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Israeli Tax Deal Doesn't Foretell Peace Progress

By Lisa Beyer
January 30, 2013 5:23 PM EST

Now that Israel has agreed to at least temporarily stop financially punishing the Palestinian Authority for getting the United Nations to declare Palestine a state, it might appear that meaningful peace talks are more likely.

I wouldn't count on it. My guess is that relations between the two sides would have to get worse rather than better to produce a climate conducive to fruitful negotiations. Otherwise, Israel has insufficient incentive to make the concessions required to secure a peace agreement.

In any realistic deal, Israel would have to withdraw from large portions of the West Bank. That could expose much of Israel to the Palestinian rockets that rained on communities near the Gaza Strip after the extremist group Hamas took over the territory in 2007, following Israel's withdrawal in 2005.

In exchange for this risk, Israel would get an agreement that, in theory, would lead to more secure relations with the rest of its Arab neighbors. Yet few Israelis actually believe the Arab world's objections to Israel would evaporate with the creation of a Palestinian state.

In the meantime, Israel isn't suffering much under the status quo. Since 1973, it has deterred existential attacks by maintaining the most powerful military in the region. It has greatly reduced terrorist strikes by walling off the Palestinians. Its economy, which is well-connected to Europe and increasingly to Asia, is robust and affords citizens a high standard of living. And Israelis have become inured to the criticism at the UN and elsewhere of their continued occupation of Palestinian territories.

If Israel is in such great shape, why did it relent today and agree to release last month's portion of the money it collects in tax revenues on behalf of the Palestinian Authority?

Although the announcement came after Prime Minister Benjamin Netanyahu met with Tony Blair, the peace envoy of the U.S., European Union, UN and Russia, Israel's motives are probably unrelated to peacemaking. The Israeli government needs the Palestinian Authority to survive, and the authority needs the tax revenue. The $100 million a month makes up about two-thirds of the authority's income. Without it, the authority has been unable to meet its payroll, and strikes have resulted.

If the Palestinian Authority collapses, chaos would reign in the West Bank, and the Israelis might be compelled to re-establish their own civil administration there. That would negate the one benefit Israel has gained from the Oslo accords of the mid-1990s: extracting Israelis from the day-to-day governance of Palestinian lives, the overseeing of such things as trash collection, utility provision and criminal justice. 

As Netanyahu attempts to form a new governing coalition in the wake of the Jan. 22 elections, he hopes to include the centrist Yesh Atid party, whose leader Yair Lapid insists that the prime minister agree to restart peace talks. Yet that doesn't mean negotiations will get anywhere. The costs and benefits of making compromises haven't changed for Israel.

One factor that could alter that calculation is the possibility of the Palestinians suing Israelis for war crimes in the International Criminal Court. Last week, Palestinian Foreign Minister Riad Malki threatened to do just that if Israel follows through with its plan to build Israeli settlements in a sensitive part of the West Bank known as E-1. First, the ICC would have to accept Palestine onto the court, but the November UN vote declaring Palestine a non-member observer state makes that more likely.

Israelis can shrug off anti-Israel votes in UN bodies because they rarely have practical implications. ICC proceedings, on the other hand, could expose Israeli political and military leaders to personal demonization and to arrest if they go abroad. Even Israelis don't have skin thick enough not to feel that bite.

(Lisa Beyer is a member of the Bloomberg View editorial board. Follow her on Twitter.)

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