SYMPOSIUM: WHAT ARE THE COSTS OF NO PEACE?

Indyk, Martin S. ; Pelletreau, Robert H. ; Fandy, Mamoun 等

The following is an edited transcript of the sixteenth in a series of Capitol Hill conferences convened by the Middle East Policy Council. The meeting was held on October 2, 1998, in the Hart Senate Office Building.

CHAS. W. FREEMAN, JR., President, Middle East Policy Council

We are here today to discuss whether the peace process is alive or dead, and whether it makes any difference. Is it on life support? Is it moribund? This being the Middle East, is it dead but about to resurrect itself? Is it buried alive, stirring only as it dies, or are we looking at some sort of operatic death scene, where everyone but the victim knows the victim is dead, and the victim contorts about the stage and moans and groans theatrically until the fat lady sings and puts the victim and the audience out of their misery?

And what difference does it make? At the moment, of course, there is some life in the process, thank God. But the last few months have forced us to contemplate a world in which the peace process, this diplomatic equivalent of a perpetual-motion machine, no longer functions. This has forced us to recognize some of the good and bad products of that machine. The peace process has provided an alternative to violent struggle between the parties to the disputes in the Levant. It has given patriots time to moderate their passions, and it has given idle hands more constructive things to do than throw stones or pull triggers.

The peace process has been a vehicle for American influence throughout the broad Middle Eastern region. It has provided an excuse for Arab declarations of friendship with the United States, even if Americans remain devoted to Israel. In other words, it has helped to eliminate what otherwise might be seen as a zero-sum game.

It has been a very useful means of turning the attention of the parties from apparently intractable aspects of their struggle to tactical issues of the moment that might actually be solved. If nothing else, you might say, cynically, that it has allowed Middle Easterners to do what comes naturally to them, namely, indulge their short-sightedness so that the future of their region continues to recede ever farther into the future.

And it has, I think it must be said, provided a framework within which things that everybody thought had been settled can always be reopened in renewed bickering between the parties. Finally, it must be admitted, it has sometimes seemed to allow the parties to pretend to deal with each other and the issues that divide them while focusing their energies on creating facts.

So I think it matters a great deal whether the peace process is alive or dead, whether it is healthy and moving forward or unhealthy and stalemated.

ROBERT H. PELLETREAU, former Assistant Secretary of State for Near Eastern and South Asian Affairs

After the positive meetings and developments of the past week, we may want to adjust our focus a bit and ask instead: assuming that the peace process has not run its course, and that Israel, the Palestinians and the United States reach agreement on redeployment and other outstanding interim issues, and are able to move on to permanent status talks, what have been the costs of the past two years of impasse, and what challenges do we now face?

Of course, we are not there yet. Although Prime Minister Netanyahu and Chairman Arafat have come together under U.S. auspices in New York and in Washington, the full package of reciprocal measures, with the calendar and the sequencing, has not yet been completed. The risk of a derailing incident is always present. And bringing the shades of right represented in today's Israeli cabinet into a supportive posture is a daunting task, even for someone of the prime minister's capabilities. But it seems to me that the benefits for each of the three parties of reaching agreement in this time frame have grown substantially and in each case outweigh continuation of the deteriorating status quo.

For Israel, Netanyahu has succeeded over the past two years, in slowing the peace process, through delay after frustrating delay, to a point of stagnation and paralysis. In the process, the spirit of partnership so vividly described by Uri Savir in his book on Oslo and succeeding negotiations, was replaced gradually by what is today rampant mistrust. And the attempt to find win-win solutions in which each side tried to understand the requirements of the other side -- what the essential needs were and to meet those essential needs -- has been replaced by a zero-sum mentality in which any gain for one side is considered a loss for the other.

But if slowing the process provided a breath of respite for Israelis after the breakneck pace of events and agreements during the Rabin-Peres years, ending the process was not what they wanted, nor was a less friendly, more confrontational posture with the United States. After all, the Hebron agreement, which Netanyahu negotiated with Arafat, was overwhelmingly approved by the Knesset and Israeli public opinion.

It must also be recalled that the prime minister was elected on a platform of peace with security, not a fragile and unreliable security without peace. To make good on that pledge, he must use the second half of his term to find a way back into negotiations, just as he used the first half to slip away from them.

If elections come sooner -- and that is a real possibility, according to some observers of the Israel political scene -- then the urgency is even greater. And what better time than now to rebuild that cooperative relationship with the United States and to help our president demonstrate continuing effectiveness in foreign affairs?

On the Palestinian side, the case for an agreement now is very strong. Chairman Arafat's stock of political gambits is just about depleted. Age and health problems are creeping up. His new cabinet, which won reluctant approval by the Legislative Council in August after a stormy debate, was more of a manipulation than a genuine response to the council's call for reform and an end to corruption. Its purpose, obviously, was to shore up the chairman's authority in a difficult time. And it was understandable that Hanan Ashrawi and Abd al-Jawad Salah, viable and credible members of the previous government, preferred to resign rather than take diminished positions in a questionable body.

The threat to declare a Palestinian state next May, when the transitional period foreseen under Oslo expires, is a further political ploy with little real meaning. Arafat needed to come up with something to fill the vacuum created by the negotiating impasse. For all practical purposes, the state was declared at the November 1988 Palestine National Council session in Algiers, which adopted a declaration of independence based on a two-state solution and a negotiated peaceful settlement with the government of Israel. It has been the objective of all Palestinian negotiations and all interim incremental agreements reached since the Madrid Middle East peace conference in 1991.

You could say it has been the state of mind of every Palestinian negotiator. Yet every negotiator knows that the only way it will become a reality is through negotiation with the government of Israel, and not a unilateral declaration of independence (UDI) or a number of UDIs. We should not be too concerned about the fixed timetable or the immutability of the May 1999 date. The fixed date, in many ways, is not a Middle Eastern concept, and this one was artificially selected, in any case.

The status of the Palestinian National Charter is a similar issue. A decade ago, at the same PNC session in Algiers, Arafat and the PLO formally abandoned the charter's call for the elimination of the state of Israel through armed struggle. This unilateral action had no resonance or acceptability among Israelis, and Israel rightly insisted at Oslo that the PLO confirm its renunciation of the charter within the context of peace negotiations.

Since then, the United States, the Palestinian Authority and the Labor government have all made efforts to dispose of this issue. When Arafat, with difficulty, convened a PNC session in Gaza in April 1996, the United States immediately supported Shimon Peres's acceptance of the Palestinian action. Again, in January this year, President Clinton accepted Arafat's letter reaffirming, provision by provision, the cancellation of each article of the charter deemed inconsistent with the Oslo accord. If the current government of Israel requires further action, it should accept Arafat's offer to convene the Central Council, rather than the outdated National Council, for the purpose of reapproving or reaffirming Arafat's January letter.

The disastrous condition of the Palestinian economy also argues for a rapid agreement. Declining living standards and rising unemployment in the Palestinian areas have reached crisis proportions. Frequent border closures -- and there's another one in effect today -- have been accompanied by trade and travel restrictions that have impeded investment and prevented the development of export markets for Palestinian goods and agricultural products.

Inadequate transparency in PA procurement and decision making and the slowness in developing a reliable legal and institutional framework for private investment have contributed to the problem. Parts of the package deal that seems to be in the making will help ease some of these restrictions. But continued international assistance for Palestinian economic development is also vital. And here the U.S. administration and Congress must each do its part.

One of the key reasons why we are so close to an agreement is the success achieved by the United States in establishing a tripartite security committee, with direct American participation, to strengthen coordination between Israeli and Palestinian security and intelligence organizations.

Neither side likes to admit the extent of security cooperation that exists today. And while more obviously can be done, particularly in the area of weapons collection and registration of weapons in Palestinian areas, the situation is much improved since the trilateral security committee began functioning. A tighter memorandum of understanding (MOU) on security, which will be part of this package, will be reassuring to Israelis, but it also risks, in my view, making the United States the guarantor of Palestinian performance, and I have some reservations on that score.

Nevertheless, the time is right for an agreement from the U.S. point of view, not only because we have midterm elections on the horizon, and there is an obvious political return for the president, but also because the world in general and the Middle East in particular are badly in need of restored U.S. leadership in foreign affairs and in the peace process.

Protracted impasse in Palestinian-Israeli negotiations has brought the frustration level of Arab public opinion to a boil, often directed against the United States, and has made it harder for governments to respect or to follow U.S. leadership on other issues, such as dealing with Saddam Hussein in Iraq, cooperating on terrorism and nonproliferation, and introducing badly-needed economic and political reforms.

U.S. leadership will also be required to broaden the peace process to Syria and Lebanon, to restart a gradual normalization process between Israel and the rest of the Arab world, to press forward the opening which President Khatami's election has provided to restore mutually beneficial relations with Iran. And even to coax Libya into accepting the third-country-trial proposal as a way out of its international isolation.

We all know that crossing the threshold to permanent-status talks is only one more step in a very long process, one that will take years and perhaps generations to complete. But, as any American ambassador in the region will tell you, the United States stands taller and is more influential on issues throughout the Middle East when it is actively engaged in Arab-Israeli peacemaking, and when that peacemaking is producing results.

MAMOUN FANDY, Research Professor, Center for Contemporary Arab Studies, Georgetown University

The question raised today is, what are the costs for the region and the United States given the current status of the U.S. peace process? To understand the costs, one has to define U.S. interests in the region. In the past, as now, the two pillars of stated U.S. policy in the region have been a secure flow of oil at a reasonable price and the security of Israel. To serve these interests, it is very important to shore up the stability of friendly governments on the Arabian Gulf and to keep the peace process moving forward toward the final outcome, an outcome that ensures peace.

Currently, the Arab world and America's interests are hostages to two very distinct failures in the region. One, the failed peace process, and, two, a failed balance of power in the Gulf. Both have devastating implications for the United States and its allies in the region.

Gulf security and the stability of the regimes there are inextricably linked to the peace process. In 1990, Saddam Hussein knew that a linkage between the Gulf and Palestine would make sense, at least in the eyes of certain segments of the Arab public, and it did. During the war, George Bush went to great pains to delink these issues. But as soon as the war was over, this linkage between the security of the Gulf and the peace process with Israel was sealed in Madrid, when the Gulf War gave birth to the Madrid conference.

Thus in the minds of both the Arabs and the Americans, the two are linked. Those who want to de-link the issues and argue that the United States could have security in the Gulf while giving Netanyahu a free hand to undermine the peace process and destabilize friendly Arab regimes serve narrow and parochial political interests, namely, those of the extreme right in Israel at the expense of America's complex global and regional interests.

If one looks at the most recent encounters between the United States and Iraq, and the response of the Arab leaders to America's positions, this linkage becomes very obvious. One of the current truisms in the region is that any gain for Saddam Hussein is a loss for the United States. Saddam Hussein lives off Arab anger over the failure of the peace process and the humiliation of the Arab people through the continuous insults of Netanyahu and his entrenched policies.

In every confrontation, Saddam is not testing U.S. resolve, as many commentators and officials claim. He is merely capitalizing on the contradictions of U.S. policy in the region. Every time the peace process deteriorates and Netanyahu insults the Arabs by reneging on Oslo while the Americans stand by, Saddam manufactures a crisis to make the United States look ugly in Arab eyes. This leads to increased anti-American sentiment and makes Arab governments allied with the United States look weak in the eyes of their citizens. One of the dominant myths in Washington is that Arab public opinion doesn't matter. But now, with satellite dishes all over the place, Arabs know everything, and their leaders cannot get away with what they used to get away with in the past.

With all of these tricks by Saddam Hussein, every time the United States rises to his bait, the discontent of Arab states is made clear by the stances America's allies in the region, namely, Egypt, Saudi Arabia and Kuwait, have taken concerning the various crises between the United States and Iraq.

The Gulf states, though hawkish on Saddam, are very reluctant to get involved in the recent crisis between the United States and Iraq. Because of the current stalemate in the peace process, Gulf elites and their diplomats cannot afford to pay the political price for the failed American policies in the region. Many in the region argue that these policies, both in Palestine and the Gulf, are designed to deliver Palestinians to Hamas and the Arab world to Saddam Hussein, and to undermine the current moderate leadership.

One of the common arguments in the Arab world is that precisely this is the strategy of Netanyahu. When he delivers Palestinians to Hamas, then he will declare that "you cannot negotiate with a radical group that is trying to establish an Islamic state."

Failure of the peace process, coupled with attacks on Iraq and Saddam, give ammunition to Arab nationalist and fundamentalist critics who assert that their leaders kill Arab Muslims. From an Arab perspective, it is very difficult to go along with U.S. policies while television pictures from Palestine show nothing but more collective punishment, more settlements and more suffering. American networks do not show this footage, but it appears every day throughout the Middle East, with devastating effect.

American allies in the Arab world are serious about the peace process. They have invested very heavily in it. U.S. allies in the region, Saudi Arabia, Kuwait and Egypt, cannot be accused of hindering American interests in the region. On the contrary, they care about America. And because they have gambled on the success of the peace process, and because they have sound knowledge of the political realities of the region, they find it very difficult to support U.S. policies that seem to undermine their very stability.

The United States should take its cues from its allies in the region. When very cautious leadership by President Mubarak of Egypt and Crown Prince Abdullah of Saudi Arabia, who was here very recently, say that the United States should do more on the peace front, the U.S. should take note of this advice. Equating the narrow interests of the Israeli lobby in Washington with America's interests in the region is a recipe for disaster. It undermines the position of America's allies in the region and allows its enemies to exploit the contradictions of American foreign policy to their advantage.

Immediately after the Gulf War, America was riding high in the Arab world. Seven years later, very few Arabs can stand publicly and support the policies of the United States. The question for you today is, who lost the Arab world?

AMB. FREEMAN: Thank you very much, Mamoun, both for reminding us that in politics, perception is reality, and that perceptions of the United States more broadly in the region are fundamentally influenced by the issues we are discussing. Thank you also for reminding us that listening is an essential element in leadership.

IAN S. LUSTICK, Professor of Political Science, University of Pennsylvania

After one initial observation, I will make three points regarding the consequences for the United States on a regional level, the consequences specifically with respect to the Arab-Israeli conflict, and then a question on the consequences for the failure of the peace process for the domestic and general foreign policy interests of the United States and of any administration. I will conclude with a couple of brief remarks on what we should do.

When our attention is so heavily focused on a few square miles of West Bank territory and on the details of the status of a nature reserve in the West Bank, it is crucial to remember that this question of whether the peace process has run its course is not the same question as whether the second redeployment takes place, and whether the second redeployment agreement is signed at some kind of quasi-Camp David in a few weeks. These are completely different questions. If a redeployment agreement is signed, it could have minimal positive consequences, unless American foreign policy makes it a positive factor.

Specifically, what I anticipate happening as soon as such an agreement is signed by the Netanyahu government is that provocative settlement activity will go forward in very sensitive places in the occupied areas, specifically at Ras-el-Amud, inside of Al-Quds, in part of East Jerusalem, where a very small group of extreme Jews have set up a settlement in a virtually all-Arab neighborhood, on Har-Homa or Jebel Abu-Ghanem, where the new neighborhood announced by the Netanyahu government two years ago will go forward, and at Tel-Rumeida, in Hebron, where there is a move afoot to expand and rebuild some trailers into a permanent facility.

It is very possible -- in fact, likely -- that the aftermath of a signed agreement will be the unleashing of these settlers as part of a strategy to maintain the integrity of the government. That is exactly what happened when Netanyahu signed the Hebron agreement. It was followed immediately by breaking ground at Har-Homa. So, if that occurs, we can expect a similar consequence, which was a mini-intifada, riots, many deaths on both sides, and a halt to negotiations of any kind.

What we have to keep our eye on, then, is not the specific question of the second redeployment, but the whole question of the peace process. Accordingly, let's ask this question: What are the consequences if the peace process has run its course, or if it is allowed to come to some kind of unsuccessful end?

First, what are the forgone opportunities in the region for cooperation on tourism, for water-development projects, for trade, for infrastructural development in a variety of countries, including Israel, Lebanon, Syria, Jordan and Egypt? There were, as you know, very high hopes in the international community, in Europe, in the United States, that the peace process would facilitate economic development, and that the two processes would work in tandem.

Obviously, all of those hopes have come to very little. You have heard a reference already to the miserable conditions in the Palestinian areas, but the Israeli economy these days is not doing so well either. With the end of the peace process, whatever hopes we still cherish in this area would be dashed.

Of course, as Professor Fandy has already mentioned, American efforts to counter Saddam's aggressiveness, and to sustain important dimensions of our foreign policy, including the enhancement of democracy in the Middle East, containment of Saddam, antiterrorism measures throughout the area -- all of these are made less credible by a failing or phony peace process.

Failure would interfere also with our efforts to establish regimes for the control of weapons of mass destruction and long-range missile technology, which hinge ultimately on including all the states in the region. Israel, in a post-peace environment, would be available for such regimes, but in a pre-peace environment is not.

What about the consequences of such a failure for the Arab-Israeli conflict itself?. As someone who has been studying the Arab-Israeli conflict for my whole career, and looking at it over the long sweep of its origins from the late nineteenth century onward, my judgment is that there is no alternative to partition. I'm not talking about what generations from now may do. But, as a medium-term bridge to the future, there is no alternative. The imperative of partition -- two states -- is what this tandem, the Arabs and the Israelis, are forced to confront, no matter how many times they may turn away from it. It is also the reason why, several more political iterations from now, if necessary, they will return to partition after all other efforts prove fruitless.

The question is, how great are the costs that are going to have to be paid before the peoples and the politicians eventually implement this arrangement? If not this time, then we will be back seeing the same movie again, but it will be bloodier. And we, the Israelis and the Palestinians will have to do the same retooling that we did for this version, which itself is similar to the movies we saw several times in the 1970s and 1980s. I am thinking specifically of the autonomy negotiations of 1979-81.

But it will be harder for many reasons. One is that there is currently an option for a solution to the Jerusalem question that involves satisfying the need for Al-Quds to be the capital of a Palestinian state and Yerushalayim to be the capital of a Jewish state. The activities of the Netanyahu government -- in Ras el-Amud, in Har-Homa, and with the newly approved Eastern Gate Project to extend the so-called jurisdiction but not municipality to include all the Jewish settlements west and north of the city -- are steps which if implemented would foreclose that option. And, absent an agreement with the Palestinians, they are bound to be implemented by this government in the year 2000 if not sooner.

It is also obvious that we will no longer have Arafat around and functioning as an active player for very much longer. We can imagine other personalities, and eventually there will be new leadership emerging, but it won't have some of the resources that he has, even with all his faults. I would be the last person to deny that he has more faults and much less adaptability than anyone who wanted peace to be achieved might have hoped.

We will also have lost the generation of the intifada leaders, who in the struggle at the grassroots level and in the prisons learned political lessons that enable them to make a crucial contribution to the legitimization and implementation of a real peace agreement with Israel based on a two-state solution. But as time passes without that option being exercised, that leadership will also leave the scene as a legitimizer for it, and those of us who work for peace will be forced to look for an alternative. That alternative may only come from another mythic action comparable to the intifada.

We also will see an increasing beleaguerment of the liberal core of Israeli society that is standing behind the peace process and animating it. We are likely to see, at least for the medium term, a continued "blackening" of Israeli society, (referring to the robes that the ultra-Orthodox religious Jews wear) which ultimately injects a greater tribalist element into Israeli society and works against the prospects for political compromise.

In the long run, the failure to achieve peace when it is within reach in a reasonable period of time on the basis of a partition solution means that there will not be an opportunity to use the presence of a Palestinian polity ready to accept the political presence of Jews in the Middle East -- to normalize the political presence of Jews in the Middle East -- for generations to come.

Consider the Crusaders, who were in the Holy Land for a lot longer than the Zionists have been. They never had the opportunity to make an agreement with Palestinians. The rest of the Middle East was not able to say, "If they're making peace with the Crusaders, who stole their land, we are free from the burden of having to rally our society around that issue. We won't have to respond to those elites in our society who insist that we fight for the Holy Land."

In other words, if peace is not made with the Palestinian people when they can make it, then Israel in the long run will lose that bridge into the Middle East as a whole that can normalize, and thereby secure the long-term prosperity and security of the Jewish community in the Middle East.

What about the implications of the failure of the peace process for domestic and general foreign-policy interests in the United States? We have people here, like Martin Indyk, who know just how draining this problem is for the limited attention and resources available in the foreign-policy-making establishment in the United States. In the intelligence community, in the State Department, in the White House, it is just not possible to attend, as one would like, to the really important questions and challenges that face us in the former Soviet Union, in Africa or in Latin America; to the frightening economic and security questions raised in Northeast Asia and the explosion of Chinese influence in that whole region, to say nothing of South Asia, the nuclearization of the sub-continent and the volcanic implications of change there.

These are the issues that should be engaging, in a sustained way, the attention of our best people. Instead, they are focused on a few acres of land in a territory whose status should have been resolved for a few hundred thousand people decades ago. But we cannot let it go, and we will not be able to let it go, unless this problem is resolved. So, one consequence is a continuing and destructive drain of the attention and concern of our foreign-policy makers onto a problem that is not worthy of their attention on its own merits.

Another consequence is the systematic "de-credibilization" of U.S. efforts to mediate and orchestrate interventions in other protracted conflicts around the globe. Just think for a moment of what NATO and the United States are talking about in Kosovo: we are starting to demand that the Serbians give some kind of significant autonomy to the Albanians there. How much credibility do we have in making a demand like that and in other areas of the world, where increasingly those will be these kinds of struggles we will be trying to help mediate, and when our record in the Middle East, where we have spent more time and more attention, is so unbalanced and so unsuccessful?

Right at the core of the consequences, and explaining these others in part, is that to the extent that the peace does not succeed, or at least present us with a better set of problems, then U.S. foreign policy in the Middle East will continue to be distorted and shoved to one end of the spectrum by a fanatical lobby in the United States, which has a comparable effect on our policy in the Middle East to that of the Cuban lobby on our policy toward Cuba.

Our policy toward Cuba has very little effect in the wider world. But our policy in the Middle East has an enormous effect. And the reason for the influence of this lobby, and its own inability to break free of a tradition of extremism, has nothing to do so much with what Americans who identify with Israel feel about the actual issues, but with the dynamics and organizational imperatives that grow up in any lobby organized the way it is and active and successful the way it has been.

From the time of its founding, the American republic has been based on the principle of checks and balances, of power and countervailing power, of opposing factions mobilizing for their own interests and perspectives to prevent one narrow or extreme view from prevailing or sustaining its predominance. This works quite well in domestic affairs, where most domestic pressure groups can grumble and cheer effectively for their interests. But in foreign affairs, this dynamic is less dependable. If an intensely committed minority exists inside the United States with respect to a particular foreign-policy issue and organizes itself as a single-issue movement, it is unlikely that a countervailing force, with the same singlemindedness, but on the other side of the issue will appear, or that those without direct connection with the issue will feel it is worth angering that intensely partisan group on a policy question with no immediate consequences for them or their constituencies. Under such circumstances, there is little to prevent the political system as a whole from lurching badly toward a foreign policy unduly attached to the passionate view of a parochial group.

Thus has the Israel lobby in the United States, itself largely controlled by the right wing of the Israeli political spectrum and out of step with most American supporters of Israel, exerted a baleful and distorting influence on our foreign policy. Indeed, one of the most debilitating consequences of a failure of the peace process would be an indefinite continuation of the Israel lobby's negative and embarrassing role in American politics in general and in the Congress in particular.

So what should we do? First, we should do all we can to facilitate Israeli-Palestinian agreements that we genuinely believe will enhance prospects for a sustainable peace. But we must beware of attaching our prestige to agreements for their own sake, or foreclosing options we, the Israelis, and the Palestinians will need in the future, in our anxiety to at least appear to be making concrete progress in the present. This means we should not settle for and we should not bless a politically destructive but possibly available agreement that Arafat and Netanyahu could be cajoled to sign. And we must be very clear that no agreement is worth signing if it is used by either side as a signal to take unilateral and provocative actions that challenge the principle of an Israeli-Palestinian partnership. We have to accept the fact, if not make this our publicly stated belief, that only a Labor government in Israel will be able to make a secure and stable peace with the Palestinians.

This means that our eye must not so much be on what we can get a current Israeli government to sign, although we should always be thinking about that, but what we do that affects the incentive structure for Israeli politicians and Israeli voters.

We should speak our mind on important issues. We should not allow the negotiations to be used as a camouflage, as a protective belt surrounding the real opinions of American foreign-policy makers. We should allow the U.N. Security Council to speak its mind on violations of the peace process that it sees, or of international law, by either the Palestinians or the Israelis.

We should, as I said, shape the incentive structure of politicians and voters. We can see that Netanyahu understands very well that that is what the game is. He came into office in his campaign with a promise to reject Oslo. But he understands very well, with 70 percent of the Israeli population favoring the peace process, that he must fight Oslo without rejecting it, but by pretending to accept it as a legal document and using its detailed terms to prevent progress in other areas, by calling the Palestinians to account and seeking loopholes for Israeli actions such as settlement activities in and around Jerusalem.

The fact is, as we saw with the assassination of Yitzhak Rabin, when Israel moves toward peace in a way that can actually help the Palestinians move comparably, the ship of state in Israel will be rocked, just as the leadership of the Palestinian Authority will be threatened. But those threats can be negotiated. Those threats can be dealt with. Those threats can even be exploited for peace by savvy politicians who understand the lessons of history, and the requirements of the future.

AMB. FREEMAN: You've heard three excellent and very different presentations on the subject of the moment, Ian, I would like to thank you for that very eloquent statement of your views. I think you've effectively reminded us that progress on details does not necessarily mean progress on broad issues. That's something which we do need to remind ourselves of from time to time, in this context.

I would like to go back to something that Bob Pelletreau said and ask Mamoun and Ian to comment briefly on whether they agree with it or not. I think, Bob, you said that in May, a possible unilateral declaration of independence by Mr. Arafat, would be a political ploy with little real meaning. Does it make a difference what the nature of such a declaration might be? For example, if such a declaration included a statement of the borders of the Palestinian state that was being proclaimed, specifically excluding claims to the pre-June 4, 1967, territories of Israel, would that make a difference? Is this inevitably something of no significance, of no harm or no help, to the broad peace process, which the three speakers all agree is vitally important to be continued?

DR. FANDY: First of all, one axiom for Mr. Arafat is this: one does not declare that he is going to declare. But the fact that he might declare a Palestinian state will, of course, have tremendous consequences. It would bring the whole region to a state of more hostilities rather than peace. It would raise the level of emotion; the temperature of the place would certainly change. I think Arafat can be swayed to do something different, if the United States has credibility and can put together a package that can convince Arafat that this is not the right time. But given the failure of American policy there, given its lack of credibility, Arafat might go ahead and declare a state. But it's a very complicating step to the whole process.

DR. LUSTICK: I've actually been thinking about this from a tactical point of view. There are some interesting and subtle possibilities here. For example, instead of declaring a state, why not just let 50 countries recognize that there exists a state? That puts the situation in an interesting light. There are also plenty of Israelis who would not look unfavorably on an action by Arafat that put Arafat in a position of having to acknowledge the international reality that he was now running a state.

There is in Zionist self-imagery an important episode related to this. In 1948, the United States leaned heavily on Ben-Gurion not to declare statehood in May. Moshe Sharett, the foreign minister, advised against declaring the state. However, Chaim Weizman, who usually counseled caution, supported Ben-Gurion, and the state was declared. This is a proud and greatly honored moment in Israel. Against the will of the United States, against the will of the world, taking history into its own hands and making a shrewd political judgment of the conditions, Ben-Gurion declared the state. Had he not done that, Jews might not have a state today. So there is a precedent for Israelis to understand why Arafat could do something like that.

I also think that there's another tactical route. If you look at the Irish case, there was a treaty signed by the English and the Irish in 1921 that forced Ireland to accept in principle that it wasn't going to be a sovereign state, it was going to be something called the Irish Free State, under the formal suzerainty of the Crown. The treaty also divided Ireland into North and South.

But the Irish Free State, based in Dublin, was not supposed to declare itself an independent republic. But once it got its status as Irish, it did. And the British had to deal with that. They weren't going to reconquer the country, and they did not. They put up a big fuss; they said this action was not in keeping with the treaty. But in the long run, that unilateral declaration allowed the Irish Free State, now the Republic of Ireland, to coexist peacefully for a long time with Northern Ireland and with the United Kingdom. So it's possible that the Palestinians could, instead of declaring a state, declare a free state, something that has an ambiguous status that doesn't formally say it's a fully sovereign state, and then wait to move to the next step.

Finally, I want to mention something about the notion of the threat that Israel would annex the rest of the territories in the West Bank and Gaza, if a Palestinian state were created or recognized. That is a very doubtful proposition. Israel has never annexed anything that it conquered or occupied in 1967. It did not annex the Golan Heights, contrary to popular belief, and it did not annex eastern portions of the West Bank east of Jerusalem. The extensions of municipal jurisdiction that occurred in each of these instances fall well short of annexation and can be reversed or changed by simple administrative order.

What could happen would be an announcement of some change in the jurisdictional status of many settlements. But that change would not matter very much. If the word "annexation" were used, it would also raise huge red flags inside of Israel and of course have other implications for the citizenship of the Arab population living in those areas. I'm therefore very doubtful that any kind of important annexation would take place in response to a declaration of Palestinian statehood.

AMB. PELLETREAU: We're in the realm of rampant speculation here about what might happen in May. But Mr. Arafat, as we know, has been very careful not to spell out in any detail what he might really intend by some kind of unilateral declaration. What he has been doing is holding out to his people a reaffirmation of his own leadership at a time when there has been no progress in the peace process that he can point to. He is doing so, in my view, within the context of the way he has operated since the PLO began its long trek back toward negotiations, that is, within the context of buying on to the incremental process of Madrid and Oslo. Not all at once, but gradually, step by step.

We see in the Palestinian areas today all kinds of indications that a virtual state exists in the minds of the Palestinians. Arafat calls himself "president." The Palestinian Authority calls itself the "government." All the members of its cabinet call themselves "ministers." These are all trappings of a state. Throughout the early negotiations, some of the things that Arafat put the most emphasis on were things that had to do with the imagery of a state.

I remember some very acrimonious discussions, for example, about issuing a Palestinian postage stamp. Even if we've reached a point in May where no progress has been made, and Arafat's intention becomes a self-fulfilling prophecy, and he has to declare something, I don't believe that he will declare anything that is a deal-breaker, anything that prejudges or turns its back on the prospect of future negotiations. He knows that negotiation is the only way that he is going to get there. So, even if the worst happens, I think what we will see is a very general declaration that will not go much beyond the existing declaration of independence.

I think the Israelis have a virtual veto power on Mr. Arafat's going any further, a point that hasn't been mentioned so far. Over 50 percent of the Palestinian Authority budget, if I'm correct, comes through passbacks from the Israeli government of taxes and customs collected. Denying these funds would truly cut off the PA's lifeblood.

AMB. FREEMAN: In the discussion, the three of you, speaking of the peace process, used words like "stagnation," "paralysis," "faltering" and "failure," although you all recognize that there is hope in the current efforts. And several of you referred to the birth of this peace process through the Madrid process, which gave birth to the Oslo process. As Oslo has been smothered, the Madrid process has also largely gone away. None of you mentioned Camp David. Is there any implication of this for this longstanding experiment in reconciliation and peace between Israel and its neighbors, or is the Camp David framework essentially so secure now that it is immune to the consequences of failure in the former Palestine mandate and between Israel and Syria?

AMB. PELLETREAU: In my view, Camp David is the cornerstone of this entire process; the treaty between Israel and Egypt is the cornerstone. It has stood against challenges from within the Arab world for a long time. Everything we're doing now is building on that initial agreement. In my view, it continues to be very solid today. As President Sadat made that peace, President Mubarak has maintained it. I know for a fact that President Mubarak, in meetings of the ruling party, has reported to Egyptian political leaders that he considers the Israeli border with Egypt to be the most secure of Egypt's borders. That continuing peace, and Egypt's continuing involvement in the ongoing peace process, is a vital element to all that is trying to be done now.

DR. LUSTICK: I think that the relationship with Egypt, as a result of Camp David, is the cornerstone of what we can do in the Middle East, and it's one of the great accomplishments of American foreign policy. At the same time, the Camp David framework, which is one reason why that agreement was able to be made, planted the seeds of endless problems regarding the Palestinians. The political context that was supposed to produce a workable deal on the Palestinian issue rested on judgments at Camp David about the close and continued involvement of President Carter, pressuring Prime Minister Begin, that proved false.

One other comment I'd like to make concerns the new head of the prime minister's bureau in Israel, Uri Elitzur. Formerly Elitzur served as editor of Nekuda, the journal of the Gush Emunim settlers on the West Bank. In its day, he was the leader of the Movement to Resist Retreat from Sinai that mobilized thousands of people to fight Israeli soldiers. He has joined the Netanyahu government out of the calculation that that kind of confrontation can't stop peace, that the Israeli public won't allow that kind of outright opposition to the regime. He's got to do it, he knows, from the inside, and make sure that the Netanyahu government plays by rules that won't allow it to move in the direction that is ultimately necessary to make a secure peace.

DR. FANDY: Camp David illustrates one point, that peace in the Middle East cannot be achieved without constant American involvement and bringing the parties in here, locking them up, and working a deal. That's the basic lesson of Camp David. Other than that it just does not work.

Camp David also tells us about differences of securities and insecurities. While the Egyptians after 20 years somehow manage to transcend the state of war, maybe because Egypt is an older and mature state, the Israelis still have their insecurities about the Camp David and even the nature of that particular peace. It's been called a "cold peace," without knowing that the Egyptian mind set of that cold peace, its incremental movement, is what paved the road for the larger peace process that we have, with many Arab states talking to Israel.

It also illustrates that Israelis somehow psychologically could not manage to move toward a level of trust. That's something we have to consider as we think about the issues of security that Netanyahu keeps raising over and over and over again. Chronic insecurity requires therapy rather than defense mechanisms.

Q: The Palestinian state is not a ploy. Had it been a ploy, it would not have exercised so much pressure on the United States, on Israel and on everybody to try now and rush toward some kind of a second-deployment agreement. Unless there is some concrete progress that Arafat can deliver before the first of May, he will have nothing else to do. Regarding the 50-percent revenue. It is taken from Palestinian taxes collected by Israel. This is Palestinian money, not Israeli money.

AMB. PELLETREAU: You may have more confidence than I do, that Israel would turn over that money automatically, in all circumstances. I don't think that a ploy has to be viewed as something that doesn't have any political intent. Of course it has political intent. But I think it's a great exaggeration to say, as you imply, that it was that brilliant stroke, a brilliant tactic by Arafat, that is leading us all to the Washington summit. There are many other factors that are coming in to this current situation that make it more likely.

Q: Once a Palestinian state formally comes into being as a government, the logical thing to do is to eliminate the PLO and with it the questions of the PLO charter. Doing that would leave no other negotiating partner who represents the Palestinians except the Palestinian state. For Netanyahu this would be an extraordinarily difficult entity for him to negotiate with, since his larger strategy, especially the trade-off of recognition of statehood for Jerusalem, would create a situation where we're back to a stark difference between the right and the left, with respect to whether it's possible to deal with a negotiating partner. And under those circumstances, with no negotiations, it would seem to me that the desire of the Israeli people for negotiations, would be the kind of thing that would lead to electoral change.

DR. LUSTICK: I agree with the dynamic you are spelling out, and I agree with the crucial criterion for judging policy, which is, what is its effect going to be, how is it going to play politically in Israel? We would not be where we are today, if Rabin had not been assassinated and had won the election. But, what you're saying also requires a certain imagination and subtlety on the part of the Palestinian leadership, in order to articulate its message in a particular way, sensitive to Israeli concerns. We can think of a lot of possibilities for doing that at the same time that a virtual state or a free state is declared, or a state is created which is recognized but not declared.

Recently, Herb Kelman's group came out with a very interesting publication about a possible framework for resolution of the demand of the Palestinian refugees to return. It is rooted in the idea that Israel will accept that there was plenty of blame from all sides for the refugee question, that a Palestinian state will be the locus for the solution of many of the refugees' problems, and that there will be an expanded reunification-of-families program that will enable a certain number to return to Israel proper. To my mind, the greatest anxiety that Israelis have is not that there will be a state, but that the refugees will be able to return.

So if Arafat coupled the creation of the state with the question of the return and committed himself to a solution along the lines spelled out in Kelman's group by both Palestinian and Israeli negotiators, I think that could hit the right note in Israeli politics.

AMB. PELLETREAU: I want to go back to Ian's suggestion in his formal remarks that in some cases an agreement may be worse than no agreement. It is entirely unrealistic to think that the United States would back away from the possibility of concluding even a small agreement on any such calculations. It is not a politically tenable prospect to think that our government would do that. If at the upcoming Washington summit, which we hope occurs, we successfully conclude agreements, it will be a validation of Prime Minister Netanyahu's leadership. It will strengthen him in future electoral politics in Israel if both the Palestinians and the United States were able, with him, to conclude an agreement, and that he is able to take that agreement back to Israel. Obviously, it will have very strong security provisions as part of it.

I think we have to accept that that is going to be one of the potential consequences of an agreement. I do not agree with Ian's statement that only a Labor government could make a secure and stable peace. History has shown very different results. The most stable final-status agreement is one that would be made by a national-unity government.

AMB. FREEMAN: We are honored and pleased to have been joined by Secretary Indyk, who will now share his views with us.

MARTIN S. INDYK, Assistant Secretary of State for Near Eastern and South Asian Affairs

I'm delighted to have a chance to appear again before the Middle East Policy Council. Some of you may recall that my last baptism by fire here was on the issue of the policy of dual containment. The title of today's forum is, of course, provocative. And I think it does, from time to time, serve a value to consider the worst-case option, though I pick up from the discussion that maybe some of you have been arguing that it's actually the best-case option.

Our motto in the peace team is, "never, ever give up." The reason we have adopted that motto, is, in part, because ifs really hard work. You cannot begin to imagine what hard slogging it is, like running a marathon in deep desert sand. Therefore, we have to sustain our belief in the outcome and the value of that outcome.

But more fundamentally, one has to adopt a historical perspective and look not just at the difficulties we face today and for the past two years. One has to look in a broader historical perspective to how far the peace process has come since the first disengagement agreement between Israel and Egypt back in 1973, and around to the Israeli peace treaty, to the historic process of reconciliation between Israel and the Palestinians signed on the White House lawn back on September 13, 1993, to the Israel-Jordan peace treaty, and to the significant progress that was made in the Syrian negotiations, where, as Syrian spokesmen would tell you now, we came very close to achieving an agreement. And although it will still be a hard slog once we get negotiations going again on the Syrian and Lebanese tracks, I believe that a lot of the work that was done there will serve as a foundation that will make it much easier and much quicker to achieve agreement.

If you're looking in this broader historical perspective, one should not lose sight of what the Palestinians have gained in this process. Of course, it is easy to point out the difficulties that they face in the West Bank and Gaza, the decline in the standard of living, the closures, the checkpoints, the daily affronts to their dignity. But if one tries to look to the horizon and see how far they have come, from exile to having a government of their own, elected more or less freely, in Gaza and the West Bank, compared to the decades in which they were in exile and had no independent base of their own, that is a dramatic achievement for the Palestinian people.

In that context, were we to succeed in the next few weeks in achieving an agreement on the implementation of both sides' obligations under the Oslo accords, the Palestinian Authority would expand its control to 40 percent of the West Bank, before the final-status negotiations begin. If anybody wishes to dismiss that as insufficient, I think it behooves them to explain how the Palestinians will achieve control over more territory other than through this negotiation process.

If anybody can imagine that a declaration of statehood would achieve more control over territory, then it behooves them to explain how that is going to come about, other than through a negotiation process. For all of these reasons, we remain committed to the objectives of achieving an agreement on interim issues, seeing them implemented over a short time period, and during that time launching final-status negotiations, which would then give the parties an opportunity to engage on the most complex and difficult and sensitive issues in their relationship, in a context in which both sides, as a result of the implementation of their obligations under the Oslo accords, would then have greater confidence in dealing with each other.

One of the reasons that we have faced such great difficulty in the past year and a half, since the signing of the Hebron accord and its implementation, is the total breakdown in confidence between the parties. It is extremely difficult to make progress in the negotiations when both sides see them as a zero-sum game in which one side's benefit is the other side's loss.

This has been exacerbated by the breakdown in communication between them, so that they are, in all cases but one that I'll come back to in a moment, negotiating through us, rather than negotiating with each other. This makes it extremely difficult for them to make progress, because they are not engaged in any kind of trade-off. They are not listening to each other's problems with a particular issue and then trying to find a way to get around those problems, to find a compromise in which both sides' problems are taken care of. Instead, they've got to explain themselves, their problems and their constraints to us, and we have to try to explain them to the other side, and try to cobble together an agreement. It is very difficult to do.

I said in all cases but one, because the Israelis and the Palestinians were able to work out an agreement between themselves on the issue of territory, which they negotiated on their own. We, as you know, put out some ideas about the extent of the further redeployment, what we thought was necessary for the combined first and second phases. And the Israelis wanted to make some amendments to our proposal. We said to them, "Look, we have put out our ideas, and we are not shifting from those ideas. This is the bottom line, after many, many months of concentration on both sides. If you want to change this, then you're going to have to convince the Palestinians. You're going to have to deal with them directly."

And that is what they did. The arrangement that has now been talked about in the press, for this 3-percent nature reserve, was an arrangement worked out between Israeli and Palestinian negotiators on their own. Of course we were supporting them, and encouraging them and trying to help with our own ideas. But they sat down and dealt with each other. We were not in the room for that negotiation, and they came to a successful conclusion.

People now put out the story that this was some kind of diktat from the United States or from Israel. It was nothing of the sort, When you see the text, you will see that it is entirely consistent with Oslo. The arrangement for the nature reserve is something that the Palestinians have taken upon themselves, not as a result of a diktat, not as a result of pressure, but rather as a result of very positive negotiations.

I dwell on this point because I think it is very easy to focus on the negative, since there has been so little progress, or no progress for so long. But it is still possible for Israelis and Palestinians, under this government of Israel and the Palestinian Authority, to reach agreement on very difficult issues, and to go forward and create a climate for an effort to deal with the final-status issue.

I'm sure that you have been focused on the May, 1999, deadline, as are we. As Yitzhak Rabin used to say, "No deadlines are sacred." But he might have added "except this one," because the time for the interim period expires on May, 1999. It is because of that reality, that we have felt for some time a good deal of urgency about getting this agreement, and getting into the final-status negotiations, so as to deal with this problem. Those of you who have heard me speak on this subject will know that this has been a constant refrain of ours for at least the last six months, if not longer.

I think that now both sides -- and I emphasize both sides -- have come to appreciate the sense of urgency. And it is for this reason that I believe that we do have the chance to reach an agreement now. Both sides look at that date and recognize the dangers involved for each side.

It doesn't take a lot of imagination. The declaration of Statehood, in precisely the situation that we've discussed here, where the Palestinians do have control over some territory, becomes a recipe for an almost immediate confrontation, as Palestinians seek to assert their sovereignty, having made their declaration, and Israelis seek to deny that sovereignty. It becomes a perfect opportunity for those in Israel who have always opposed the Oslo accords, who have always sought Israeli annexation of the West Bank (something that no government of Israel has done), to make an argument for abandoning the Oslo accords and annexing what's left of the territory.

In these circumstances, you have the recipe for an explosion. And we do not believe that that would serve the interests of the Palestinians, any more than it would serve the interests of Israel, or anybody that sought a peaceful solution to this conflict.

This is the context in which we are operating. We have very clearly in mind that if we can reach an agreement in the coming weeks, we would move quickly to an effort to relaunch the Israeli-Syrian negotiations and the Israeli-Lebanese negotiations. We believe that there, too, all sides -- Israel, Syria and Lebanon -- are keen to resume the negotiations. Again, finding a basis for doing so will not be easy. But, for reasons I can go into in the Q and A, I believe that there is another unusual confluence of interests that leads these three parties to want to resume the negotiations.

I will close by saying that we have been going through a very long and very dark tunnel for a very long time. But I believe that we now have a chance to emerge into the daylight, before we go into the next long tunnel.

AMB. FREEMAN: Thank you very much, Martin. We have now heard four very different presentations. Bob Pelletreau, I think convincingly, made the case that it would be in the interests of the parties to come to grips finally with the issues that have divided them, and that therefore there is a basis for the United States to continue its work to that end. Mamoun Fandy assessed the damage that has been done already to the U.S. position more broadly in the region, and that might be done if failure were to ensue. Ian Lustick spoke of the consequences of a breakdown in the process, both for the region and for Israel and the United States. And Martin Indyk, who must professionally consider failure unthinkable, has stressed the possibility that the process, which has been in difficulty, may in fact be able to move forward, as we all hope it will.

Q: Where in fact is the U.S. national interest? When it comes to the Arab-Israeli conflict the Europeans made the mess. Why do we assume that we have to resolve problems that are not of our making? On this one, in particular, we have so many constraints, some of which are self-imposed; others are a part of the conditions under which all of us work. Perhaps it is time to hand this one off to somebody who is much more "guilty."

DR. LUSTICK: I'm not someone who finds it easy to use the notion of a national interest. I find it very difficult to identify it, independent of what conflicting groups in our society want their government to do overseas.

The problem is, as I've mentioned, that for reasons of history or accident, we have a very strong lobby on one side of a foreign-policy problem -- a single-issue lobby. Inevitably, it distorts the whole machinery of American foreign policy abroad. I think we do have, in that sense, a national interest to reduce our involvement in areas where that effect takes place. Cuba and the Middle East are two places I mentioned. I don't think we can reduce our involvement by walking away, however. I think we have to play a role to resolve the problem. And I think it's within our grasp. I just think that it takes a tougher-minded kind of foreign policy than we sometimes have exhibited.

Q: I'm astonished that nobody has mentioned the name Osama bin Laden. And it astonishes me also that we do nothing, apparently, to indicate that we are not a colony of Israel, when his whole appeal depends on demonstrating and reminding Muslims the worm over that the United States is identified with Israel. If we do not develop a firm disagreement with Israel, we are going to suffer repeated casualties and deaths, including Foreign Service personnel.

AMB. FREEMAN: Perhaps I could begin by saying that Mr. Osama bin Laden is a renegade from his family and from Saudi Arabia; his family has disowned him, and the kingdom has certainly dissociated itself from him. Mr. bin Laden's principal point, in pursuing this campaign of violence against the United States, has nothing to do with Israel. It has to do with the American military presence in Saudi Arabia, in connection with the Iran-Iraq issue. No doubt the question of American relations with Israel adds to the emotional heat of his opposition and adds to his appeal in the region. But this is not his main point.

I'd make a second comment: foreign policy, contrary to what many on this Hill believe, is not necessarily cost-free or blood-free. The question is whether Americans believe sufficiently strongly in our interests and what we stand for to be willing to accept some pain in the process of pursuing it. I, for one, believe in what we're doing and in our interests.

Q: We've seen recently that the Central Intelligence Agency has taken a very active role in the bilateral security cooperation arrangements between the Israelis and the Palestinians. What do you see as the CIA's assessment of Palestinians' performance in security cooperation? What does this say about their sincerity in the future, regarding their agreements with Israel?

AMB. INDYK: I can't comment on intelligence matters; I hope you will understand that constraint. Let me make some general comments about Palestinian performance on security, though. It's a mixed bag. There are times when the Palestinian security services have been very effective against terrorists, and there was that period after the four suicide bombings in Jerusalem and Tel Aviv in 1996, in the run-up to the elections, in which they were very effective in cracking down on Hamas. In the process they discovered a very real threat from Hamas to the Palestinian Authority itself, which gave them an added incentive for dealing with this problem.

Subsequent to that, their performance fell off and security cooperation also fell off. Hamas found itself in an environment in which it was able to rebuild, much more effectively than the Palestinian Authority or the government of Israel or the United States, expected. The reality of that is only now becoming known, as a result of recent operations both by the Palestinian and Israeli security services.

I think the situation in Gaza is a different situation than the West Bank. In Gaza, there is an effective security operation run by Mohammed Dahlan. There is a very real understanding that the Palestinian Authority's institutions are in Gaza, and that they are targeted by Hamas. Therefore, they have a strong incentive. But it's also easier to control the situation in Gaza, because of its very nature. It's a discrete, fairly bordered area.

On the West Bank, it's much more complicated. Hamas has built up its interests in the West Bank as a result of an easier environment to operate in, partly because authority is mixed between the Israeli and Palestinian security services and partly because of problems in the unwillingness of some of the security people to cooperate and coordinate with the Israelis or really confront this problem.

We have followed the approach that security is an integral part in the negotiations because the Palestinians have taken on that commitment in the Oslo accords. To boil it down to its essence, Israel would give up territory, and the Palestinians would fight terror. That was the bargain: land for security, as it were.

And when we try to rebuild confidence, it becomes essential that we find a way to get the Palestinians to act on this commitment. The Palestinians are very suspicious that the Israelis will never be satisfied with their performance. That is why we have engaged, on the security level, with our security experts, as well as on the political level, in this effort to try to develop a clear-cut framework for security cooperation, and action by the Palestinian security services, as well as a clear plan of action. Then we can make the judgment about Palestinian security performance, rather than put the Palestinians in a situation where it's the Israelis alone that make that judgment.

More work needs to be done. In recent months, some serious actions have been taken by the Palestinian security services. They have arrested people and they have not let them go, people who have been involved in terrorism. They have cracked down quite effectively in Gaza on Hamas. But a lot more needs to be done in the West Bank, and that's something that we're trying to address in these negotiations.

AMB. PELLETREAU: I would just reaffirm that the tripartite security committee is extremely important. It was a great success for the United States to have organized it. It was probably the beginning of the road back from the impasse that had developed. And it was not only the fact of doing it, but it was done in the right way, to put professionals with professionals in the area of security. I think the results can be seen by careful observers, even though we don't see much said about the work of this committee by Chairman Arafat. Obviously, he doesn't find a great advantage in admitting how good, in some respects, the security cooperation has become. We don't see much of it on the Israeli side, either, because the Israelis are, understandably, constantly pressing for a higher level of performance. But the United States is not just the policeman, or the intermediary, between the other two. One of the reasons why it is effective is that it allows the United States to bring its own intelligence contribution into what is essentially a very important part of the global fight against terrorism.

DR. LUSTICK: Mr. Assistant Secretary, I have a question about your notion of a recipe for confrontation, which you used to refer to what would happen if a state were declared. I agree that unless it was handled in a (probably impossible to achieve) imaginative and sensitive way, there would be a confrontation. On the other hand, the last recipe for confrontation we had was the Hebron agreement, which had our State Department heroes down in the dust working hard, slogging through the long tunnel to get that agreement. One result of that agreement was a complicated compromise in Hebron. But it also produced Her-Home and a mini-intifada, with many killed on both sides amid a gigantic confrontation, and the collapse of all negotiations for a long, long time. So, when we look at the prospect of the next American-brokered agreement, we have to ask: Is this also a recipe for confrontation? When we make a judgment about this agreement, are we also making a judgment about how we can prevent the same thing from happening? In Ras el-Amud, in Tel Rumeida and in Har-Homa, settlers let loose by the Netanyahu government, anxious to placate its right flank, could easily precipitate the very same kind of confrontation you're saying this work is designed to avoid.

AMB. INDYK: It's an important point that you make, and it's not one that we are oblivious to, having, as you say, toiled so hard to get the Hebron agreement, only to see it result in the Har-Homa episode and the collapse of the negotiating process. It would be pointless to repeat that exercise. And that is why, as part of our approach, there is this call for a time-out. Under that rubric, we will have to address the issues of unilateral actions by either side that would undermine the confidence that we are trying to rebuild in the process of implementing both sides' obligations.

The second point is that because we have this limiting deadline, which is May 1999, we have to address that question as well, not just what happens on the ground after the agreement, but what happens on May 1999. We can't do that at the moment, but it has to be very much a part of the outcome of this negotiation, if we can bring it to a successful conclusion. To have the parties start to engage in dealing with that problem, rather than threatening unilateral action; to start talking to each other about how we're going to deal with that deadline.

Q: Ambassador Indyk, not only as assistant secretary of state, but also as the leading light in the pro-Israel lobby for many years, at AIPAC, etc., how do you suppose that the United States can construct an effective policy in this region, given the distorting role of the pro-Israel lobby in Washington? Or, if you will, how you would characterize the role of the pro-Israel lobby?

AMB. INDYK: Thank you for that easy question. (Laughter). Look, we have a number of constraints of different pressures being placed on us, in terms of trying to promote effective policy. One of the realities that we have to deal with is not so much what you described as the distorting role of the pro-Israel lobby, but rather the reality of these negotiations and what they are about. Negotiations are focused on an exchange of land for peace, in which Israel has to give up the land. Now, if you look at any other negotiations in which these issues are involved, there are only two ways of doing it. Either you find a way through the negotiations to meet their concerns, or there's a resort to force, which has been used in the Arab-Israeli conflicts of the past.

Those are the only two options here. Now since resort to force has been eschewed by all parties, and all parties are committed to the negotiations, then you have to find a way to meet Israel's concerns. You have to deal with a democracy, with the government that was elected by the people of Israel. That is just the reality of negotiation.

The fact that Israel has strong support in this country is not just a product of an effective lobby, but the historical reality of bipartisan views of congresses and administrations from the creation of the state of Israel on. That is an abiding reality. It's not, in my view, an impediment. It's actually an advantage. What we have to do is convince the Israeli government to do something difficult and painful. And the difficulty involved for them as a nation should never be underestimated. If we take that point, that that is the challenge here, then I believe a close and strong relationship with Israel is the best way for us to achieve this objective rather than through the alternative approach that many of those who inveigh against the evils of the pro-Israel lobby advocate: to beat up on Israel, to pressure it to capitulate, to drive it into a comer, and thereby force it to give up territory. I believe that is simply a prescription for failure.

The prescription of working with the Israeli government of the day, to encourage it and cajole it and find ways to meet its concerns, has a proven track record. It takes time, and it's very frustrating. People always look to the alternative, saying we should just point the finger and announce who's to blame, as if that would somehow get us closer to the objective.

So, it's our view, it's the president's view, and if you look back through most previous administrations since the start of this peace process, you'll see it's the view of successive administrations, that in the end, you have to work with the government of Israel.

AMB. FREEMAN: It strikes me that the supporters and friends of Israel in the United States, who are numerous and influential, are not particularly of one mind at the moment on many of the issues that we have been discussing. In fact, there are serious divisions and differences of opinion among people who support Israel. They provide contradictory advice to our government, our Congress, and indeed to Israelis. Bob Pelletreau in his remarks somewhat wistfully invoked the desirability of leadership and prestige and effectiveness at the American presidential level. I don't think we need to get further into some of the complications that that issue raises. But I think it is fair to say that there is an opportunity for leadership. And the constraints on specific issues may not be as overpowering as the question implied.

DR. FANDY: Ambassador Indyk, there is no doubt that some of the pro-Israel intellectuals in this town, as well as wealth and other things have contributed to a debate in which there is a conflict between American national interests in the region and Israeli interests. To what degree does this complicate your job when you deal with important countries in the region like Egypt, or when you deal with issues like Gulf security, or wide-ranging issues that reflect the complex role of the United States in the region rather than that narrow concern?

AMB. INDYK: We have many friends in the Arab world -- whether we're dealing with Gulf security, Iraq, controlling weapons of mass destruction (WMD), fighting terrorism, etc. -- we are dependent on working with those governments, just as in the peace process we are dependent on working with the government of Israel. Those governments are increasingly sensitive to what can be referred to as the Arab street. As a result of mass communication, they now feel that they are better in touch with the sentiments of the street. I say "feel they are," because I think this can be very misleading. If we took American public opinion to be represented by the people who call in to talk shows, we would have a distorted view of American public opinion. They are acutely aware of what is going on in the media. And the introduction of satellite television and talk shows, the Al-Jezira phenomenon that some of you may be familiar with. All of this has sensitized them in a way that they were not sensitive before to this perception that the Arab street feels strongly about the issues, including what the United States is doing. It complicates their responsiveness to us, at least their public responsiveness. But it is a reality that today, despite all of the problems that we face in the peace process, we have stronger and closer relations with many Gulf states than we had in Chas. Freeman's time as ambassador in Saudi Arabia. We have access arrangements that we never dreamed of back in those days.

The bottom line is that they are much more focused on their parochial concerns. As a matter of course they will pay lip service to the peace process and to the cause of Palestine. But they're not prepared to sacrifice their own parochial interests for that cause. This is a phenomenon that has developed over a number of decades. This affects their willingness to be identified with us publicly. But when it gets down to the level of where their basic interests lie, they feel that the United States is not just important, but essential to their security. That is the bottom line for many of them.

Q: Ambassador Indyk, it has been very difficult to get you or other public officials of the State Department in recent years to say specifically that any outcome in the final status is rooted in U.N. 242, 338, and land for peace. You've used it as a phrase this morning. But the sort of international legitimacy of where that comes from, is often put off with a kind of "hands off, it's for the parties to decide." Can you give us a sense of what the U.S. declared policy is in regard to a full Palestinian state?

AMB. INDYK: Your perception on the first point, I think, is wrong. There is no bashfulness on my part or on the part of any other administration official to say that the peace process is based on 242 and 338, and the land-for-peace bargain. That is the basis of our policy, and the basis of our approach, as I said today, unprompted by your question. There's no hesitation in that regard, and I am happy to clear up that misperception, if in fact it exists.

On the second question, your perception is correct. We have avoided coming out and saying what we think should be the final-status outcome. We have done that, because of our belief in the importance of trying to maintain the integrity of the negotiating process. In the Oslo agreements, the Israelis and the Palestinians decided that certain issues would be resolved in the final status negotiations. That includes the issue of what form the Palestinian entity will take. Its borders, its make-up, the extent of its independence and sovereignty are all issues for the final-status negotiations, just as are Jerusalem and refugees, and the very controversial issue of settlements. The parties themselves agreed that they would negotiate those issues in the final-status negotiations. We are now trying to get them into those negotiations, through this agreement.

We feel it is our responsibility as the sponsor or cosponsor of the negotiations not to try to do anything to preempt them. That is why we have taken a very strong position on the issue of Jerusalem. We have avoided, despite overwhelming congressional sentiment in this regard, doing anything in terms of the U.S. position on Jerusalem that would preempt the final-status negotiations or undermine our chances of getting those negotiations going. And that applies to statehood, but mostly it applies to the issue of Jerusalem.

Q: Dr. Indyk, can you elaborate on what the Palestinians have gained? They will be gaining only 10 percent of the West Bank. Also, you said that the only way for the Palestinians to get a state is by negotiations. But the Israelis did not negotiate when they declared their state.

AMB. INDYK: First of all, it is flat-out wrong to say that what the Palestinians would get out of this agreement is 10 percent. As the Israelis have put out, what they have agreed to is 13 percent from Area C. There is no new category created here. The nature reserve is part of a B area in which Israel, as it does in all other B areas, has overall security responsibility. But the Palestinians have civilian control. They have control of the land for civilian purposes, and there are certain restrictions on activities that they have decided to impose on themselves in this area. It is a desert inhabited only by Bedouins, whose rights will be protected under this agreement. But under this agreement, if we get it, there is also a shift of territory from B to A, to complete Palestinian control. The overall result would be that the Palestinians would control 40 percent of the West Bank before the final-status negotiations begin.

As an outcome of negotiations, this is a considerable achievement. The Palestinians have no other way of acquiring control over territory than through the negotiating process. They have decided to end their conflict with Israel and to negotiate a solution. What this agreement will show is that the process of negotiations produces results. The Palestinians didn't have control over their territory. Yes, it's restricted, yes it's got lots of problems. But that's a lot further along than they were before 1993. Those who dismiss it and say it's nothing have the responsibility to stand up and answer the question, "How are the Palestinians going to get a better deal from another course of action?"

DR. LUSTICK: I think the single most important point to be understood here is that the United States does not have only two choices -- full-scale confrontation with the whole state of Israel ore endless rounds of possibly counterproductive negotiations. Our choice is not between forcing Israel into a comer and imposing a solution on a cornered country or working with whatever government the Israeli democracy produces on whatever terms it offers. There is a third option, the option that the Bush-Baker team used. When Shamir came to Washington in 1989 and offered the Shamir Plan, it was rejected by the United States, because to accept it would have strengthened his hard-line approach without opening real negotiating opportunities. Israel is not just one Israel, it is several Israels. The point of the Bush-Baker policy was to drive into a comer the extreme ideological group that Shamir was associated with -- that's the other option -- and show that Shamir could go to Madrid, but he wouldn't win the national election. And then you would get a government that Palestinians could negotiate with.

We are dealing with a country, not with a government. We have to take a longer view. Sometimes it's the right thing to drive a bargain with a government that you don't see eye to eye with. Sometimes, as with the Hebron agreement, it is not a good idea to do that. Whether it's a good idea now, is dependent on the exact terms of that agreement and provisions for preventing unilateral actions in Jerusalem and by the Palestinians.

AMB. INDYK: Yes, it does depend on the agreement. It is something that we do have to take into account, in terms of dealing with unilateral actions on both sides, and reaching understandings with both sides as to what they will and will not do in the context of this agreement.

As for the third option, I think you will admit that it's a very complicated process in which, if we were to enter into it, which I don't think we should, the outcome could at least be worse than we wanted to achieve, as much as it could be the way that you would want it to come out. Nothing is certain in democracies. And the intervention of the United States in trying to set things up in a way that would advantage one side rather than the other is a process which can have unintended consequences. As a government, we'd do well to try to stick with the course that I've articulated, of working with governments, difficult as that may be at times, to achieve the outcome that we're trying to get here.

Q: Dr. Fandy, what are the factors surrounding gaining both Arab popular sentiment, as well as Arab government sentiment?

DR. FANDY: After the Gulf War, the United States was very strong in the Arab world and had tremendous political capital that could have created miracles. Over the years, that political capital was squandered, and there aren't many Arabs in the region who can stand publicly with the United States. It's a myth in Washington that there is no Arab public opinion. There are thresholds for Arab societies that governments cannot cross. President Mubarak did not come to Washington at one point when he knew that the summit between President Clinton, Arafat and Netanyahu would fail.

And Gulf states are shying away from the U.S. policies, because the political price is very heavy. When the United States launches a few volleys from a ship somewhere and then retreats to North America, these people are stuck. They have to pay a political price in terms of their stability.

How to regain it is by listening carefully. These people are not idiots. They know their local setting; they know how much they are willing to pay, and how much they are not willing to pay. The United States, unfortunately, does not listen very carefully to local sentiments. All the signs there are really bad. By every measure, we are losing the Arab world.

So, I think there has to be a great deal done in the peace process to convince the Arabs that America is a fair and neutral party, perhaps tilts just slightly toward Israel. But the perception there is that the United States is fully embracing the most extreme Israeli position, not merely the Labor position. This is a very dangerous challenge to the interests of the United States.