Tag Archives: West Bank

Israel’s March 23rd election results likely to prolong political stagnation; may pose challenges to strategic business operations – Israel Analysis

Executive Summary:

On March 23, Israel held its fourth round of parliamentary elections in the past two years, which produced another stalemate. Rather than the left and right, the political fault lines in Israel are currently divided along the pro-Prime Minister (PM) Benjamin Netanyahu bloc and the anti-Netanyahu bloc. At present, neither has been able to form a viable coalition.
Even if either bloc succeeds in forming a coalition through complex political maneuvering, any potential government’s longevity will likely be limited in time. Therefore, the years-long period of political deadlock in Israel is likely to persist due to the lack of a conclusive outcome.
The political stagnation will hinder the implementation of a long-term budget and comprehensive government planning, which will disrupt proper governance, cause some economic damage, limit the ability for strategic long-term security planning, and hamper Israel’s foreign relations with key allies.
This is liable to pose challenges for long-term strategic business operations in Israel, especially those requiring high-level government collaboration. However, regardless of the political situation, essential services and infrastructure remain operational and the country is largely functioning as normal. The highly successful COVID-19 vaccine campaign has significantly reduced restrictions on business and commercial activities, with domestic and foreign companies and organizations able to operate without major hindrance.
Those operating or residing in Israel are advised to remain abreast of the ongoing political situation, which is liable to result in some challenges to long-term business operations requiring state collaboration. Consult with us at [email protected] or +44-20-3540-0434 for more information.

Implications of the political deadlock

As well as leading to an unprecedented situation in which four elections have been held in the past two years, the political stalemate has had, and will continue to have, an impact on the functioning and governance of Israel in various fields. These range from budgetary and economic issues to foreign relations and long-term security doctrines. Below are the primary areas in which the political deadlock is liable to impact until a conclusive outcome is reached and a stable government is formed.

Economy, budget, and domestic governance

The political situation in Israel has had an impact on the country’s economic functioning and ability to strategically plan ahead. As a result of the political stalemate, the Knesset has not passed an annual budget or comprehensive spending plans since March 2018, which has hindered the capacity of ministries and other government-funded organizations to operate effectively. This concern has been shared by Israel’s economic leadership, as evidenced by comments on April 9 by Bank of Israel Governor, Amir Yaron, who reiterated that “without a stable government that operates long-term” Israel will not be able to implement a multi-year economic plan to effectively emerge from the COVID-19 health and economic crises. This view highlights the importance of both the formation of a stable and cohesive government as well as its longevity for proper governance and economic growth. This is particularly in light of the pandemic, which had a severe impact on the Israeli workforce, with unemployment reaching a high of 27 percent early on in the health crisis and falling to 9.8 percent by March amid the opening up of the economy. Prior to the pandemic, unemployment had reached a record low of 3.8 percent.
FORECAST: Payments to furloughed workers in Israel are set to expire at the end of June. Many furloughed workers have preferred to continue receiving state payments instead of returning to the workforce and will thus likely be compelled to return to part-time unemployment when these payments end in June. That said, parts of the population will likely remain indefinitely unemployed. This will require government-funded training programs and investment, potentially in cooperation with the private sector, to assist these individuals to reenter the workforce. This is especially because several sectors, particularly those depending on tourism, continue to operate at lower than pre-pandemic capacity and there are therefore fewer jobs in these fields. In the absence of a stable government able to strategically implement such initiatives, hundreds of thousands of people are liable to be in a precarious final situation, which will place strain on the government and the wider economy as their consumption will be reduced.
The political situation has partly impaired Israel’s ability to respond to pressing needs in a timely manner. This is most saliently evidenced by a reported delay in Israeli payments to vaccine production companies as the Israeli cabinet has not convened to pass this budget due to political infighting in the current Likud-Blue & White caretaker coalition. This is due to the cancellation of a cabinet meeting by Defense Minister Gantz as a result of Netanyahu’s alleged refusal to permit the appointment of a Justice Minister, which also hinders the Knesset’s ability to pass key legislation. The void in the Justice Ministry is one of multiple senior roles, including in the security and defense sectors, that have not been filled due to government infighting. The fact that this led to Gantz’s cancellation of the cabinet meeting underscores the potential for multiple other issues of an important and strategic nature to be hindered or delayed due to political stagnation. The ministers were slated to vote on a 2.1 billion USD procurement of new vaccine doses, which is essential for Israel to sustainably combat the COVID-19 pandemic over the long-term and keep the economy open and thus provide crucial income for individuals and revenue for the state. FORECAST: Although the government will likely find a solution to this specific issue, the development highlights multiple aspects of the current political impasse on proper governance.
The failure to pass a budget has impacted the government’s capacity to fund infrastructure projects and major national initiatives. This has affected multiple sectors and fields. For instance, the lack of a budget hindered the start of the academic year as the Knesset was forced to pass a special budget in order for schools to open while other state-funded educational services were impacted. More generally, the lack of a long-term budget poses challenges in terms of structural economic reforms and for ministries to provide essential services, including physical and mental healthcare, social provision, and education, which require increased investment in order to meet rising inflation and demand.
FORECAST: Although the government has managed to pass a series of short-term spending plans and special budgets to cover specific needs, the longer the political deadlock continues, the more that certain services and infrastructure plans will be impacted. Furthermore, even if a coalition is formed, if its primary components lack a shared vision beyond replacing the current Netanyahu-led government, this will also hinder state funding and the passing of a viable long-term budget due to disagreement over policy and economic priorities. Taken as a whole, the political situation will continue to have a relative impact on the functioning of the state over the coming months at least. It may also reduce the desire of international firms to commit to invest and set up offices in Israel until a stable government is in place that can facilitate such operations and work in collaboration. This is also evidenced by a warning by an international credit ratings agency from March 31 indicating that while the present situation does not pose immediate risks to Israel’s economic rating, shown by the fact it kept Israel’s credit rating at AA-, if the political situation persists, it will elevate the fiscal risks due to the difficulty in reducing the deficit. Bank of Israel governor Yaron reinforced this concern, stating that “credit ratings companies are worried by the government’s instability and the failure to pass a budget.”
Regardless of the political situation, essential services and infrastructure remain operational and the country is largely functioning as normal. The highly successful COVID-19 vaccine campaign has significantly reduced restrictions on business and commercial activities, with domestic and foreign companies and organizations able to operate without a major hindrance. FORECAST: The political stagnation in the country is more likely to pose a challenge to foreign companies potentially seeking to initiate major investments or launch large-scale projects within Israel. This is because government ministries face both budgetary issues and obstacles in the decision-making process. This may also affect collaboration with ministries or state-funded organizations, but routine operations of existing companies within Israel will continue regardless, albeit delays can be expected when receiving permits, regulatory approvals, or other activities that depend on legislation.

Foreign Relations

The political situation is also somewhat affecting Israel’s ability to forge relations and gain international influence. As a result of political infighting, the current caretaker government, even when it managed to convene on a fairly regular basis, struggled to project a united message to the international community regarding Israel’s policies as senior members of the Likud and Blue and White parties frequently undermined each other. This is particularly the case in sensitive issues of foreign and defense policy, with the latter portfolios being held by Blue and White’s Gabi Ashkenazi and Benny Gantz, respectively, but many diplomatic and security matters being directed by Netanyahu. These competing points of authority have likely posed problems for various states when dealing with Israel. FORECAST: The failure to establish a viable and stable government led by ministers appointed for the long-term will likely pose a challenge for Israel’s efforts to forge relations in essential sectors such as trade and commerce. Foreign governments may be reluctant to commit to such agreements with caretaker officials, while the latter may be restricted by legal obstacles placed upon an interim government.
The current impasse has resulted in a situation wherein 36 new ambassadorial appointees, which have been approved by Israel’s Ministry of Foreign Affairs (MFA) appointments committee are not yet fulfilling their roles. This situation has been ongoing since November 2020 and many of the ambassadors are reportedly ready and set to be posted on diplomatic missions on an immediate basis. Reports state that this delay is due to a refusal by Netanyahu to bring their approval to the cabinet for its consent. The absence of new ambassadors is a significant issue that is liable to harm Israel’s diplomatic, trade, and security interests. This situation can hinder Israel’s ability to conduct diplomatic campaigns and strategic discourse with other international actors as well as to advance visits of economic delegations to other countries.
Most importantly for Israel, the lack of government can undermine the country’s relations with key strategic allies such as the US. Continued political paralysis within Israel has likely somewhat hindered its ability to build strategies and coordinate with its allies on matters of essential policy and national security. This is because these allies may be reluctant to engage in long-term planning in the absence of a stable government, especially one that may be perceived as volatile and potentially liable to fall as soon as a political crisis emerges. This may impact Israel’s positions on the Iranian nuclear agreement, especially amid international efforts to revive the Joint Comprehensive Plan of Action (JCPOA); and any US engagement with the Palestinians.
Another area that the political situation can impact in terms of foreign policy is the pre-election, US-brokered normalization trend that was recorded, consisting of diplomatic agreements between Israel and four Arab states (the UAE , Bahrain, Sudan, and Morocco). These deals are extremely important and strategic for Israel’s diplomatic, security, and economic interests as they enable Jerusalem to garner additional international support against its adversaries and forge trade and investment relations. FORECAST: This trend is likely to slow down or be suspended altogether in the absence of a stable Israel government that other potential Arab states perceive to be a long-term partner. The regional actors that are most likely to reach a normalization agreement with Israel tend to be relatively risk-averse and attach great importance to stability. Thus, if the political deadlock continues or an unstable government is formed, further normalization agreements are unlikely.

Security

In terms of security, the political deadlock will have an impact on the procurement of military hardware and weaponry. It may also impact the development of advanced security doctrines based on these weapon systems and long-term, large-scale organizational planning. This is due to various budgetary obstacles and challenges posed to the decision-making process. However, over the past two years, despite the political stalemate, Israel has continued to act to safeguard its security interests across multiple arenas. Military activity, both overt and covert, has been reported in various theaters of operation throughout the Middle East region. That said, although these operations are informed by a guiding strategy that has been formulated by previous governments and continues to be updated by Israel’s security agencies, especially vis-a-vis the regional threat posed by Iran and its proxies, the lack of a cohesive government is liable to affect proper governance and the decision-making process. This is shown for instance by the Israeli government’s apparent lack of strategy regarding the best way to manage the threat of militant groups based in the Gaza Strip, which is an issue that periodically emerges with a potentially decisive operation indefinitely put on hold until a stable government is formed. Taken as a whole, despite the political situation dictate, Israel can continue to respond to any threats to its national security and continue to formulate a military strategy to defend these interests.
FORECAST: This situation will impact Israel’s security in the strategic realm and possibly lead to long-term damage as Israel’s adversaries can gain an edge on delays to procure and develop weaponry due to budgetary and decision-making challenges. However, the ability of Israel’s security apparatus to mitigate and thwart security within Israel itself will remain intact over the coming period. The Israeli security agencies have proven during this period of relative political instability and throughout periods of far greater security volatility that the vast majority of local and regional threats, namely along its northern borders and vis-a-vis Palestinian militants in the West Bank and Gaza, are manageable. Thus, the political situation will not lead to a fundamental destabilizing of the security environment within Israel over the coming period.

Election Results and Political Blocs

On March 23, Israel held its fourth round of elections for its parliament (the Knesset) in the past two years.
During this two-year political deadlock, a government was formed in May 2020, which was led by Prime Minister (PM) Benjamin Netanyahu and the Likud party alongside Benny Gantz, his political rival from the“Blue and White” party. The government’s functioning was hindered by in-fighting and discord between the rival political factions, which eventually led to the dispersal of the Knesset in December 2020, resulting in the March election.
The results of the election can be seen below. The political fault lines within Israel since the first election in March 2019 have revolved around the parties’ willingness to join or rejection of a government led by PM Netanyahu, who is on trial having been officially indicted in November 2019 for breach of trust, bribery, and fraud.
The debate on Netanyahu’s political and legal status has transcended the traditional left-right discourse within the Israeli political landscape. In this context, parties that are part of the right-wing political camp in Israel, such as former Likud member Gidon Saar’s “New Hope”, have formally declared themselves to be part of the “anti-Netanyahu” or “change” bloc. Other parties, such as Naftali Bennett’s right-wing “Yamina” and Mansour Abbas’ Islamist “Raam”, remain unaffiliated with either of the pro- or anti-Netanyahu blocs.
This has resulted in a situation that neither the pro-Netanyahu bloc, primarily made up of right-wing and religious/ultra-Orthodox parties nor the ideologically diverse anti-Netanyahu bloc has been able to form a coalition, which requires a 61-seat majority in the Knesset.
On April 6, Netanyahu was given a four-week mandate to form a government by President Reuven Rivlin. He has until May 4 to try to assemble a viable coalition and can thereafter request a 14-day extension at the discretion of the president. If he fails, Rivlin can ask a second person or return the mandate to the Knesset. If these alternatives fail to yield a government, the Knesset will automatically dissolve and another election will be held.

Affiliations of political parties

These are the various political parties and their affiliations and policies.

Main options for government coalitions – likelihood and longevity

Option 1: Pro-Netanyahu bloc & Yamina government plus Raam external support in Knesset

Prime Minister: Benjamin Netanyahu
Coalition Components: Likud, United Torah Judaism, Shas, “Religious Zionism”, and Yamina (59 seats)
External support for government votes: Raam (4 seats)

Analysis:

This option is somewhat feasible as it includes various political parties with broadly similar ideological agendas and worldviews in government. Although the Raam party would likely not be a formal part of the government, but an external support bloc, its inclusion poses the greatest challenge to the formation of the government. The “Religious Zionism” party has explicitly stated and reiterated that it will not be part of a government that depends on Raam’s support and this is likely to hinder any progress on this option. This is compounded by major concessions that Netanyahu may have to make to Bennett for the latter to join a government led by the former. In terms of longevity, the Raam party’s leadership is able to cooperate with the religious factions in this potential government, particularly over social policy and support for religious institutions. However, its overall Islamist agenda and links to the Palestinian cause are liable to create complications for the government’s functioning, which would be exacerbated during periods of escalation or religious sensitivities.

Option 2: Pro-Netanyahu bloc & Yamina government plus defectors from the anti-Netanyahu bloc

Prime Minister: Benjamin Netanyahu
Coalition Components: Likud, United Torah Judaism, Shas, “Religious Zionism”, Yamina + 2 members of anti-Netanyahu bloc shift allegiances (61 seats)

Analysis:

This government is unlikely due to the reluctance of members of the center or center-right parties to renege on their pledges not to join a government led by Netanyahu amid his indictment on corruption charges. The “Blue and White” party has insisted it will not join a Netanyahu-led government following its previous power-sharing experience with the incumbent prime minister while “New Hope” members, more likely to defect, have so far insisted they will not join the pro-Netanyahu bloc. Although individual members of these parties may choose to join Netanyahu under the pretext of preventing another round of elections, the parties themselves are unlikely to do so due to the potential for a fifth vote and the impact this would have on voters who will perceive this as the violation of election pledges. In terms of longevity, a government made up of the Netanyahu bloc, Yamina, and two defectors from the anti-Netanyahu bloc would likely be more stable on key policies than a Raam-backed coalition. However, with legislation pertaining to Netanyahu’s legal complications, this government would likely face substantial hurdles as several members of Yamina and most potential defectors are unlikely to support any perceived efforts by Netanyahu or his supporters to release him from or evade the legal process.

Option 3: Anti-Netanyahu bloc plus external support from Raam

Prime Minister: Naftali Bennett/Yair Lapid (Rotation)
Coalition Components: Yesh Atid, Blue & White, Yisrael Beitenu, Labor, Meretz, Yamina, New Hope (58 seats)
External support for government votes: Raam (4 seats)

Analysis:

In terms of the likelihood of formation, this government faces multiple challenges due to the ideological diversity of the parties it would include and the pressure within both the left-leaning (Yesh Atid, Labor, Meretz) and right-leaning factions of the potential coalition (Yamina, New Hope) to extract concessions from the other. The former parties seek to ensure Yesh Atid’s Labor is the prime minister (PM) or first in any rotation, while the latter right-leaning bloc insists on Bennett as PM and first in the rotation. The right-leaning parties will also aim to block the left-leaning parties from holding key cabinet posts and thus advancing a left-wing agenda as well as blocking their entry to the security cabinet. Even if this government does materialize, it would likely be hindered by major in-fighting and its longevity is thus very low.

Option 4: Netanyahu chooses/forced to sit aside; right-wing government formed

Prime Minister: Consensus among right-wing parties
Coalition components: Likud, Shas, United Torah Judaism, Yamina, New Hope, Religious Zionism (65 seats)

Analysis:

This option is extremely unlikely due to Netanyahu’s widespread popularity among the Likud party and the Ultra-Orthodox parties that support the Likud. Members and voters of these parties would consider any attempt to coerce Netanyahu to step down as anti-democratic, which would create major tensions within Israeli society. Netanyahu also continues to hold significant support among parliamentarians in his and other supporting parties, while even some of his detractors may oppose legislation that prevents him from being prime minister due to its targeted nature. This is evidenced by the failure of anti-Netanyahu parties to pass such legislation over the past years despite their overall opposition to his continued premiership. Taken as a whole, this option is highly unlikely and its longevity is thus negligible.

BOTTOM LINE

Overall, given that all of the above-mentioned options pose considerable challenges to political actors in terms of both the formation of a viable coalition and the longevity of any government, the most likely scenario is either a fifth election with a similar outcome along pro- and anti-Netanyahu lines or an unstable government that fails to complete its term and thus elections are again called.

Recommendations:

In light of the current situation:

Those operating or residing in Israel, or seeking to do so, are advised to remain abreast of the ongoing political situation, which is liable to have an impact on business continuity.
It is advised to allot for obstacles to cooperation with public sector bodies and ministries as well as other state-funded organizations.
Allot for disruptions to processes that require government permits, regulatory approvals, or other activities that are liable to depend on legislation.
More generally, allot for continued restrictions on entry to Israel due to the COVID-19 pandemic. Consult with us at [email protected] or +44-20-3540-0434 for guidance on entry to Israel amid the current limitations.

General Recommendations:

Travel to Israel may continue at this time while adhering to security precautions regarding militant attacks, while avoiding the immediate vicinity of the Syrian, Lebanese, and Egyptian borders, due to the persistent risk for cross-border violence.
Those traveling in the 40 km area surrounding the Gaza Strip should continue adhering to all safety precautions regarding early warning sirens for incoming rockets. Remain cognizant of the situation along with the Lebanese and Syrian border areas, as minor hostilities between various groups can escalate into a broader conflict. In case you hear a siren, seek shelter in a protected area and remain inside for at least 10 minutes.
In major Israeli cities, remain vigilant in crowded commercial areas or public transport hubs, as these locations have been targeted by militant groups in the past. Alert authorities to suspicious, unattended packages in these areas.
As a general precaution, avoid nonessential travel to the vicinity of Jerusalem’s Old City, particularly in the vicinity of Damascus Gate, due to the increased potential for acts of militancy and civil unrest. For those seeking to travel to the Old City, it is advised to contact us for a security-oriented travel guide.

Potential Israeli ‘annexation’ to destabilize security environment, affect relations with Gulf states – Israel & Palestinian Territories analysis

This report was written by:

Darren Cohen – Senior Intelligence Manager, Middle East and North Africa

And reviewed by:

Oded Berkowitz – Deputy Chief Intelligence Officer

Executive Summary

Israeli Prime Minister Benjamin Netanyahu and current Alternate Prime Minister Benny Gantz reached a coalition agreement in April, which stipulates that Israel can apply sovereignty to parts of the West Bank, in coordination with the US administration, from July 1.

The different and currently unknown versions and timing of the potential application of sovereignty, also known as annexation, will have an impact on both the local backlash vis-a-vis the Palestinians, as well as Israel’s relations with prominent regional actors.

Overall, Israel’s potential annexation of parts of the West Bank will destabilize the local security environment and scale back Jerusalem’s rapprochement vis-a-vis Saudi-aligned Gulf states. However, the potential for significant violence in the West Bank or large-scale armed conflict with Gaza-based militant groups remains relatively low.

Travel to Israel may continue at this time while adhering to security precautions regarding militant attacks, while avoiding the immediate vicinity of the Syrian, Lebanese, and Egyptian borders, due to the persistent risk for cross-border violence.

Current Situation

Netanyahu-Gantz Coalition Agreement

On April 20, Israeli Prime Minister (PM) Benjamin Netanyahu and “Blue and White” leader Benny Gantz reached a coalition agreement. The deal facilitated the formation of a unity government following a prolonged political deadlock, wherein Netanyahu and Gantz will alternate as PM.

As part of the deal, a clause stipulated that PM Netanyahu is authorized to bring “the agreement that will be reached with the US” on “applying [Israeli] sovereignty” [to unspecified parts of the West Bank] from July 1 “for approval by the government and/or the Knesset (Israeli Parliament).”

The agreement also states that the unity government will work with the US “while pursuing the security and strategic interests of the State of Israel, which include, maintaining regional stability, [maintaining existing] peace agreements, and striving for future ones”.

The application of Israeli sovereignty in the West Bank has also been referred to as “annexation.”

Statements by Netanyahu, Gantz

In an interview on May 28, Netanyahu stated that Israel will apply sovereignty to the Jordan Valley and extensive territory in the West Bank, while keeping Jerusalem under undivided Israeli control and not uprooting a single Israeli West Bank community.

In January, prior to a March 2 election, Gantz stated he would annex the Jordan Valley, referring to it as “Israel’s eastern protective wall”, “in coordination with the international community”.

The Jordan Valley encompasses a strip of territory that spans the length of the border between the West Bank and Jordan.

Gantz has persistently emphasized the need for coordination with both the US and prominent Arab states in the region for any unilateral Israeli annexation of the West Bank.

Reaction of Prominent Regional Actors

Overall, all implications regarding potential annexation elicit overwhelmingly negative reactions from prominent regional actors. Below are some notable examples:

On May 19, Palestinian Authority (PA) leader Mahmoud Abbas declared that in light of the coalition agreement, “the Palestine Liberation Organization (PLO)…are absolved, as of today, of all agreements and understandings with the American and Israeli governments and of all the commitments based on these understandings and agreements, including security”.

On June 15, a Hamas senior official and spokesperson stated that the group calls for “the annexation project to be confronted with resistance in all forms”.

In an interview on May 15, Jordanian King Abdullah II stated that Israeli annexation of parts of the West Bank would lead to a “massive conflict with the Hashemite Kingdom of Jordan”.

The Egyptian Foreign Minister, Sameh Shoukry, stated on June 4 in a joint declaration with the Russian Foreign Minister, that Cairo “rejected the annexation of any parts of the West Bank to Israel” and “any [Israeli] unilateral declarations”.

In an unprecedented article published in an Israeli newspaper on June 12, UAE Ambassador to the US, Yousef al-Otaiba, stated that while Israel has promoted normalization of relations with Arab states, “Israeli plans for annexation and…normalization are a contradiction.”

Background

Since 2017, President Trump’s US administration has made a series of policy announcements pertaining to Israel and the Palestinians that the latter perceive to be biased towards the former.

These include: the December 2017 recognition of Jerusalem as Israel’s capital; the May 2018 transfer of Washington’s Embassy to Jerusalem; the March 2019 recognition of Israeli sovereignty in the Golan Heights; and the November 2019 statement that the administration does not consider “the establishment of Israeli civilian settlements in the West Bank” as “inconsistent with international law.”

On January 28, the US administration launched its peace plan, known as “Deal of the Century”, which included recognition of Israeli sovereignty in approximately 30 percent of the West Bank, including the Jordan Valley, all of Israel’s major settlement blocs to the east of the 1949 Armistice Line (“Green Line”), and all other Israeli West Bank communities in the West Bank.

The plan also stipulated the formation of a Palestinian state in parts of the West Bank, the Gaza Strip and the Negev, with territory east of Jerusalem as its capital at the culmination of a four-year process.

The US’s recognition of the Palestinian state would be conditioned on numerous commitments by the Palestinians, including the disarming of all Palestinian militant factions, recognition of Israel as a Jewish state, and the termination of all payments to militants.

According to numerous reports during the month of June, the US administration seeks Gantz and his political partner, Foreign Minister Gabi Ashkenazi, to be in agreement with any move advanced by the Israeli government in order for Washington to endorse the announcement.

The US presidential election is slated for November 2020. Democratic Party presidential candidate, Joe Biden, reportedly stated in May that he does “not support annexation”, adding that he will “reverse Trump’s undercutting of peace”.

Map of Trump’s “Deal of the Century” plan

Assessments & Forecast

Factors affecting version, timing of Israeli annexation in West Bank

There are several factors affecting both the version of annexation that the Israeli government may implement in the West Bank and the timing of any application of its sovereignty. All of these factors are pertinent in assessing the potential impact on the security environment.

Version

There are multiple scenarios for the version of potential annexation. This ranges from a “hard” annexation, which would take the form of the application of sovereignty to the entire Jordan Valley, the major Israeli settlement blocs in the West Bank, as well as more isolated Israeli West Bank communities and their surrounding territory for security and expansion purposes. Overall, this would amount to approximately 30 percent of the territory of the West Bank.

A more “moderate” version would be limited to Israeli annexation of the Jordan Valley, with the exception of Palestinian territorial enclaves, as per Netanyahu’s recent statement. The Israeli control of or at least Israeli military presence in this territory has historically been part of the Israeli political consensus as a requisite for ensuring Israel’s national security. The “medium” annexation plan may also include all or some of the aforementioned major Israeli settlement blocs. These areas are relatively closer to the Green Line within the West Bank and are areas where the majority of the Israeli West Bank populace is located.

A “soft” version of annexation would be even more limited. This may include either just the Jordan Valley or be restricted to some or all of the major settlement blocs. The former would likely be presented by the Israeli government as de-jure recognition of Israeli security needs, while the latter would more likely be an attempt to represent the “facts on the ground”, namely, the large Israeli population living beyond the Green Line in major settlement areas.

FORECAST: In light of current reports indicating that the US seeks an Israeli consensus among the government partners in order to endorse annexation, and given that Gantz and Ashkenazi are known to be opposed to major unilateral moves, PM Netanyahu may be compelled to advance a more “moderate” or “soft” version of annexation. The statements condemning the move by both Joe Biden and prominent Arab states may also lead Jerusalem to pursue a softer version of annexation in order to avert a major crisis with either a potential future US administration or Israel’s regional partners.

Timing

Although the government can, in accordance with the coalition agreement, bring the annexation plan to the Knesset from July 1, if it happens, the process itself is likely to take several more weeks and possibly months to potentially even start. This will depend on multiple factors: In the event that Netanyahu and Gantz reach an agreement pertaining to the type of annexation, and thus satisfy this reported US requirement, the government will likely seek to act swiftly in order to implement the plan. This is due to the forthcoming US presidential election in November, which Israel will be reluctant to encroach upon and thus potentially limit the Trump administration’s willingness to make such a major foreign policy decision so close to a national vote.

However, in the event that the Israeli government assesses that Biden is likely to win the forthcoming election, it may seek to adopt a more cautious approach in order to avert a crisis with the potential incoming administration. Jerusalem may, therefore, apply its sovereignty to parts of the West Bank in stages. A more symbolic or security-minded initial annexation of the Jordan Valley and/or major settlement blocs may first be implemented in July. Thereafter, Israel may apply sovereignty to the more contentious Israeli communities situated deeper in the West Bank in the months following the US presidential election, in the event of a Trump victory.

The decision to apply sovereignty may be delayed due to other domestic considerations. Israel is currently experiencing a spike in COVID-19 cases following an easing of restrictions amid a major reduction in the infection rate. In addition, the COVID-19-induced economic downturn, characterized by a sharp increase in unemployment, remains at the forefront of the Israeli political agenda. Thus, Netanyahu may consider delaying annexation until after both the US presidential election and the significant halting of the COVID-19 pandemic in Israel and the US, and attribute this decision to the prioritization of dealing with the health and economic crises that both countries are currently dealing with.

FORECAST: It cannot be entirely ruled out that the government will completely postpone plans to apply sovereignty to parts of the West Bank due to multiple reasons. These include: a possible failure to secure US backing for Jerusalem’s preferred version of annexation, external pressure from major regional and international stakeholders, domestic opposition from Israeli political parties, and, lastly, the ongoing instability of the current Israeli unity government. Since its inauguration in May, the new government has publicly clashed on a range of issues and it is known that the major components of the government, the Likud and Blue and White parties, have different visions of Israel’s future vis-a-vis the Palestinians. By the end of August, the Knesset must pass the government’s state budget. In the event that the coalition members fail to do so, this would lead to a premature collapse of the government and the postponement of annexation until after another Israeli election, which may yield a more favorable result for Netanyahu.

Israeli annexation in West Bank to destabilize security environment, unlikely to trigger widespread violence

Potential for major uprising in West Bank remains relatively low

The precedent of recent years shows growing apathy and a decline in nationalist motivation among local Palestinians in the West Bank and, as a result, an apparent decline in willingness to engage in militant activity and large acts of civil unrest. This is evidenced by the significantly reduced number of large-scale attacks over recent years and drop in the frequency and scale of unrest. In recent years, attacks have been largely limited to periodic stabbings, vehicle-rammings, small-scale shootings, and rock-hurling attacks in the West Bank and East Jerusalem. This has persisted despite the aforementioned period from 2017 onwards during which the US administration has announced a series of foreign policy measures pertaining to the Israel-Palestinian conflict, all of which the Palestinian leadership have deemed to be biased towards Israel. Calls by either the West Bank-based PA or Gaza-based Hamas militant faction for civil disobedience or “days of rage” in condemnation of these decisions have been met with a very limited response by local Palestinians, which underscores the aforementioned general apathy.

This trend has even continued since PA leader Abbas’ May 19 declaration that all agreements with Israel, including security coordination, were annulled. While there have been some limited indications that the PA has down-scaled its coordination with Israel, for instance, reports from May 22 that the PA security forces retreated from territory to the east of East Jerusalem, this was mostly symbolic. This was further demonstrated by a June 7 report indicating that PA security forces foiled an attack against the Israel Defense Force (IDF) in the Jenin area. Thus, it is likely that the declaration was rhetorical only and an attempt to pressure Israel into reversing its declared intention to annex West Bank territory. However, even in the event that security coordination is completely suspended between the parties, the limited evidence of the past month indicates that there is no major increase in motivation among Palestinians, either organized factions or local elements, to conduct large-scale attacks against Israeli security forces or civilians.

The PA has other options at its disposal. The Ramallah-based leadership may opt to completely dismantle the PA and all its institutions, which would transfer civil and security control of the entire West Bank to Israel. This is less likely, as the PA leadership remains interested in maintaining its power in the area, rather than relinquishing control, which would allow Hamas to gain a foothold. The PA may also seek to inflict an economic toll on Israel by blocking crossings between PA-administered territory and Israel, while also prohibiting Palestinian laborers and goods from entering the latter territory. This would cause economic damage to Israel, which is dependent on these workers and items in some sectors. However, this scenario is unlikely given the substantial socio-economic damage it would cause to the PA and the local populace.

The PA may wage a diplomatic campaign against Israel, rather than risk widespread security instability. Such diplomatic initiatives may include working with the PA’s supporters, both state and non-state actors, primarily in Europe, to build a coalition against Israel. This would be aimed at diplomatically and economically isolating Israel in the international area, and empowering the anti-Israel Boycott, Divestment, and Sanctions (BDS) movement to expand its activities. This is a likely scenario given the PA’s previous action and repeated warnings made by numerous European states and prominent non-governmental organizations (NGOs) against annexation of the West Bank. The PA can also act against Israel in the diplomatic arena by unilaterally declaring statehood in the entire West Bank and Gaza Strip in coordination with its allies, while simultaneously initiating anti-Israel campaigns and resolutions at prominent international forums where it is represented, or alternatively, through its regional partners. Given precedent, a unilateral declaration of statehood by the PA, or international anti-Israel campaign, is likely, as the PA/PLO leadership has embarked on similar actions in the past. However, this would be mostly symbolic, and given Israel’s strong relationships with prominent international actors, primarily the US, any PA initiative will be limited in its ability to effectively isolate Israel.

Overall, the PA, and particularly its leader Abbas, who responded to the US peace plan with “1,000 nos”, have lost significant legitimacy and popularity among West Bank Palestinians. This is even more acute among the young demographic, many of whom disagree with the PA’s strategic direction and security cooperation with Israeli authorities over recent years. Many of these individuals also consider the PA to be a corrupt institution. Thus, they are likely to remain indifferent to the potential for Israeli annexation in the territory, and subsequent undermining of the PA’s vision of a two-state solution, because they have already ceased to support such a resolution to the conflict.

That being said, a potential annexation of territory in the West Bank is likely to be perceived as a crossing of a red line that perpetuates the ongoing conflict and potential for a long-lasting solution. This is in contrast with the aforementioned US policy declarations and peace proposal that have likely been considered as either symbolic or hypothetical, while annexation would constitute a practical move that has a tangible impact on the lives of some Palestinians. In addition to this, the PA-administered areas of the West Bank, in addition to Israel and the wider region, are currently experiencing a COVID-19-triggered economic crisis. This has been exacerbated by the PA’s refusal to accept clearance funds that Israel accepts on its behalf, which constitute a significant amount of the Ramallah-based authority’s budget. The PA attributes any economic crisis to Israel’s policies in the region, which tends to resonate with most segments of Palestinian society. The combination of the perceived intolerable annexation action by Israel and the economic crisis in the West Bank are likely to elevate nationalistic sentiments and increase the motivation to convey to Israel that its perceived belligerent actions will not go “unpunished”.

FORECAST: Therefore, it is likely that an increase in violence will be witnessed in the West Bank, though the PA will seek to limit its scope and scale, with the understanding that widespread unrest would ultimately pose a risk to its own governance. In this context, violence will likely be restricted to localized outbreaks of civil unrest and low-level militancy, such as stabbings and vehicle-ramming attacks, than large-scale IED attacks, mass shootings, or suicide bombings. Moreover, these incidents are more likely to remain contained to the West Bank, rather than occurring in Israeli territory west of the Green Line. Even within the West Bank, it is likely that the violence will not be widespread throughout Palestinian cities, but will be contained to Palestinian refugee camps that are known to be more hostile to Israe. While not in the West Bank, an increase in civil unrest is also likely in Arab-populated neighborhoods of East Jerusalem, primarily Issawiya, Silwan, and the Shuafat Refugee Camp, where violence is often recorded.

FORECAST: Palestinian militant groups in the West Bank will be more motivated to conduct a large-scale attack in order to present themselves as the “protectors of the Palestinian people”. The Hamas militant group maintains networks within the West Bank and will be determined to undermine its rival Fatah faction that leads the PA by claiming responsibility for action that portrays the latter in a negative light and as “out of touch” with the Palestinian people. Hamas will likely seek to capitalize on the PA’s perceived weakness and failure to prevent Israeli unilateralism and thus garner more support and expand its influence in the West Bank, which may include direct attacks by Hamas against PA targets in order to expedite this potential process.It is furthermore possible that the Palestinian militant factions operating in the West Bank, particularly Hamas, will order a large-scale symbolic attack against a prominent Israeli target in condemnation of the perceived seizure of Palestinian territory. However, given precedent of recent years, this will likely be foiled by Israeli authorities, although this will pose more of a challenge in the event of a complete suspension of coordination with the PA. A large-scale successful attack would significantly increase regional tensions and trigger a more extensive IDF operation in the West Bank.

Annexation to increase risk of escalation in violence between Israel, Gaza-based militant groups

The Gaza-based militant factions, led by Hamas, as well as more hardline Iran-backed Palestinian Islamic Jihad (PIJ) and other smaller Salafist groups, have repeatedly rejected any Israeli presence in the region. These groups maintain maximalist ideologies that consider all territory in the region to be “annexed” by Israel and have therefore persistently and violently responded to peace talks between Israel and the PLO/PA over the past 25 years. The potential annexation of parts of the West Bank will therefore be viewed differently by these factions to the way it is perceived by the PA, whose long-term stated strategy has been to establish a Palestinian state in the West Bank on territory which includes the land Israel seeks to apply its sovereignty to.

Moreover, over the more recent period, despite employing more threatening rhetoric, the militant factions have largely refrained from significantly increasing rocket attacks into Israel from the Gaza Strip in response to US policy announcements. While major unrest was witnessed along the Israel-Gaza border when the US Embassy was moved to Jerusalem, this came in the context of a protest movement that had already begun several months earlier. This highlights the point that US or Israeli policy declarations are not necessarily triggers for action for these groups.

Regardless, the Gaza-based groups, particularly Hamas, will likely feel compelled to show some form of symbolic opposition or resistance to Israel’s annexation of territory in the West Bank. As is the case in the West Bank, the militant groups will seek to portray the PA as weak and “out of touch” and highlight their ability to violently confront Israel. FORECAST: Thus, if/when Israel formally announces its intention to annex parts of the West Bank, passes the legislation in the Knesset, and implements the policy on the ground, an increase in violence in the Gaza area is likely. This may manifest in the form of rocket fire, unruly border protests, the placing of IEDs along the border, and the hurling of grenades, crude explosives, and rocks against IDF troops. Similar escalations have been recorded periodically over the past years and generally conclude after several days of violence, at most. However, the increased motivation to avenge Israel’s perceived seizure of Palestinian territory and violation of Palestinians’ rights may trigger these hostilities to spiral out of control and lead to a broader outbreak of violence. This remains a less likely option as it is not in Hamas’ interest to risk a large-scale armed conflict with Israel that significantly weakens the organization and diminishes its hold on the Gaza Strip. It will therefore likely demonstrate relative caution when initiating any hostilities.

Another factor in this respect is the role of the Iran-backed PIJ. Iran funds and supports the Gaza-based militant group and Tehran will have a distinct interest in presenting itself as the “defender of Palestine” in the Muslim world. FORECAST: It may therefore act via its regional proxy to launch a sustained rocket assault against Israel, which the militant group has proven it is capable of doing over the past year. While during previous rounds of violence, Hamas has opted not to engage in armed conflict vis-a-vis Israel and the IDF has responded by also specifically targeting the PIJ, due to the perceived severity of the annexation issue, it will be extremely difficult for Hamas to refrain from joining the PIJ or other groups in violently opposing Israel.

FORECAST: Overall, Israeli application of sovereignty to parts of the West Bank will raise tensions vis-a-vis the Gaza-based militant groups. It threatens to undermine any potential understandings that Hamas and Israel have reportedly reached and trigger a renewal of violence. However, due to Hamas’ interest in containing hostilities, this is unlikely to prompt a major round of fighting unless one of the parties makes a significant miscalculation, which cannot be ruled out.

Israeli annexation in West Bank to undermine relations with Jordan, may lead to downgrading of ties

Israel and Jordan have shared a peace agreement since 1994. During the majority of this period, the two countries have maintained full diplomatic relations and succeeded in overcoming several temporary crises. However, a potential Israeli annexation of any of the West Bank is likely to undermine relations between the countries. This can be attributed in part to the fact that a majority of the populace of Jordan is of Palestinian descent and many Jordanians harbor anti-Israel sentiments. This is evidenced by the continued controversy surrounding any cooperation between Israel and Jordan, as illustrated by periodic protests in Amman against an Israeli-Jordanian gas agreement, which were witnessed during 2019-2020.

The Jordanian authorities will seek to prevent a major outbreak of violence in the West Bank that has the potential to spill into Jordan. Despite it not being in Jordan’s interests to sever or downgrade relations with Israel, the Kingdom’s leaders will risk substantial condemnation and anti-government demonstrations if they fail to “punish” Israel’s annexation in a meaningful manner in the eyes of their population. This is especially given that socio-economic grievances are likely to be aggravated over the coming months amid the COVID-19-triggered global economic crisis. King Abdullah II and government officials will therefore seek to avoid taking actions that bolster the potential for anti-government unrest.

However, Jordan’s stability also depends on the significant economic assistance that the US provides to the Kingdom. In 2018, USAID donated more financial aid to Jordan than any other country in the region after Israel, with an accumulative transfer of almost 1.7 billion USD. Therefore, Amman faces a trade-off between preventing destabilization by inadequately responding to Israeli actions on one hand, and on the other, facing punitive US measures if it issues what Washington perceives to be too harsh a response, by, for example, cutting diplomatic relations with Israel and thus suspending or terminating the peace agreement.

FORECAST: With this in mind, the most likely scenario in the event of Israeli annexation of parts of the West Bank is that Jordan will downgrade relations with Israel, rather than outright severing all ties with the latter. This may take the form of the recalling of its ambassador to Jordan and expulsion of Israel’s ambassador from the Kingdom, the suspension of all security and economic cooperation, and diplomatic international resolutions against Jerusalem. Meanwhile, there remains the potential for acts of unrest or low-scale militancy against perceived US-linked or Israeli-linked interests in Jordan, including government infrastructure and companies. There will likely be an overall elevation in anti-Israel and US sentiment in the country. However, given precedent and the rarity of militant activity in the country, militant infiltration attempts from Jordan into Israel are highly unlikely.

Egypt likely to condemn Israeli unilateral declaration, maintain current covert ties

Israel reached a peace agreement with Egypt in 1979. In recent years, particularly in the security realm, collaboration between Egypt and Israel has further intensified as both states have conducted counter-militancy campaigns and shared intelligence. However, the peace agreement between Jerusalem and Cairo has limited popular support among Egyptian citizens, especially those supportive of the Muslim Brotherhood movement, who will increase pressure on the President Abdel Fattah al-Sisi-led government to condemn Israel. Regardless, opposition elements, including the Muslim Brotherhood, have been significantly weakened over recent years by a prolonged government crackdown. The Egyptian government is less attentive to the popular will and has been very effective at clamping down on any civil unrest over recent years. President al-Sisi will therefore be more likely to act in accordance with Egypt’s strategic interests, than attempting to placate opposition figures and critics. This is in contrast to Jordan, even though both countries are US allies and rely on Washington for financial assistance.

FORECAST: Egypt will denounce any potential Israeli annexation of the West Bank, although this will likely be limited to a diplomatic condemnation. The government will be compelled to publicly demonstrate its opposition to Israel’s actions and thus cooperation between the two states will become even more discreet and covert over the coming months in any scenario in which Israel acts unilaterally.

Israeli application of sovereignty in West Bank to lead to scaling back of rapprochement with Saudi-aligned Gulf states

Over recent years, Israel and the Saudi-aligned Gulf states, particularly Saudi Arabia, UAE, Bahrain, and Oman, have demonstrated an increasing willingness to move towards a full normalization of relations. The most recent and pertinent example of this was the June 12 article written by the UAE Ambassador to the US, Yousef al-Otaiba, in an Israeli newspaper. While the article was specifically warning the Israeli people against the ramifications of annexation, the very fact that a senior Emirati official wrote in an Israeli newspaper following decades of antipathy is historic and noteworthy. An additional and highly relevant example in this context was the decision by Bahrain to host the launch of the economic component of the US peace plan in June 2019, and thus provide legitimization of the program by a prominent Gulf state.

The period of rapprochement can largely be attributed to two parallel phenomena. On one hand, many Saudi-aligned Gulf states have demonstrated less interest in supporting the PA or other Palestinian factions. On the other hand, Israel and the Gulf states share multiple common interests. These include a shared perception of the regional security threat posed by Iran and its proxies, as well as an understanding in the mutual benefit of cooperating in the intelligence, security, technological, and economic remits. This period of “detente” has been accelerated over recent years by the US administration’s close ties with the Saudi-led bloc, which has created a covert alliance of interests.

FORECAST: Annexation of parts of the West Bank is likely to scale this normalization process back. The Saudi-aligned states, including the UAE that has been most vocal in its willingness to engage with Israel, will be reluctant to be considered as “succumbing” to perceived Israeli aggression in the form of the seizure of Palestinian territory. The Gulf states will therefore be forced to publicly condemn this Israeli action.

FORECAST: The form that this condemnation takes and the impact on the current normalization process is likely to correlate with the version of annexation. As the Gulf states and Israel do not maintain official ties, there are few diplomatic tools at their disposal because all relations have largely been covert since their commencement over the past years. A “hard” annexation that is perceived as undermining any possibility for the solution envisioned by the PA and most of the Arab world will likely significantly impact covert economic and security ties between Israel and the Gulf states. In the event of a milder application of sovereignty to parts of the West Bank by Israel, it is possible that the Gulf states will publicly condemn Israel while covertly continuing to cooperate with Jerusalem.

Recommendations

Israel

Those traveling in the 40 km area surrounding the Gaza Strip should continue adhering to all safety precautions regarding early warning sirens for incoming rockets. In case you hear a siren, seek shelter in a protected area and remain inside for at least 10 minutes.

In major Israeli cities, remain vigilant in crowded commercial areas or public transport hubs, as these locations have been targeted by militant groups in the past. Alert authorities to suspicious, unattended packages in these areas.

During escalations in violence:

Those operating or residing in Israel, including Tel Aviv and Jerusalem, should adhere to all Israel Defense Forces (IDF) Home Front Command guidelines regarding early warning sirens for incoming rockets. In case you hear a siren, seek shelter in a protected area and remain inside for at least 10 minutes. As a general security precaution, those operating or residing in Israel should ensure that contingency and emergency evacuation plans are updated due to the potential for a further deterioration in the security situation. We advise to contact us to be briefed on the situation, while consulting us for operational support.

We advise against all travel within 40 km of the Gaza Strip. Those remaining within this vicinity should initiate contingency and emergency evacuation plans due to the deterioration in the security situation. Contact us for itinerary and contingency support options.

Those operating or residing in Jerusalem are advised to avoid nonessential travel to the areas of Shuafat, Beit Hanina, Silwan, and Wadi al-Joz, as well as the vicinity of the Temple Mount/al-Aqsa Mosque Compound and the Damascus Gate given the potential for further unrest. Maintain heightened vigilance throughout East Jerusalem and the Old City for the same reason. Avoid nonessential travel to Arab-Israeli towns, particularly Nazareth, I’billin, Qalansawe, Tayibe, and Tira.

Palestinian Territories

Business-essential travel to Ramallah and Bethlehem can continue at this time. Adhere to basic security precautions regarding the threat of civil unrest and militancy. Consult with us for itinerary-based recommendations and ground support options.

Avoid nonessential travel to other Palestinian-controlled areas of the West Bank at this time given the persistent threat of civil unrest.

We advise against all travel to the Gaza Strip due to frequent border crossing closures and the threat of militant activity and armed conflict.

Minimize night travel in major cities, as the majority of IDF and PA security operations occur at this time, particularly in the vicinities of Palestinian refugee camps.

During escalations in violence:

As a general precaution, avoid all travel to the West Bank during an escalation in violence due to counter-militancy operations, and relating unrest in Palestinian urban centers. The risk for altercations remains most pronounced in the Hebron, Jenin, and Nablus areas, and to a lesser extent within Ramallah and Bethlehem.

Be advised that crossing points between Israeli and Palestinian controlled territories, including the Qalandiya checkpoint between Jerusalem and Ramallah, have frequently witnessed unrest leading to violence. As a result, crossing points may be closed, or experiencing disruptions. Additionally, avoid nonessential travel to the vicinity of the Ofer prison, due to the threat of unrest.

For those remaining in Gaza, in the event that orders to evacuate are issued by the IDF, including via flyers, it is advised to immediately comply with instructions and leave the mentioned areas. If airstrikes are reported in your vicinity, it is advised to seek shelter and remain away from windows. If no shelter is available, lie on the ground and shield your head.

US measures against PA likely attempt to force concessions in negotiations with Israel – Israel & Palestinian Territories Analysis

Executive Summary

In recent months, the Trump administration took several economic and diplomatic measures against the Palestinian Authority (PA), including cutting funding for the United Nations Relief and Works Agency for Palestine (UNRWA), as well as closing the Palestine Liberation Organization (PLO) mission in Washington, D.C.

These are likely driven by the Trump administration’s desire to act in accordance with perceived US national interests only, as well as to challenge the status quo, thus forcing the PA to return to negotiations and adopt more flexible positions vis-a-vis Israel.

While the measures have exacerbated heightened tensions between the US and the PA, as well as domestic tensions, in the near-term, they are unlikely to lead to broad hostilities between Israel and Gaza, or large scale unrest in the West Bank.

Nonetheless, the measures will likely contribute to an uptick in “lone-wolf” attacks by Palestinians targeting Israeli civilians and security personnel in the West Bank and Jerusalem, as well as fuel the ongoing civil unrest along the Israel-Gaza border.

Current Situation

On August 31, the US State Department announced that the US Government will end all financial contributions to the United Nations Relief and Works Agency (UNRWA), which officially provides Palestinians with healthcare, education, and social services. The statement described the agency as an “irredeemably flawed operation”, further citing its unwillingness “to shoulder the very disproportionate share of the burden of UNRWA’s costs”.

The US regards UNRWA’s business model as “simply unsustainable” due to its “endlessly and exponentially expanding community of entitled beneficiaries”, namely the bestowing of refugee status to descendants of Palestinian refugees following the Arab-Israeli conflict of 1948-49.

The measure was denounced by the Palestinian Authority (PA) President Mahmoud Abbas whose spokesperson referred to the Trump administration’s move as “promoting terrorism” and a “flagrant assault against the Palestinian people and defiance of UN resolutions.”

Meanwhile, on September 10, the US State Department announced that it will close the Palestine Liberation Organization (PLO) mission in Washington, citing the PLO’s “refusal to engage with the US government with respect to peace efforts”.

Background

The Trump administration’s decision to halt all funding to UNRWA comes amidst a series of policy changes vis-a-vis the Palestinians over the last year. On December 6, 2017, President Donald Trump officially recognized Jerusalem as the capital of Israel, followed by the relocating of the US Embassy from Tel Aviv to Jerusalem on May 14. In January, the Trump administration withheld 65 million USD of a planned 120 million USD contribution to UNRWA.

More recently, on August 24, the US State Department announced that it will cut a further 200 million USD in aid to the Palestinians, followed by the September 8 announcement of cuts amounting to 25 million USD earmarked for Palestinians in East Jerusalem hospitals.

The UN agency is funded almost exclusively by voluntary contributions from UN Member States. The cuts in the US’s contribution amount to approximately 300 million USD in planned funding for UNRWA. The US had previously contributed almost 30 percent of UNRWA’s 1.1 billion USD 2017 budget.

The PA has not engaged with a US-brokered diplomatic process since the latter’s recognition of Jerusalem as the capital of Israel in December 2017.

Assessments & Forecast: US measures in accordance with national interests, constitute effort to force Palestinian engagement

The Trump administration’s series of diplomatic and economic measures are likely motivated by two reasons. First, the decision is consistent with President Trump’s broader “America First” doctrine, which emphasizes a foreign policy that prioritizes perceived US national interests. This has manifested in the desire to demand that other governments increase their share of the budgetary burden for numerous international organizations. Thus, President Trump seeks to reduce UNRWA’s reliance on the US, as the latter had been paying almost 30 percent of UNRWA’s budget prior to the cuts and the Trump administration does not believe that UNRWA serves its national priorities.

Given the administration’s attempts to challenge previously held international consensus on issues such as the status of Jerusalem and Palestinian refugees, the UNRWA cuts are likely driven by the US’s goal of encouraging the Palestinians to return to the negotiating table and make concessions. By challenging the status quo, the US likely seeks to exert pressure on the PA to adopt more flexible positions on areas of policy that have long been considered non-negotiable by the Palestinian leadership. President Trump’s reported remarks on September 6 that the US “is not paying” (with reference to US aid to the Palestinians) if the Palestinians “don’t make a deal”, strengthens this assessment.

Furthermore, the US measures should be understood within the broader geopolitical context pertaining to the widely anticipated US-sponsored peace plan. Alongside the US’s attempts to force the Palestinians to make concessions, Egyptian authorities have sought to encourage both a Hamas-Fatah reconciliation process and, simultaneously, an Israel-Hamas long-term ceasefire, much to the chagrin of PA President Mahmoud Abbas, whose Fatah Party was reportedly excluded from the ceasefire talks. As the PA strives to return to control the Gaza Strip, such an exclusion may have been interrupted by Abbas as sign that he is considered irrelevant to the Gaza negotiations. Meanwhile, the US reportedly seeks to leverage a reported warming of ties between Israel and the Gulf countries, in addition to Egypt and Jordan, to promote its diplomatic plan and help to harness this growing relationship to exert pressure on the Palestinian leadership to yield to the US’s demands. Overall, the developments represent a weakening of the Abbas-led PA, which the US is likely seeking to take advantage of to promote their own interests.

However, the US measures are unlikely to succeed. Rather, they will likely exacerbate already heightened US-PA tensions. Given that the right of return of Palestinian refugees is considered by all Palestinian factions to be a prerequisite for the conclusion of the conflict, any international decisions pertaining to the refugee question are highly sensitive. In this context, the US’s decision to cease its funding of UNRWA, represents a perceived “flagrant assault against the Palestinian people” for the Palestinian leadership because it likely views such a decision as undermining the “right of return”. Therefore, the US’s efforts are prone to reduce the PA’s willingness to engage in a US-brokered diplomatic process.

If PA President Abbas was perceived as agreeing to US demands on the right of return and the status of Jerusalem, this would significantly undermine him in Palestinian public opinion due to the sensitivities surrounding these issues. Furthermore, it would present an opportunity for more extreme Palestinian factions, such as Hamas, to undermine the PA and sabotage any diplomatic process.
FORECAST: Given precedent, and the failure of previous measures to bring the Palestinians back to the negotiating table, the strategy is more likely to strengthen the Palestinian leadership’s refusal to engage and will therefore undermine the US-sponsored peace initiative due to this refusal.

Assessments & Forecast: Potential ramification on security environment due to economic initiatives

Overall, we do not assess that the US measures will lead to a broader violent uprising in the Palestinian Territories. On the contrary, the Israeli security apparatus continues to deter sophisticated acts of militancy exceptionally well, despite constant attempts to destabilize the security environment. For instance, in June, Israel Security Agency (Shin Bet) Director Nadav Argaman revealed that 250 acts of militancy, including suicide bombings, kidnappings and shootings, had been foiled by security forces in the first half of 2018. Furthermore, despite the lack of diplomatic engagement, the security collaboration between Israel and the PA remains stable and adds to the overall excellent security environment. Indeed, this cooperation is the only remaining Palestinian institution that the US continues to fund, in the form of the office of the United States Security Coordinator (USSC), which provides direct financial assistance and support to the PA Security Forces (PASF).
FORECAST: Taken as a whole, over the short-term, we do not anticipate that there will be an uptick in sophisticated, large-scale acts of militancy in the West Bank.

However, alongside the tangible, adverse economic effects of the cuts to UNRWA and additional aid, the broader series of economic and diplomatic measures is liable to exacerbate existing frustration and the Palestinians’ sense of marginalization. As a result, this perception may lead to an uptick in small-scale acts of militancy, motivated by these grievances. For instance, in the aftermath of the Trump administration’s recognition of Jerusalem, a slight temporary uptick in “lone-wolf” attacks was recorded, representing the increased sense of marginalization amongst the Palestinian populace. The question of the right of return of refugees is a similarly emotive and sensitive issue for Palestinians and any attempt to undermine this perceived right is liable to ignite Palestinian violence.
FORECAST: As a consequence, over the coming weeks and months, this anger could manifest in an increase in the volume of “lone-wolf” attacks such as throwing of Molotov cocktails, stabbings, shootings, and vehicle-ramming attacks on security forces and civilians, primarily in the West Bank and Jerusalem.

With respect to the Gaza Strip, UNRWA services, in part, play an important role in stabilizing the Palestinian security environment. UNRWA officially provides vital employment opportunities, medical services, and educational institutions. For instance, in Gaza, 240,000 students study at 252 UNRWA-run schools, illustrating the importance of such aid in helping to alleviate economic challenges.
FORECAST: With this in mind, the cuts to UNRWA are liable to exacerbate the precarious economic crisis. Given precedent, as Hamas tends to divert Gazans’ attention away from such economic crises and rather than permit criticism of its governance, this will likely redirect Gazans’ grievances towards Israel. Hamas’ resistance to Israeli policy, at present, typically manifests through the enabling, or instigating, of unruly riots on the Israel-Gaza border, encouraging the hurling of Molotov cocktails and incendiary balloons and kites into Israel, as well as infiltration attempts. In the short-term, these acts of unrest are likely to continue but are unlikely to cause a significant escalation. However, over the medium- and long-term, as the impact of the UNRWA cuts aggravates the economic crisis, there will be an elevated risk that Hamas will be forced to resort to armed conflict out of desperation, manifesting in rocket attacks, sophisticated infiltration attempts utilizing Hamas’ tunnel network, and mass riots on Israel’s borders. Nevertheless, overall, over the coming months, a significant change to the travel security environment that would have an impact on business continuity in Israel is unlikely.

Recommendations

Israel:

Palestinian Territories:

Business-essential travel to Ramallah can continue at this time, while maintaining heightened vigilance in Bethlehem. Adhere to basic security precautions regarding the threats of civil unrest and militancy. Consult with us for itinerary-based recommendations and ground support options.

Avoid nonessential travel to other Palestinian-controlled areas of the West Bank, including refugee camps, at this time given the persistent threat of civil unrest.

We advise against all travel to the Gaza Strip at this time due to continuous border crossing closures and the threat of militant activity.

If travel is essential, prior to entering Palestinian-controlled areas from Jerusalem-area checkpoints, confirm that crossings remain open and no unrest is taking place. Crossings near the cities of Jenin, Qalqilya, and Tul Karem remain less prone to violence.

Minimize night travel in major cities, as the majority of IDF and PA security operations occur at this time, particularly in the vicinities of Palestinian refugee camps.

How will Fatah Hamas reconciliation agreement affect international status, foothold in Gaza Strip? – Palestinian Territories Special Analysis

Current Situation

On October 12, Fatah and Hamas signed a reconciliation deal in Cairo. According to the agreement, Hamas will hand over all Gaza government institutions to the Fatah-led Palestinian Authority (PA) by December 1. PA security forces will take control of the border crossing with Egypt, with certain sources indicating that this handover will be completed by November 1. The parties reportedly agreed to prepare for national elections and are scheduled to meet again in Cairo on November 21 to negotiate further issues.

Previously, Hamas agreed on September 16 to dissolve its government in Gaza and reconcile with the Fatah-led Palestinian Authority (PA). The group also reportedly agreed at that time to hold general elections. Lastly, multiple Arab and Muslim countries welcomed the reconciliation agreement between the two parties, including Saudi Arabia’s Foreign Ministry on October 13.

Assessments & Forecast

Reconciliation agreement liable to improve Hamas’ status vis-a-vis region’s Arab countries; PA likely to gain foothold in Gaza Strip, possibly increasing its image among Palestinians

While in light of the failure of past reconciliations between the two parties it cannot be ruled out that the agreement will not materialize, given that the agreement serves the interests of both parties, it will likely manifest and be kept by Hamas and Fatah in the short- to medium-term. The reconciliation agreement between the two parties is likely part of the Hamas’s efforts to bolster its regional and international legitimacy. While the Fatah-led Palestinian Authority (PA) is widely accepted within the international community, Hamas is designated as a terrorist organization among many Western countries. Furthermore, Hamas has traditionally been resented by the prominent Arab countries, chiefly due to its rivalry with the PA, which is broadly supported across the region.

Through reconciling with the PA, Hamas likely attempts to improve its relations with the Arab countries. This is highlighted by the Egyptian-mediated negotiations between the two entities, as well as the Hamas’ growing cooperation with the Egyptian security establishment regarding the threat of militancy in North Sinai in recent months. By improving relations with Egypt, a prominent actor that maintains close ties with Saudi Arabia, Hamas will likely bolster its relations with the Kingdom and other Arab countries. This is further strengthened by Saudi Arabia’s recent welcoming of the reconciliation agreement between Fatah and Hamas. Additionally, Hamas also demonstrated this effort in its new charter, which distanced the Hamas from the Muslim Brotherhood, a banned group in many countries.

In the Gaza Strip, the agreement is likely a part of Hamas’ efforts to reverse the PA-instated sanctions in recent months, including halting power supply to the Gaza Strip, as well as withholding the salaries of thousands of Gaza-based civil servants. Should relations between Hamas and some of the Arab countries eventually improve, investments and donations may recover the Gaza Strip’s economy. In addition, the frequent opening of the Rafah border crossing may relieve pressure on the group in the Gaza Strip, coupled with the rapprochement between Hamas and the al-Sisi administration in Egypt. Such economic improvements in the Gaza Strip may allow Hamas’ local reputation to improve. However, should the economic improvement be perceived by Gaza’s population as linked to the PA’s efforts, it is possible that support for the PA among the Gaza Strip’s residents will increase, thus shifting the political environment towards the PA.

In the West Bank, the agreement is likely part of Hamas’ attempts to increase its foothold. In this context, if elections eventually take place, Hamas will likely achieve significant gains, capitalizing on growing anti-PA sentiments across the West Bank. Multiple polls conducted among the Palestinians over the past several years have predicted Hamas’ victory in the event of elections. According to an opinion poll from September 20, if presidential elections take place, the chief of Hamas’ Political Bureau Ismail Haniyeh would win the elections with 49.8 percent, while the current PA president Mahmoud Abbas would achieve only 41.7 percent. With this in mind, the PA will likely seek to postpone such a scenario as much as possible to prevent the reduction of its power in the West Bank.

For the Fatah-led PA, the agreement may serve its interests by granting PA security forces a degree of control in the Gaza Strip, including of its border crossings and local administration. Given the PA’s declining status among Palestinians, the reconciliation may allow the body to portray itself as siding with the “resistance” and rebuild its reputation. In addition, the development may be aimed at putting pressure on Israel, given the current lack of negotiations and low likelihood of such talks at this time. By forming a unity government, the PA likely seeks to counter one of Israel’s main arguments against the commencement of negotiations, namely the lack of one government representing the Palestinians. This would allow the PA to portray Israel as unwilling to negotiate a solution to the Israeli-Palestinian conflict.

Reconciliation liable to enhance Egypt and Saudi-led Arab countries’ influence in Gaza, while countering Iran’s

Iran will likely oppose this newly achieved agreement, given that it compromises its interests in the region by reducing the threat of militancy to Israel, as well as strengthens elements allied with its regional rival Saudi Arabia. Tehran is liable to attempt to thwart the materialization of the agreement, mainly by bolstering its support for factions within Hamas who are known for their traditional links to Iran, such as the group’s military wing, Izz ad-Din al-Qassam Brigades. This party, in turn, is likely to oppose the agreement given the influence it would allow other Arab countries at Iran’s expense, and more hawkish factions within the military wing may seek to thwart the agreement over the coming weeks, including by attempting to overthrow the current Hamas leadership in Gaza, as well as to escalate tensions with Israel into a broad conflict.

For Egypt, the reconciliation agreement serves Cairo’s interest in mitigating the risk of militancy in the North Sinai Governorate. Over the past several months, Egypt has invested efforts to destroy militant infrastructure in Rafah city along the border between Egypt and the Gaza Strip, mainly to prevent the Islamic State (IS)-affiliated group Wilayat Sinai from smuggling weapons and fighters from Gaza into northern Sinai. Having pro-Egyptian security personnel along the border on the Gazan side, particularly PA-linked security forces, will enable cooperation with their Egyptian counterparts, subsequently reduce the threat emanating from such jihadist elements. Even in the event of Hamas security forces’ positioning along the border, in light of the ongoing rapprochement between Cairo and the faction in recent months, the Egyptian government’s interests are liable to be preserved nonetheless.

The agreement also serves Saudi Arabia and its Arab allies’ interests. The Hamas-controlled Gaza Strip had been under Iranian influence, exemplified by efforts to arm Hamas’ military wing Izz ad-Din al-Qassam Brigades. By securing the presence of friendly elements within the Gaza Strip, namely PA officials, Riyadh would be able to gain a certain foothold in Gaza and potentially counter Iran’s influence. This could also be achieved by future investments by Saudi Arabia, as well as other Gulf Cooperation Countries (GCC), in the Gaza Strip. In addition, an agreement between the Saudi-backed Fatah-led PA and the Qatari-backed Hamas could possibly serve as a trigger for negotiations to solve the crisis between Qatar and the other GCC countries, as a cooperation may be required by Doha and Riyadh to oversight the agreement.

Likelihood for negotiations between Israel and Palestinians remains low, despite decreased potential for future broad conflict between Israel, Gaza-based militants

FORECAST: Given Hamas’ refusal to disarm its military wing, as well as Israel’s interest in avoiding acknowledging Hamas as representatives of the Palestinians, peace negotiations are unlikely to commence at this time. However, given precedent of previous such reconciliation agreements, the ongoing security cooperation between Israel’s security apparatus and PA security forces will likely continue over the coming weeks and months, including in the form of arrests of Hamas militants.

The agreement will likely reduce the potential for large-scale hostilities between Israel and Gaza-based militants. This is due to the expected improvement of economic conditions as a result of such an agreement. This includes salary payments to Gaza-based civil servants, particularly Hamas’ military wing’s operatives, which would diminish the group’s motivation to ignite hostilities. In the event of a localized escalation, in light of Egypt’s increasing rapprochement and growing influence on Hamas, Cairo would likely serve as a mediator between Israel and Hamas, thus reducing the potential for an exacerbation of hostilities. Nevertheless, Gaza-based Salafist and Islamic State (IS)-inspired militant groups will likely continue to target Israel with occasional rocket fire over the coming weeks and months in an attempt to drag Hamas and Israel into a broad conflict, with the long-term goal of weakening Hamas’ control over the Gaza Strip. Such elements may also carry out acts of militancy against PA elements and Hamas-affiliated interests, destabilizing the security conditions in the Gaza Strip, which in turn would serve as a fertile ground for the recruitment of new militants.

Recommendations

We advise against all travel to the Gaza Strip at this time due to continuous border crossing closures and the threat of militant activity. If travel is essential, prior to entering Palestinian-controlled areas from Jerusalem-area checkpoints, confirm that crossings remain open and no unrest is taking place. Crossings near the cities of Jenin, Qalqilya, and Tul Karem remain less prone to violence. Minimize night travel in major cities, as the majority of IDF and PA security operations occur at this time, particularly in the vicinities of Palestinian refugee camps.

New Hamas charter likely effort to improve public image, versus major policy shift by group toward Israeli-Palestinian conflict – Palestinian Territories Analysis

Current Situation

On May 1, Hamas’ Political Bureau Chief Khaled Mashaal revealed during a press conference in Doha, Qatar a revised version of the group’s charter, accepting the idea of a Palestinian state according to the June 4, 1967 borders. However, according to the charter, the group still does not recognize the state of Israel. In addition, the new charter stresses that the “struggle is against the occupation and not against the Jews”. Meanwhile, according to Mashaal’s summary of the changes to the charter, Hamas will not abandon armed struggle nor “give up one parcel of Palestinian land,” and “strives to liberate all Palestinian lands from the river to the sea” (referring to the Jordan river and the Mediterranean, including the state of Israel).

Additionally, Hamas distances itself from the Muslim Brotherhood and pan-Islamic notions. This contradicts the previous charter which indicated the group’s role in the global Islamist militancy theater. Furthermore, the new document defines the group as follows: “The Islamic Resistance Movement ‘Hamas’ is a Palestinian Islamic national liberation and resistance movement. Its goal is to liberate Palestine and confront the Zionist project. Its frame of reference is Islam, which determines its principles, objectives and means”. Lastly, the group dismissed all previous agreements signed between Israel and the Palestinian Liberation Organization (PLO), including the 1993 Oslo Accord.

Assessments & Forecast

Newly published charter likely attempt to improve image among international community, regional powers, Palestinian residents of West Bank, not reflective of major policy shift

We assess that the newly published charter is an attempt by the Islamist Palestinian faction to rebrand itself, rather than forming a new strategic approach towards the Israeli-Palestinian conflict. This is despite the stated acceptance of the June 4, 1967 borders, which is largely viewed as the main component of the “two-state solution”, as opposed to the group’s previous charter version. This assessment is backed by the group’s emphasis on not “giving up one parcel of Palestinian land,” and that it “strives to liberate all Palestinian lands”.

As part of this effort at rebranding, the group seeks to project a more moderate stance to the international community, particularly to Western countries, as some of these countries designate it as a terror organization. This attempt to project a more moderate stance is reflected by the group’s statement concerning their “struggle against the occupation and not against the Jews”, as opposed to the previous charter, which called for a “campaign against the Jews in Palestine”. With this in mind, by issuing this revised charter, Hamas likely strives at bolstering its image and increasing its legitimacy as a political entity in the eyes of the international community. This potential shift in Hamas’ approach towards the West may partially be explained by the group’s likely perception that some of the current Western governments have altered their stances towards the Israeli-Palestinian conflict to a more pro-Israeli attitude, particularly that of the Trump administration. This is further relevant regarding the charter’s distancing of Hamas from the global Islamist militancy theater, in a likely effort to alienate itself from jihadist elements globally, thus further enhancing its legitimacy in the international community.

This is also relevant with regard to the region’s leading Arab countries, most notably Egypt and the Gulf Cooperation Countries (GCC), with which Hamas has made persistent efforts at rapprochement over the past several months. By distancing itself from the Muslim Brotherhood, the Palestinian group likely seeks to improve its relations with such Arab states in light of the decreasing popularity and influence of the Muslim Brotherhood organization across the region, as it is has been banned and designated as a terror organization in these countries. This is further likely within the context of the ongoing economic and energy crisis in the Gaza Strip. In this respect, Hamas potentially desires financial support from some of the GCC countries to alleviate this crisis.

Meanwhile, domestically, we assess that the new revised charter is part of the group’s efforts to increase its support among the Palestinian people, particularly those living in the West Bank. By expressing its willingness to accept the idea of June 4, 1967 borders, Hamas positions itself closer to the general consensus of Palestinians in the West Bank surrounding the potential resolution of the Palestinian-Israeli conflict. Over the past several years, multiple opinion polls among Palestinians have indicated that a majority support the “two state solution” without the renouncement of the “Right of Return”, namely the return of all Palestinian refugees to Israel’s 1949 Armistice (Green Line) territory, including during a recent poll in February.

Furthermore, while in its previous charter the group emphasized the Palestinian national movement as a tool to promote the Islamist agenda, the current version emphasizes instead that Islam remains a guideline and a component within the Palestinian national identity, thus elevating the status of the “local” component of the movement at the expense of the “global”. Because religion constitutes a smaller component of the identities of large segments of Palestinians living in the West Bank, in comparison to those in the Gaza Strip, Hamas likely attempts through this new rhetoric to appeal more to these Palestinians, as a part of such efforts to gain support in the West Bank.

Current status quo of Israeli-Palestinian conflict unlikely to change, due to lack of negotiations, tensions between Hamas-Fatah, future hostilities between Israel and Hamas

Given that we assess that Hamas has not changed its stance regarding Israel or the resolution of the Israeli-Palestinian conflict, the charter is unlikely to affect or improve the prospect for future negotiations between Israel and the Palestinians. This is underlined by Hamas’ refusal to recognize Israel, its rejection of previous agreements between Israel and the PLO, as well as issues mentioned in the new charter, including the “liberation” of all of Palestine as defined by the group, as well as the insistence on the “Right of Return”, which Israel traditionally rejects. As a result, even if negotiations between Israel and the Palestinian Authority (PA) eventually materialize, potentially although not likely including Hamas backing the Fatah-led PA, we assess that they are unlikely to bear fruit in the coming month and years.

Furthermore, despite such efforts to appear more moderate, this shifting public image does not indicate an improved relationship with the PA, which is currently strained. Efforts by Hamas to appeal to Palestinians in the West Bank are not likely to be perceived positively by the PA, given that the PA continues to view Hamas as undermining its rule in the West Bank. As a result, tensions between the two parties will likely continue over the coming months, including in the form of additional arrest operations targeting Hamas activists and militants throughout the West Bank and potential implementation of political sanctions by the PA on Hamas’ political activity in this area.

Finally, with respect to security, the charter is unlikely to change the potential for large-scale hostilities and a future broad conflict between Israel and Gaza-based Palestinian militant factions. This is highlighted by Hamas’ calls to not abandon armed struggle nor reduce its claims on Palestinian land, as well as its continued efforts to rebuild its militant capabilities, including by manufacturing rockets and explosives, ground maneuvers, test firing of rockets, and the construction of attack tunnels. As a result, in spite of this new document, we continue to assess that the likelihood for a broad conflict over the coming months remain low-medium at this time. Moreover, despite the abovementioned efforts to increase its foothold, in the short-term, the security environment in the West Bank is liable to remain at the same level. While Hamas will likely continue its attempts to conduct sophisticated acts of militancy against Israelis in the West Bank, given the Israeli security apparatus’ broad experience in mitigating this threat, the majority of such plans will likely be thwarted.

Recommendations

Business-essential travel to Ramallah can continue at this time while adhering to basic security precautions regarding the threats of civil unrest and militancy. Consult with us for itinerary-based recommendations and ground support options. Avoid nonessential travel to other Palestinian-controlled areas of the West Bank at this time given the persistent threat of civil unrest. We advise against all travel to the Gaza Strip at this time due to continuous border crossing closures and the threat of militant activity. If travel is essential, prior to entering Palestinian-controlled areas from Jerusalem-area checkpoints, confirm that crossings remain open and no unrest is taking place. Crossings near the cities of Jenin, Qalqilya, and Tul Karem remain less prone to violence. Minimize night travel in major cities, as the majority of IDF and PA security operations occur at this time, particularly in the vicinities of Palestinian refugee camps.