the 
        peace process.
    The Israelis, Palestinians and the international community 
are skeptical that the U.S. will continue to be engaged in 
resolving the Israeli-Palestinian conflict over the long-term. 
U.S. personnel and resources dedicated to the peace process 
appear as ad hoc, short-term and temporary measures. Despite 
the appointment of General Ward as Security Coordinator, there 
is no single U.S. voice for all aspects of engagement in the 
peace process and U.S. policy appears fragmented. This 
intensifies Palestinian fears of ``Gaza first and Gaza last,'' 
and could undermine those in Israel who support the two state 
solution.

   Progress is being made on Wolfensohn's short-term 
        shared agenda of six issues and steps are being taken 
        at the Ministerial and agency levels to move forward on 
        each to ensure success of the withdrawal. These include 
        detailed plans to resolve questions on border crossings 
        and trade corridors; ensuring access between Gaza and 
        the West Bank; addressing internal mobility and 
        closures; opening of the airport/seaport; disposition 
        of the greenhouses and related jobs and income; and 
        dismantling settler houses and disposing of the rubble. 
        There are problems in implementation, however, at the 
        field level. Access and mobility issues, particularly 
        in Gaza, reportedly slow or prevent provision of U.S. 
        assistance to the Palestinians from U.S. aid providers.

   General Ward has minimal staff to facilitate reform 
        of the Palestinian security forces (16 in all, 
        including security personnel and detailees from other 
        countries) and only a few have Arabic language skills. 
        Given security concerns, General Ward and his staff 
        also have limited access to, and mobility in, Gaza and 
        the West Bank. U.S. Security Coordination personnel 
        interaction with the Palestinian Authority security 
        forces is occurring at the Ministerial level, but 
        again, is minimal in the field. Without U.S. personnel 
        presence in field activities, progress reported to have 
        been made on consolidation and reorganization of 
        Palestinian Authority security forces cannot be 
        confirmed on the ground.

   Moreover, there appeared to be no specific mechanism 
        for Israeli and Palestinian Authority security forces 
        to interact or communicate at the ground level to 
        ensure that acts by extremists and terrorists of either 
        side can be differentiated from actions sanctioned by 
        the Israeli Government or Palestinian Authority. Issues 
        of control of the border crossings at points such as 
        Rafah, for example, have been particularly contentious, 
        exposing severe gaps in coordination among the parties 
        and raising Israeli fears of increased weapons 
        smuggling and terrorist infiltration.

    There is a very real risk that unless there are concrete 
benefits that meet rising Palestinian expectations from Gaza 
disengagement in the short-term, and either an agreed, more 
formal negotiating framework or plan to move forward on the 
Road Map in the longer-term, a ``third intifada'' could be 
launched after Gaza disengagement to try to drive the Israelis 
out of the West Bank. The U.S. must work to forestall this. 
Israel must be persuaded to demonstrate in words and deeds that 
they will return to the Road Map and to the negotiating table 
in the near future. The Palestinians must be persuaded that the 
path of peace will produce dividends; that their economic 
future will be brighter; and that discussions of final status 
issues will only occur if there is continued calm.
    The U.S. must deliver strong, tough messages to both sides 
while recognizing the historic burdens each carries. The 
Israelis and Palestinians are each facing intense internal 
political conflicts with factions positioning themselves for 
the ``day after'' disengagement. Both Prime Minister Sharon and 
Palestinian Authority President Abbas have taken enormous 
political risks to move the disengagement forward. Over the 
past few months, however, when the U.S. has taken tough 
positions with each side, despite delays, it has achieved 
results. Israel apparently has been more cooperative and 
flexible on disengagement issues such as removal of barriers 
and checkpoints. The Palestinian Authority reportedly has taken 
steps to arrest terrorists identified as perpetrators of 
violence. Continued direct, forceful U.S. engagement, reflected 
by more permanent mechanisms for coordination and 
implementation, will be critical to maintaining momentum on the 
``day after.'' The continuing expansion of West Bank 
settlements, particularly E-1 and Maale Adumin, and the 
construction of the security fence or barrier must be at the 
top of the agenda with the Israelis. Stopping terrorism must 
remain at the top of the list with the Palestinians. We should 
be insistent in our message to both Israelis and Palestinians 
that they live up to their commitments.

  2. There is an urgent need for the U.S. to develop a strategy and a 
        policy for dealing with the growing popular support for Hamas.

    For the Palestinian Authority to do well in the January 
2006 municipal and parliamentary elections, it needs to be 
credited with delivering tangible benefits to the Palestinian 
people. Specifically, it needs to compete with Hamas' social 
services network in terms of effectiveness, efficiency and 
transparency. Some aid providers complained that U.S. laws 
intended to prevent U.S. funding from going to Hamas, 
unintentionally leave critical areas vulnerable to Hamas 
influence and weaken moderate voices in the Palestinian 
Authority.
    Currently, U.S. laws prohibit aid to Palestinians who are 
known to be, claim to be, or are suspected of being members of 
Hamas, a U.S. designated foreign terrorist organization. Aid is 
prohibited, specifically, from going to ``groups or individuals 
who are or have been involved in terror.'' These laws and our 
policies to implement them place the onus on U.S. aid providers 
to judge which Palestinian aid recipients are terrorists or 
suspected members of terrorist organizations and which are not. 
Fearing they might break the law, aid providers reported that 
few non governmental organizations (NGOs) will work with 
Palestinian recipients and contractors unless they agree to 
sign an anti-terrorism certification (ATC) as required by 
USAID. Many bona fide Palestinian grass roots organizations--
particularly educational and humanitarian organizations--
reportedly refuse to sign such certifications based on 
principles and/or politics. Thus, aid goes primarily where it 
is legally uncontroversial rather than where it may be most 
needed and effective. Even worse, in towns and villages in 
which Hamas controls the local municipal councils, U.S. aid 
providers stay away, ceding such areas to Hamas dominance 
without a fight, and thus indirectly bolstering Hamas' 
legitimacy and credibility.

   In a roundtable held with Senate Foreign Relations 
        Committee staff at the Consulate in Jerusalem, several 
        of the six NGO representatives participating argued 
        that the U.S. policy of isolating Hamas and similar 
        groups is counterproductive. They argued that Hamas 
        members or terrorists would be more likely to sign the 
        anti-terrorism certificates to get U.S. aid than decent 
        people from organizations that refused to sign on 
        principle. The NGO representatives also argued that 
        Hamas could not be eliminated, and U.S. policy should 
        be either to co-opt the organization or to force a 
        split between its military and political arms. 
        Palestinian Authority officials echoed many of these 
        arguments.

    Israeli officials expressed concern that Palestinian 
Authority President Abbas lacks the leadership abilities to 
organize Palestinian security forces against Hamas. The 
Israelis fear Hamas is seeking to replace the Palestinian 
Authority and is following a concerted strategy to do so. One 
aspect of that strategy is undertaking terrorist acts to 
demonstrate that Hamas, and not the Palestinian Authority, 
controls Gaza. One Israeli official stated Hamas wants to 
paralyze and destroy the Palestinian Authority so it can 
replace the current government and establish ``Hamasastan'' in 
Gaza.

  3. Additional U.S. aid and flexibility in delivering it quickly and 
        visibly are needed for both the Israelis and Palestinians:

   U.S. Aid to Israel. Israel has requested $2.1 
        billion ($.8 billion for security and $1.3 billion for 
        economic aid) to cover part of the estimated $8 billion 
        total cost of Israeli security forces redeployment and 
        disengagement from Gaza and development of the Negev 
        and Galilee (Israel estimates it will spend $3 billion 
        on security and redeployment of security forces and $5 
        billion on economic reintegration and development). The 
        administration and Congress will need to review this 
        request carefully, particularly in light of new demands 
        on U.S. resources with Hurricane Katrina. The initial 
        Israeli request was timed and designed politically to 
        help counter those within Israel who argue Israel gains 
        nothing for its painful withdrawal from Gaza and West 
        Bank settlements. Additional U.S. aid to Israel would 
        facilitate the completion of the disengagement from 
        Gaza and the four West Bank settlements and reflect our 
        strong commitment to Israel's security and future. The 
        high level of aid requested, however, sets a precedent 
        which may become an obstacle to future West Bank 
        disengagement. Additionally, how providing additional 
        economic aid to the Negev and Galilee is linked to the 
        peace process needs to be clarified. The U.S. might 
        consider how to construct any Israeli aid package to 
        ensure it facilitates specific steps related to 
        progress on the Road Map.

   U.S. Aid to the Palestinians. U.S. aid to the 
        Palestinians, totaling an estimated $350 million in FY 
        2005 Supplemental and FY 2006 funds requested, is 
        focused on economic improvements and quality of life 
        issues to build confidence that there will be a better 
        future on the ``day after'' for the Palestinians. Yet, 
        while one of the highest priorities on the ``day 
        after'' disengagement will be to establish security and 
        rule of law in the newly controlled Palestinian 
        territory, currently there are no U.S. aid funds for 
        equipping and training Palestinian Authority security 
        forces to undertake this responsibility. General Ward 
        indicated that it would take 3-5 years to facilitate 
        the transition and restructuring of the Palestinian 
        security forces, but he had no authority or funding 
        flexibility to begin the process. The State Department 
        recently has tapped an estimated $3 million in 
        community policing funds to help build Palestinian 
        Authority police capabilities, but this may be ``too 
        little too late.'' The U.S. and other Quartet members 
        urgently need to develop and implement a concrete plan 
        to help reform the Palestinian Authority security 
        forces. Such reform will be key to the Palestinian 
        Authority's ability to govern on the ``day after'' 
        disengagement.
      Several Israeli officials argued that we should not 
        supply arms and ammunition to the Palestinians to 
        enhance their security forces as they have sufficient 
        arms to equip their estimated 58,000 security force 
        personnel. The issue, they argued, is not how much 
        lethal military equipment is available to these 
        Palestinian Authority security forces, but the 
        political will to use these arms to dismantle the 
        terrorist capabilities. While sympathetic to Israeli 
        security fears, one expert indicated that the equipment 
        issue is of concern as the Palestinian Authority 
        reportedly was paying $3 per bullet on the black market 
        for ammunition. Given that Palestinian Authority 
        security forces are critical to success of the 
        disengagement and long-term stability, U.S. aid 
        policies should seek to help Israel find a balanced 
        trade-off between its fears of arming the terrorists 
        and shoring up legitimate Palestinian Authority 
        security capabilities. Consideration also should be 
        given to how to condition any U.S. aid to the 
        Palestinian Authority on its efforts to consolidate and 
        reform its security forces and achieve progress on the 
        Road Map.

   Bureaucratic Delays. Current FY 2005 Economic 
        Support Funds (ESF) for USAID Palestinian assistance 
        programs have been slowed by bureaucratic processes. 
        These funds were not cleared for release by the Deputy 
        Secretary of State's office at the time of the visit 
        and such delays could complicate any return to the Road 
        Map further. USAID also is running into another 
        potential road block as once funds are released at the 
        end of the fiscal year, September 30, 2005, all funds 
        must be obligated within a few weeks or they may have 
        to be returned as unobligated balances, leaving a 
        funding gap until almost January 2006. Such 
        bureaucratic delays may be devastating to U.S. 
        interests. As one official stated: ``Whatever is not 
        done before the Palestinian elections in January 2006 
        will be too late.''

  4. Greater focus is needed on public diplomacy to demonstrate the 
        magnitude of U.S. aid (and thus commitment) to the 
        Palestinians; and to reflect the benefits of such aid provided 
        under the Palestinian Authority.

    While the Palestinian Authority's commitment to non-
violence has been of enormous benefit to the Palestinian 
people, there is very little appreciation of this on the 
streets of Gaza and the West Bank. The Palestinian Authority 
continues to be viewed as corrupt, despite a range of current 
efforts to clean up and get rid of Arafat's old guard cronyism. 
Successes are not made public and much more needs to be done to 
help the Palestinian Authority get its message of reform to the 
people. During one meeting, the Palestinian Authority Minister 
of Social Welfare requested that the U.S. provide the 
Palestinian Authority with an ``events coordinator'' to help 
get the Palestinian Authority message out. The Consulate took 
this request for consideration.

                            RECOMMENDATIONS:

A. Next Steps:
    The U.S. must find new ways to prove its long term 
commitment to the Road Map and to the peace process. One 
possibility would be to establish a more permanent 
organizational support structure for Mr. Wolfensohn and General 
Ward, not only increasing the number of personnel, but finding 
the ``right'' personnel to staff these missions. Military 
staffing from the U.S. European Command (EUCOM) with 90 day 
rotations has been at the expense of existing EUCOM missions. 
Moreover, while military civil affairs personnel are very 
capable, the needs to be met in assisting the Palestinian 
Authority often go beyond their military training.

   The new State Department office of the Coordinator 
        for Reconstruction and Stabilization (CRS) with its 
        interagency capabilities might be a useful source of 
        the ``right'' personnel and experts to support post-
        conflict transition in Gaza and the West Bank and to 
        integrate the U.S. aid process. CRS could be designated 
        to support General Ward and the Quartet under Mr. 
        Wolfensohn to develop a USG strategy and plan to return 
        both parties to the Road Map, including benchmarks, 
        timetables, and actions that the USG would undertake to 
        advance the process. Tapping into the CRS now also may 
        avoid continuity problems for assisting the Palestinian 
        Authority after the disengagement.

   Another possibility would be to facilitate an 
        exchange of letters or hold a bilateral or multi-
        lateral summit meeting among the parties to build 
        confidence that there is consensus on a process for 
        returning to the Road Map on the ``day after'' 
        disengagement.

B. Law and Policy on Hamas:
    The U.S needs to reassess our laws and policies intended to 
prevent terrorism, promote political development and rule of 
law and to strengthen reformers (both inside and outside of the 
Palestinian Authority) to ensure they are doing exactly that. 
In the near term, the administration might consider if 
providing U.S. assistance to local and municipal Palestinian 
governing institutions, regardless of the political coloration 
of any democratically elected officials heading them at the 
time, would serve U.S. long-term interests. This approach might 
take some of the onus of judging who can receive aid off of the 
U.S. aid providers and while not endorsing Hamas' terror 
activities, it, would recognize realities in Palestinian 
politics and steer those politics towards moderation.

   Elections Issue. Israeli Prime Minister Sharon 
        recently indicated that Hamas members should not be 
        allowed to participate in Palestinian elections and 
        Israel would withhold cooperation facilitating the 
        elections process if Hamas candidates are allowed to 
        take part. Others too have stated that the Palestinian 
        Authority should prevent Hamas or other terrorist group 
        members from running for elective office as under the 
        Oslo accords, if ``such candidates, parties or 
        coalitions (1) commit or advocate racism, or (2) pursue 
        the implementation of their aims by unlawful non-
        democratic means.'' This may meet U.S. and Israeli 
        counter terrorism concerns, but would be viewed as 
        interference in a democratic process which could weaken 
        the Palestinian Authority among the Palestinian people. 
        The Palestinian Authority might help resolve this issue 
        by establishing clear benchmarks or conditions for any 
        candidate's eligibility to participate in Palestinian 
        elections, including renunciation of violence.

   By advocating for strong, transparent democratic 
        Palestinian elections, the U.S. would be consistent 
        with its broader policies to promote democracy, freedom 
        and reform in the Middle East. Support for transparent, 
        democratic elections by the Palestinian Authority also 
        could help it take the high ground and raise its 
        credibility in the Palestinian street. Moreover, as the 
        majority of Palestinians do not support Hamas' 
        militancy and want an end to the continued violence, a 
        transparent, democratic legislative election could 
        actually tie any elected members of Hamas' hands, 
        requiring them, as part of joining the political 
        process, to meet the demands for non-violence of their 
        Palestinian constituents.

   Long-Term Policy. It is also worth exploring for the 
        longer term, whether some of the successes of the 
        Northern Ireland peace process, including nurturing a 
        political wing on the way toward an unequivocal 
        renunciation of violence, hold lessons for the 
        Palestinian case. While controversial, debate on this 
        issue is clearly needed to develop a coherent, 
        consistent strategy and policy for dealing with Hamas 
        and other terrorist organizations.

C. Additional U.S. Assistance:
    The administration should seek additional U.S. assistance 
resources for the Israelis and Palestinians with sufficient 
flexibility to meet urgent needs on both sides. High priority 
should be placed on aid to reform the Palestinian Authority 
security forces as such aid holds potential long term stability 
benefits for both Israelis and Palestinians. The administration 
might consider using Peacekeeping Operations Funds (PKO) to 
support aid to Palestinian security forces on an emergency 
basis; or seek approval for NATO to provide urgently needed 
equipment and training to facilitate the Palestinian Authority 
security forces transformation and consolidation. NATO may be 
an acceptable third party for both Israelis and Palestinians 
and could act as a military equivalent of the Quartet.
D. Coordination with Other Donors:
    Finally, the U.S. should continue to encourage other donors 
to provide greater support to the Israelis and Palestinians and 
should ensure U.S. assistance resources are coordinated with 
aid committed by members of the G-8 and other nations to 
prevent duplication. Any international aid coordination 
mechanism should encompass economic and technical aid as well 
as security-related assistance.
    These recommendations are not exhaustive, but may be useful 
for Committee members to explore in the coming months. There is 
much at stake in getting the ``day after'' Gaza disengagement 
right.

                              ----------                              

II. Report of Puneet Talwar--Senior Professional Staff Member (Minority 
                                 Staff)

                        DISENGAGEMENT AND BEYOND

    This report summarizes key findings and recommendations 
from a recent trip (July 5-12) to Israel and the Palestinian 
areas. It also reflects subsequent developments in order to 
provide an account of the current situation as of early 
September.
Introduction
    There are two main pillars of a successful peace process. 
First, Israel must have confidence that the Palestinian 
Authority is a reliable partner that is capable of exercising 
control, especially on security-related matters. Second, 
Palestinians must have improved economic prospects and believe 
that they will soon have a viable state.
    Israel's disengagement from the Gaza Strip and Northern 
West Bank is a politically courageous decision on the part of 
Prime Minister Sharon and can play a critical role in building 
both of these pillars. However, significant gaps in 
expectations separating the two sides require continuous active 
international involvement to ensure that disengagement does not 
become a lost opportunity to breathe new life into the peace 
process.
    This report focuses on five key issues that will determine 
the success of disengagement and the future of the peace 
process: (1) The gaps in perspective and expectations between 
Israelis and Palestinians; (2) The progress that has been made 
on the coordination of disengagement; (3) The obstacles and 
difficulties in improving security in Palestinian areas; (4) 
The impact of settlement activity and the construction of the 
security barrier; (5) The potential of Israeli and Palestinian 
political developments to slow progress on the peace process. 
The final section will make specific recommendations on a way 
forward after disengagement.

A Gap in Palestinian and Israeli Perspectives
    Prime Minister Sharon and President Abbas have an 
overwhelming common interest in a successful disengagement. 
Sharon must demonstrate that disengagement has enhanced, not 
harmed, Israel's security. Abbas must demonstrate to 
Palestinians that disengagement is accompanied by an 
improvement in daily life and a credible path to a final-status 
solution. Neither Sharon nor Abbas can succeed in achieving his 
objective without the other succeeding as well. While this 
logic would appear to be self-evident and compelling, it has 
not necessarily been reflected in actions on the ground.

   Israeli Perspective. The Israeli political and 
        military establishment has been focused on the 
        requirements for a peaceful evacuation of the 
        settlements in Gaza and the Northern West Bank. Prime 
        Minister Sharon has been highly critical of the 
        Palestinian Authority's efforts on security, describing 
        Abbas and Interior Minister Youssef as well 
        intentioned, but indecisive. As long as Israel is 
        dissatisfied with Palestinian security performance, it 
        will not begin implementation of the Road Map. While 
        Israel has not yet made clear its intentions after 
        disengagement, a key Sharon advisor said that the Prime 
        Minister believes Israel must have time to ``heal the 
        wounds.''

   Palestinian Perspective. As the date for 
        disengagement nears, Palestinians have a keen interest 
        in ensuring that Gaza is not cut off from the outside 
        world. They also are seeking assurances that ``Gaza 
        first'' does not become ``Gaza last,'' but is instead a 
        path to renewed negotiations for a final-status 
        solution. However, close advisors to President Abbas 
        believe that Prime Minister Sharon does not want a 
        viable Palestinian partner and is deliberately trying 
        to weaken Abbas. Their fear is that disengagement and 
        the construction of the West Bank barrier suggest that 
        Israel is interested in a long-term interim arrangement 
        and further unilateral steps, not a negotiated final 
        agreement.

   An Acrimonious Meeting. These differing perspectives 
        and the overall lack of trust were on display during a 
        June 21 meeting between Prime Minister Sharon and 
        President Abbas. While the meeting did produce some 
        tangible results, it did not build a foundation 
        conducive to future interaction. Israeli officials 
        described Palestinians as being unresponsive on 
        security-related matters, while Palestinian officials 
        felt that they were being lectured. Unfortunately, the 
        short-term effect appears to have been a deepening of 
        suspicions on both sides.

Progress on Coordination
    The Quartet Special Envoy, James D. Wolfensohn, has deftly 
used the convergence of both side's core interests in making 
progress toward agreements that they could not have otherwise 
achieved on their own.

   The Importance of Coordination. Successful 
        coordination of disengagement is important for two 
        reasons. First, maximizing security for Israelis as 
        they evacuate settlements can help to rebuild trust 
        between Israelis and Palestinians which is essential to 
        future negotiations. Second, it can improve the quality 
        of life for Palestinians and bolster the position of 
        President Abbas and the Palestinian Authority relative 
        to Hamas.

   ``Ownership'' of Disengagement. Nearly 75% of 
        Palestinians believe Israel's withdrawal from Gaza is a 
        victory for violence. To prevent this logic from taking 
        hold in the West Bank, President Abbas must have 
        ``ownership'' of disengagement. Hamas gains if 
        disengagement is perceived as more of a unilateral 
        move, while Abbas gets credit if diplomacy succeeds in 
        delivering results.

   Wolfensohn's Role. This is why the role of 
        Wolfensohn is so critical. Thus far, the Special Envoy 
        has made progress on a six-part work program: (1) 
        Border Crossings and Trade Corridors; (2) A connection 
        between the West Bank and Gaza; (3) Easing movement in 
        the West Bank; (4) Air and Sea Ports; (5) The 
        disposition of houses in the settlements; and (6) 
        Greenhouses in the settlements.
      Of these six issues, two--greenhouses and the removal of 
        rubble from demolished structures--have been resolved. 
        In the case of the greenhouses, Wolfensohn creatively 
        mobilized resources from the private sector to avert 
        their dismantlement, thereby saving thousands of 
        Palestinian jobs. Palestinians and Israelis also have 
        reached an agreement to dispose of the large quantities 
        of rubble from demolished settlements.
      The other four areas relate to the movement of goods and 
        people within the Palestinian territories and unimpeded 
        access to the outside world. Progress on these is 
        essential to improving Palestinian economic prospects. 
        On border crossings and trade corridors, technological 
        improvements and new terminals under construction 
        should satisfy Israeli security concerns while 
        permitting significant reductions in costly delays 
        which often prevent Palestinian goods from reaching 
        markets. Both sides have agreed on the goal of this 
        exercise: speedy and efficient transit of goods from 
        door to door.
      The two sides also have made progress in creating a 
        reliable linkage between the West Bank and Gaza, with 
        Israel agreeing to convoys between the two territories 
        as an interim measure while discussions continue on 
        more permanent arrangements. In addition, the UN is 
        working with the parties to identify major bottlenecks 
        in the West Bank which could be removed to improve the 
        flow of goods and boost economic activity. Moreover, 
        Israel has agreed to the construction of a Palestinian 
        seaport which will take two to three years, and it has 
        given the go-ahead for planning to reopen the airport 
        in Gaza.
      While progress is being made, some are concerned that if 
        the outstanding issues are not resolved they 
        effectively could become ``Sheba Farms'' in Gaza that 
        are a focal point for disputes, thus preventing the 
        focus from shifting to next steps in the peace process.

   The Rafah Border Crossing. One issue deserving 
        special mention is the Rafah crossing point between 
        Egypt and Gaza. The two sides have been discussing an 
        arrangement which would have a third-party--possibly an 
        EU member state--be involved to provide expertise in 
        customs and border-regime management. It appears, 
        however, that Israel is wary that a technical mission 
        focused on border management would not hinder arms 
        smuggling, and has instead proposed that a border 
        crossing at the meeting point of Gaza, Egypt, and 
        Israel be used so that Israel can continue to regulate 
        access to and from Gaza. The United States should focus 
        on supporting an agreement which meets both sides' 
        objectives--security for Israel and ease of movement 
        for Palestinians. This would not only be a huge leap 
        forward for the Gaza economy, but it also could serve 
        as a model for arrangements at the airport and seaport.

Obstacles to Establishing Security
    Although there is a recognition on both sides of the 
central importance of security, Israel and the PA have strongly 
differing views on the performance of Palestinian security 
services and the nature of support they require. Without a 
sustained effort to improve coordination and close the gaps 
between the two sides, the security sector could impede further 
steps in the peace process. General William Ward has made 
significant strides in assisting Palestinians rebuild their 
security forces, but the challenges are daunting and time is 
short.

   Israeli Perceptions. Israel maintains that Abbas and 
        Interior Minister Youssef are doing little to fight 
        terror. They argue that Hamas is taking advantage of 
        the ``quiet'' to rearm and gain strength. They say that 
        Abbas, during his meeting with Sharon, refused to move 
        against Palestinian Islamic Jihad--even when presented 
        with specific evidence of its intent to carry out 
        operations--arguing that he was too weak to do so. They 
        dismiss such claims and believe that the PA can disarm 
        terrorist groups--``we don't care how he does it, as 
        long as he does it.''

   Palestinian Efforts. Interior Minister Nasser 
        Youssef has taken steps to consolidate the many 
        competing branches of Palestinian security forces. This 
        has included the establishment of joint operations 
        centers to facilitate coordination among the previously 
        disparate services. He has developed a 5,000 person 
        force to secure settlement areas in Gaza after 
        disengagement. In addition to these specific steps, 
        Youssef and others emphasize the significance of the 
        cease-fire, which they maintain effectively ended the 
        second intifada.

   A Shortage of Arms? Youssef says that his top 
        requirements are arms and ammunition and is deeply 
        frustrated at Israel's refusal to permit their 
        acquisition. He claims that his weapons and ammunition 
        supplies are so low that if Israel does not permit 
        deliveries, he will soon turn to the black market for 
        smuggled weapons. General William Ward has endorsed 
        Youssef's judgment that the Palestinian security 
        services are in need of additional arms and ammunition. 
        Secretary Rice pressed the issue on her recent visit, 
        but Israel has not changed its position. It should be 
        noted that several knowledgeable Palestinians--inside 
        and outside the government--do not believe that a 
        shortage of arms and ammunition are the chief obstacles 
        to better performance by Palestinian security services. 
        Instead, they believe the main impediment is the 
        hesitancy of Palestinian leaders to act decisively 
        against corrupt and renegade elements within Fatah and 
        the PA.

   A Desire for Closer Coordination. Youssef also 
        indicated a keen interest in improving the level of 
        coordination between Israeli and Palestinian security 
        services at the field level. This message was conveyed 
        to Israeli officials. The absence of closer 
        coordination may be one of the legacies of the 
        intifada, which left an enormous gulf in trust between 
        Israeli and Palestinian security services.

   Law and Order in Palestinian Areas. Closely related 
        to the issue of security for Israel is law and order in 
        Palestinians areas. Palestinians, including cabinet 
        ministers, are highly critical of the security services 
        for their unwillingness or inability to confront common 
        criminals and thugs. The law and order problem is 
        another legacy of the intifada which empowered local 
        leaders at the same time that Palestinian security 
        services were rendered ineffective. Those who acquired 
        weapons and a measure of local power are loath to 
        surrender them now. Palestinians say that these local 
        thugs--many of whom are members of Fatah-related 
        organizations and some of whom serve in the security 
        forces--have connections to powerful players in the PA 
        and Palestinian Legislative Council.

   A Need for Decisive Action. The standing of the PA 
        is suffering because of the perception among 
        Palestinians that it is not doing all that it can to 
        restore law and order. Many Palestinians believe that 
        President Abbas has to take dramatic steps to impose 
        his authority. Suggestions heard include replacing the 
        Police Chief and Attorney General, declaring a State of 
        Emergency (Abbas did so in response to armed clashes 
        between Hamas and the PA in mid-July), and the 
        formation of a slimmed-down national security cabinet 
        to serve through the period of disengagement.

   The Importance of the Ward Mission. General William 
        Ward has been playing a crucial role in rebuilding the 
        Palestinian security services and enhancing the chain 
        of command to the Interior Minister. The European Union 
        is also serving an important function through its 
        efforts to develop Palestinian police capability. Ward 
        has developed a detailed analysis of requirements for 
        international assistance to the security forces in four 
        sectors: (1) Communications, command, and control; (2) 
        Mobility and transport; (3) Logistics and medical; (4) 
        Force protection. Recently, supplies have begun to 
        arrive from international donors in response to Ward's 
        list of requirements, and Israel has been forthcoming 
        in facilitating their delivery.
      While Ward has made significant progress, he also has 
        faced serious challenges in his mission. Until very 
        recently, he lacked the funds to direct immediate 
        assistance to priority areas within the four sectors; 
        personalities in the PA have the loyalty of various 
        branches of the security services which impairs a 
        unified chain of command; and his mandate does not 
        formally include a coordination role between the two 
        sides even though his position has inevitably required 
        him to increasingly act in such a capacity.

The Impact of Settlements and the Security Barrier
    Continuing Israeli settlement activity in the West Bank and 
the construction of the security barrier is leading some 
Palestinians and Israelis to believe that disengagement will 
foreclose the option of a two-state solution at some point in 
the near future.

   Settlements and Security. According to knowledgeable 
        Palestinians, there is a direct correlation between 
        Abbas's ability to improve security and construction 
        and expansion of the settlements. One respected 
        pollster suggests that a settlement freeze would 
        strengthen Abbas's ability to maintain strong public 
        support for disarming terrorist and militants groups.

   Status and Plans for Israeli Settlements. The U.S. 
        Consulate in Jerusalem has reported continuing 
        construction in at least 40 West Bank settlements. 
        Israeli Housing Minister Herzog says that all 
        construction has been halted in 50 unauthorized 
        outposts in the West Bank. Plans are to authorize 
        construction in two settlements--Maale Adumim and Betar 
        Ilit. Recently, Israel announced plans to build an 
        additional 117 housing units in the Ariel settlement 
        which lies deep inside the West Bank.
      The planned E-1 settlement could affect the prospects for 
        a two-state solution by essentially dividing the West 
        Bank in two. Israel says no decision has been made on 
        E-1, which is undergoing zoning at present. One Israeli 
        official envisages an eventual compromise with the 
        Palestinians in which part of E-1 will be built, but 
        with enough land returned to permit a contiguous 
        Palestinian state.

   The Implications of the Security Barrier. The route 
        of the security barrier will have significant 
        implications for future peace talks. The greater the 
        percentage of West Bank territory incorporated on the 
        Western side, the more difficult it becomes to create a 
        viable and contiguous Palestinian state. According to 
        the Israeli Defense Ministry, the route of the security 
        barrier will cut into somewhere between 6.4% and 10% of 
        the West Bank. The two undetermined portions of the 
        route involve the ``Ariel finger'' in the north-central 
        West Bank and the ``Jerusalem bubble,'' which would 
        incorporate Maale Adumim.

   Israeli Perspectives on the Barrier. Israel argues 
        that the barrier is purely a security measure and can 
        be moved based on a final peace agreement. It notes the 
        drop in the number of suicide bombings as proof that 
        the barrier has served its intended purpose of reducing 
        terrorism. The Israeli Defense Ministry maintains that 
        once the barrier is complete in 2006, Israeli soldiers 
        will be able to redeploy in large numbers to the ``seam 
        zone'' along the barrier. This, they argue, will 
        greatly improve the freedom of movement for 
        Palestinians within the West Bank. In addition, roughly 
        34 to 38 crossing points are expected to be built along 
        the barrier to facilitate the flow of people and goods. 
        It should be noted that Israel has modified the route 
        of the barrier in response to Israeli Supreme Court 
        decisions which require that the route minimize 
        hardships on Palestinians.

   Palestinian Perspectives on the Barrier. 
        Palestinians say that the route of the barrier is 
        causing significant disruptions in their daily lives, 
        especially in the greater Jerusalem area. The barrier--
        a system of fences, roads, and other obstacles for most 
        of its length, but in the form of a wall in Jerusalem 
        and other built-up areas--slices into the expanded 
        municipal boundaries of East Jerusalem, leaving some 
        55,000 Palestinian residents of Jerusalem cut off from 
        the rest of the city (Israel says that topography, not 
        demography, determined the route of the barrier and 
        that it plans to build new facilities such as schools 
        and post offices to serve residents ``outside'' the 
        barrier). Palestinians say that the barrier disrupts 
        long-standing ties between East Jerusalem and nearby 
        cities. Politically, it leads many Palestinians to 
        believe that Israel is trying to foreclose the 
        establishment of a capital in East Jerusalem as part of 
        a final-status agreement.

The Impact of Palestinian and Israeli Politics
    Internal Palestinian and Israeli political dynamics could 
impede the prospects for peace negotiations after 
disengagement. There is unlikely to be overwhelming pressure 
generated from within the Israeli body politic for bold steps 
on the peace process. Political jockeying and internecine 
battles among Palestinian factions could also preoccupy 
Palestinian leaders. An absence of progress would exacerbate 
frustration among ordinary Palestinians. Both Israeli and 
Palestinian leaders and key players in the international 
community must be prepared to take risks to push the process 
forward.
            Israeli Political Dynamics
   Israeli politics are in a state of flux. Prime 
        Minister Sharon took a courageous decision to pursue 
        disengagement against the wishes of many within Likud, 
        which historically embraced the concept of ``Greater 
        Israel.'' Few in Israel have a sense of what the 
        political landscape will look like the day after 
        disengagement. While Israel is due to have elections no 
        later than the Fall of 2006, many believe that Sharon 
        will call early elections.

   One scenario involves an idea gaining ground in 
        Israel for a reorientation of the political map and the 
        creation of a centrist coalition drawn from Labor, 
        Shinui, and a section of Likud. Such a coalition would 
        have a majority in favor of moving ahead with the peace 
        process.

   Another scenario would have Sharon moving to the 
        Right in order to win a Likud primary against 
        challenger Benyamin Netanyahu, who recently resigned 
        from the cabinet. This could create a situation where 
        further peace moves may be suspended at the very moment 
        that Abbas would want them most in advance of 
        Palestinian legislative elections.

   While there is a consensus emerging in Israel on 
        territorial issues, there is not yet a similar 
        consensus on whether there is a reliable Palestinian 
        partner. Some believe that that Israel should define 
        its borders without a negotiated solution with the 
        Palestinians. Others believe that Israel has a 
        political interest in seeing Abbas succeed, because 
        failure would likely lead to more terrorism and chaos.
            Palestinian Political Dynamics
   The post-Arafat transition in Palestinian politics 
        is still underway, and the result is a somewhat chaotic 
        political picture. The political battles being waged 
        are more than simply a question of ``who's up and who's 
        down''--their outcome will have a direct bearing on the 
        future of peacemaking efforts.

   Palestinians have been disappointed by the lack of 
        performance in key areas of governance by the PA. The 
        main complaints are corruption, a weak economy, a lack 
        of diplomatic progress, and the absence of law and 
        order. The main beneficiary of the public's displeasure 
        has been Hamas. Advisors to Abbas acknowledge these 
        popular perceptions, but blame Israeli actions, 
        jockeying among rival personalities, and the difficult 
        task of reforming broken institutions as being 
        responsible for preventing the PA from performing as 
        well as it could.

   Another feature of Palestinian politics is the 
        deepening rift between the ``old guard'' and ``young 
        guard'' within Fatah. This rift was exacerbated by the 
        generally poor showing by Fatah in local and municipal 
        elections earlier this year. The ``young guard'' blamed 
        the poor results on the decision to place discredited 
        figures from the ``old guard'' on the ballot. A recent 
        Fatah meeting in Amman apparently further hardened 
        positions in the two camps.

   The ``young guard,'' who take their cue from the 
        jailed Marwan Bargouti, may run on a separate list in 
        legislative council elections set for January 25, 2006 
        if they are not given a greater role. This could split 
        the Fatah vote and have a dramatic impact on the 
        outcome. Under a compromise formula, 50% of the seats 
        in legislative elections will be district-based, while 
        the other 50% will be allocated through proportional 
        representation. If elections were held today, polls 
        show Hamas--if it is permitted to participate--would 
        win 33-40% of the vote, with Fatah receiving roughly 
        45-50%. Should the Fatah vote split, then Hamas could 
        conceivably emerge with a majority in the Legislative 
        Council, winning 50 out of 66 district-based seats 
        alone. While this scenario is unlikely, an outright 
        Hamas victory would raise significant questions about 
        the future of the peace process.

Recommendations for a Way Forward
    It is vitally important to develop a coherent plan for 
international involvement after disengagement so that the peace 
process does not stagnate. Standing back from the process would 
be irresponsible and could set the stage for a deteriorating 
situation and a costly new round of violence.

   Five Key Steps. Once disengagement is complete, the 
        Quartet and other key parties should concentrate their 
        efforts on five areas: (1) Demonstrating clearly that 
        ``Gaza first'' will not be ``Gaza last'' by enunciating 
        broad parameters and/or principles for the way ahead; 
        (2) Outlining next steps including a return to the Road 
        Map, revising it with new dates for each of the phases, 
        and establishing a mechanism to monitor compliance; (3) 
        Endorsing the medium-term plan being developed in 
        cooperation with Quartet Special Envoy Wolfensohn and 
        solidifying pledges for it; (4) Extending Wolfensohn's 
        mandate to continue to assist the parties; (5) Creating 
        a follow-on to the Ward mission to continue to rebuild 
        Palestinian security forces and coordinate between the 
        two sides.
      The Quartet could consider endorsing these five steps 
        through an international summit or through a scheduled 
        meeting on the sidelines of the UN General Assembly. It 
        can calibrate them according to political realities on 
        the ground in the coming months.

   Arab Involvement. It will be important to ensure the 
        sustained involvement of key Arab states in the peace 
        process after disengagement. Wolfensohn is likely to 
        succeed in gaining new financial commitments for the 
        medium-term plan from the oil-rich Arab states as a 
        follow-on to the successful G-8 meeting in Gleneagles. 
        Convincing them to invest political capital as well 
        will be challenging, but it is critical to the success 
        of the peace process.
      Israel has sought genuine signs of normalization from the 
        Arab world as a demonstration that the Arabs accept its 
        existence. The Saudis and others, while offering full 
        normalization after a peace agreement, have resisted 
        taking steps beforehand because they are unwilling to 
        expose themselves to that level of political risk. The 
        United States should press them to take such steps now, 
        especially after a successful disengagement. The recent 
        meeting between Pakistani and Israeli foreign ministers 
        is evidence that there may be greater willingness on 
        the part of Islamic countries to engage with Israel.

   No Excuses/Insist on Security. Even as assistance is 
        provided to the PA to rebuild effective security 
        forces, the international community must demand that 
        the Palestinians act decisively to thwart terror and to 
        restore law and order. The PA will not be viewed as a 
        reliable partner by Israel if it is not seen as making 
        a full effort on security. The PA's credibility in the 
        eyes of its own people is also at stake. The PA must be 
        seen as capable of exercising control and enforcing law 
        and order, if it is to maintain the support of the 
        Palestinian public. President Abbas must show a 
        willingness to take the same sort of risk as Prime 
        Minister Sharon, who proceeded with disengagement 
        despite fierce internal opposition.

   Settlements. There is no moral equivalence between 
        terrorism and the expansion of settlements. However, 
        given the detrimental impact that settlement activity 
        has on the peace process, it is important to continue 
        to urge the Israeli government to halt that activity. 
        Israel has committed to the United States to dismantle 
        unauthorized outposts in the West Bank. While Israel's 
        hesitation to fulfill this commitment was 
        understandable during the difficult period surrounding 
        the disengagement from Gaza, that impediment has been 
        removed. Furthermore, by meeting its road map 
        obligation to freeze settlement expansion, Israel could 
        significantly improve the standing of President Abbas 
        to simultaneously meet his road map obligations.

   Ensuring Flexibility on the Barrier. The barrier has 
        improved Israelis' security by preventing suicide 
        bombings. Nonetheless, it is important to continue to 
        urge the Israeli government to minimize the intrusion 
        of the barrier into the West Bank. The barrier provokes 
        deep suspicions among Palestinians that Israel has no 
        interest in a negotiated solution and wants to define 
        its borders unilaterally. Construction in particularly 
        sensitive areas such as Jerusalem and Ariel should not 
        undermine prospects for a two-state solution.

   NATO Involvement. The member states of NATO should 
        seriously consider endorsing two new missions to 
        support the peace process. The first would be to offer 
        an outside monitoring presence at the Rafah crossing 
        point or another location pursuant to an agreement 
        between Israelis and Palestinians. This could 
        complement the technical management of the crossing by 
        an EU member state. A NATO commitment could satisfy 
        Israeli security concerns.
      The second mission would be to take over the work of 
        General Ward, who is due to rotate out of his current 
        assignment after disengagement. It is vitally important 
        to ensure continued international involvement in the 
        development of capable Palestinian security forces.
      These missions would not be risk free, and NATO member 
        states would have to seriously consider the possibility 
        that their forces could become a target for terrorists. 
        Moreover, NATO could only take on this role if both 
        Israelis and Palestinians are supportive. 
        Traditionally, Israel has been reluctant to transfer 
        responsibility for security functions to third parties. 
        Nonetheless, if NATO were to get the go-ahead for one 
        or both of these missions, it would send a powerful 
        signal of support for the peace process.

   Assisting Israel. Israel has taken a considerable 
        risk with disengagement. It should receive the 
        continued backing of the United States so that this 
        step is seen as benefiting Israel's security. The 
        United States should respond favorably to Israel's 
        request for assistance to partially offset the costs of 
        redeployment from Gaza and to develop the Galilee and 
        Negev regions as it refocuses its priorities away from 
        settlements in the West Bank to areas within Israel 
        proper.

   Assisting and Reforming the Palestinian Authority. 
        The international community, including the United 
        States, must make substantial financial commitments to 
        the Palestinian Authority. Funds which are directed 
        through NGOs, as important as they are, do not have the 
        same impact in boosting the standing of President 
        Abbas. At Gleneagles, G8 leaders endorsed up to $3 
        billion in assistance per year over three years for the 
        Palestinians. Three Palestinian ministries are 
        developing a medium-term plan in cooperation with the 
        Quartet's Special Envoy to give confidence to all 
        donors that aid provided to the PA will be used for its 
        intended purpose.
      In addition to financial contributions, it is important 
        to urge the PA to proceed with far-reaching 
        institutional reforms, especially in areas that promote 
        the rule of law. Senior members of the PA who are in 
        favor of deep reforms appreciate the role of 
        international scrutiny and skillfully use it as 
        leverage to effect change.

   Resources for General Ward. It is critical for 
        General Ward to have immediate access to approximately 
        $10 million which he can direct quickly to four 
        sectors: (1) Communications, command, and control; (2) 
        Mobility and transport; (3) Logistics and medical; (4) 
        Force protection. It is unfortunate that he was not 
        given control of such resources early in his tenure. 
        Additional funds should be made available to the Ward 
        mission and its successor as needs are identified.

Conclusion
    This is a pivotal moment in the peace process. There has 
been progress in certain areas in recent months, but many of 
the gains are fragile. Continuing disputes between the two 
sides, electoral issues in Israel, and internecine battles 
among Palestinians could pose significant challenges in the 
months ahead.
    The entire process could unravel without international 
involvement. That involvement may or may not include all of the 
elements outlined above, but the core guiding principle is to 
identify the areas that are showing promise and to build from 
them in a resolute manner.
    Strategically, the stakes could not be higher. They extend 
well beyond the geographic confines of the Israeli-Palestinian 
conflict. The peace process represents the best opportunity for 
progress in the Middle East region. Iraq will not be stabilized 
for a considerable period of time. Democratization will be 
drawn-out and uneven. Iran and the West appear headed for a 
protracted crisis over Tehran's nuclear program. However, the 
basic elements for progress between Israelis and Palestinians 
are in place and can be brought together with persistence and 
determination. Not only is the peace process the best path to 
ensure Israel's security and to achieve statehood for 
Palestinians, it also will have a positive spillover effect on 
the other vexing challenges in the region.

                                 

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