The Middle East is by far the most volatile regional problem facing the Bush Administration. Two struggles are underway: one, the war for the Palestinian state, its size and powers, which in turn will greatly affect the security of Israel; the other, the contest over American domination of both the Arab-Israeli diplomacy and the security of the Persian Gulf. These issues are not new but they have been brought to an acute stage by the failures of U.S. policy over the past decade.

Clinton inherited from Bush the father a promising Arab- Israeli negotiation and a strong position in the Gulf, both sustained by a working international coalition. Bush the son inherited from Clinton a collapsed negotiation and a squalid Israeli-Palestinian guerrilla war while the coalition established to sanction Saddam and, to a lesser extent, contain Iran, was barely functioning. President Bush and his team thus face a double challenge, not least of which is to prevent one trouble from spilling violently into the other. The situation may therefore be described as “between war and war”: between the current Israeli-Palestinian war and a potentially much wider regional conflict.

The Bush Administration’s initial objective was to contain (if not end) the Israeli-Palestinian violence while shoring up the anti-Saddam coalition — no easy task. But neither the Israeli-Palestinian cease-fire brokered in June nor the proposed “smart sanctions” on Iraq succeeded. Washington must anticipate a further deterioration of the situation until a decisive act of violence or a local change of direction offers a new opportunity for American action.

The Aksa Intifada: Calculations and Miscalculations

A decade after the Arab-Israeli peace process began at Madrid, the largely U.S.-led negotiations collapsed. Two failed summits, one between Clinton and the late Syrian president Hafez al Assad, the other a three-way Clinton- Arafat-Barak encounter at Camp David, left the parties stalemated with no obvious way out. Assad’s death and Israel’s unilateral withdrawal from Lebanon probably foreclosed a crisis on that border. In late September, however, Ariel Sharon’s visit to the Temple Mount (Haram al Sharif to the Muslims) and the subsequent violence, promoted by Yasser Arafat, rapidly darkened diplomatic prospects.

The Palestinian leadership depicted the uprising— called the Aksa Intifada after the Mosque on the Haram— as the precursor to independence. At first, Arafat parlayed highly publicized civilian casualties into a call for Arab and international intervention that would also pressure Washington to extract a better Israeli offer. Rioting by Israeli Arabs in support of the intifada added more trouble. This phase brought only partial success. At the Sharm al Sheik summit on October 16th, Egyptian president Mubarak signalled his reluctance to involve his country in a confrontation with Israel on Arafat’s behalf. Instead, the parties were forced to agree to call for a cease-fire, an American-run investigation into the causes of violence, and a return to final-status negotiations.

Arafat never carried out his part of Sharm, but both President Clinton and Israeli prime minister Barak decided to go ahead with the other provisions. Ultimately both the Clinton “parameters” of December 23rd and the Israeli-Palestinian negotiations in January 2001 at Taba improved upon Barak’s Camp David ideas. Still Arafat’s minimum had not been met on two points in particular: control of the Old City of Jerusalem and agreement to a potentially substantial return of Arab refugees to pre-1967 Israel.

Barak’s strategy of re-engaging Arafat diplomatically while simultaneously defending against the intifada assumed that Arafat was still a potential partner for a final agreement and that the uprising was primarily a popular passion that might soon be spent if it were not aggravated by heavy- handed Israeli military tactics. By mid-November, however, the intifada’s popular phase was over; a new second stage had commenced, that of guerrilla warfare for the roads around Jerusalem that connected the Israeli capital with the settlements in the West Bank.

Both sides pursued a military strategy that left selected areas as sanctuaries. For Israel, there was the pre-1967 territory. For the Palestinians, it was “Area A,” the portion of the West Bank and Gaza that was entirely controlled by the Palestinian Authority and where most Palestinians lived. That left Area B (administered by the PA but secured by Israel) and Area C (entirely Israeli-controlled, including settlements) as the focus of the violence. By early January 2001, Arafat’s obvious direction of this phase and his insistence on Jerusalem and the “right of return” persuaded most Israelis that he meant to continue the conflict, even after achieving statehood.

Arafat must surely have known that his conduct would make Barak’s re-election improbable. He might well have counted on either a bare Barak victory over the controversial General Sharon and yet more Israeli concessions, or a Sharon victory that would make it much easier to isolate Israel. And Washington might become an easier sell with the final U.S. election victory of George W. Bush, who owed nothing to the American Jewish vote and whose appointees had strong relations with the Arab Gulf states.

The War for Washington

General Sharon’s overwhelming defeat of Ehud Barak on February 6, 2001, rematched the veteran Israeli warrior with his old Palestinian combatant. Eighteen years earlier, Sharon had cornered Arafat in Beirut only to lose both his quarry and his political career when he overreached. Then international intervention and domestic Israeli opposition had rescued Arafat. But if Arafat expected a repeat he did not get it.

Sharon quickly capitalized on the new Israeli consensus produced by the Aksa intifada, bringing the Labour party into a broad national unity coalition. This included the most illustrious of the “peace camp” — Oslo architect Shimon Peres — as Foreign Minister. The new government’s program emphasized that there would be no negotiation without a cease-fire and, once a cease-fire was attained, the Israeli objective would be an agreement well short of Barak’s proposals. Arafat would not be called upon to end the conflict but then he would not get the territory he wanted. Thus equipped, Sharon set out to live down his reputation for excess.

The Israeli unity government was not the only unexpected consequence of Arafat’s violent tactics. The Palestinian leader also found himself unwelcome in Washington. Clinton had hosted Arafat more often than any other foreign leader but had little to show for it; Bush would not extend the investment. Moreover, the negotiating record at both Camp David and Taba lent itself to the conclusion that the Palestinian did not want an end to the conflict. By contrast, then-Governor George W. Bush had spent a friendly day with Sharon during a tour of Israel and readily endorsed the old general’s new-found moderation. In short, the U.S. shared Israeli doubts about Arafat’s intentions and saw no reason to mediate unless there were convincing signs that the parties were ready to re-engage.

As for the Gulf, Secretary of State Powell seemed headed for a rematch of his own with Saddam. His trip to the region in February 2001 to celebrate the tenth anniversary of the Gulf War was preceded by a sudden American bombing of Iraqi radar sites tracking enforcement of the no-fly zone. Powell found the Kuwaitis and the Saudis anxious that the Israeli- Palestinian crisis would afford Saddam re-entry into the regional spotlight. They opposed additional military pressure on Saddam and asked a change in the sanctions regime much criticized for the hardships it supposedly worked on the average Iraqi.

The answer to this problem, Powell announced at the end of his trip, was “smart sanctions.” These would inhibit Saddam’s military imports while exempting ordinary commercial transactions benefitting the Iraqi people. The concept was problematic. It needed a means of enforcement, UN Security Council approval, and considerable sums to compensate Jordan, Syria, and Turkey, all of whom carried out a contraband trade with Iraq to ease the sanctions damage to their own economies. None of these had been worked out but Powell’s endorsement of “smart sanctions” helped the Saudis and Kuwaitis to spoil Saddam’s plans for obtaining Arab support at the Amman Summit on March 28 of this year.

Arafat could not expect any reinforcement either from the new Administration or from the Gulf. Instead the violence would escalate. Already on January 30, 2001, Palestinians had fired mortars at targets in pre-1967 Israel. Hamas operatives released earlier from PA jails also lost no time in resuming activity, coordinating with the irregulars of Arafat’s Fatah political party (Tanzim) and occasionally the Palestinian police. Even under Barak, Israel had begun to kill select members of Hamas and the Tanzim, and to capture others in undercover operations. On April 17th, the Israelis seized territory in Area A, leaving it 24 hours later after strong protests from Washington. The “rules” which had confined the war to Areas B and C were changing for the worse.

The Mitchell Commission Finds Facts

At this juncture, the Bush Administration launched an initiative inherited from the October 2000 Sharm agreement. As noted earlier, the Mitchell Commission had proceeded despite Arafat’s refusal to call a cease-fire. It had been charged to “find facts” rather than assign blame. Its report, issued on May 21, 2001, recounted the violence, and, in accordance with its mandate, did not find that either side plotted to explode the peace process. The Commission proposed steps to put the parties back on the path toward a negotiated peace: an unconditional cease-fire, a cooling-off period to reduce tension, and confidence-building measures. Among the proposals were bitter pills for both sides: Palestinian collection of illegal weapons, arrest of would- be bombers, and ending of incitement against Israel and Jews; Israeli fulfillment of further territorial withdrawals and a settlement freeze, including a freeze on “natural growth.” This term of art had been used by the Israelis to justify additional building in the settlements that increased their population even during a “freeze” on expansion of their size and number.

The Oslo Accords had listed settlements as a final status issue. By advancing it to the “confidence rebuilding” stage, the Mitchell Commission produced a potential disruption of both the Israeli coalition (Likud and Labour had long disagreed) and U.S.-Israeli relations. Moreover, a freeze that prohibited any building anywhere in any settlement (which, according to the Palestinians, included Jerusalem beyond the 1967 lines) would hand Arafat a convenient tool for harassing the Israelis on compliance.

The Mitchell Commission thus offered Arafat a way out of his immediate dilemma. By accepting it, he could re-establish a link with Washington, and by hastening into the confidence- building steps, he might break down the Israeli government and divide it from Washington. But the achievement of these objectives demanded a real cease-fire, or at least one that proved to the Americans, if not to the Israelis, that he was making a 100 percent effort.

The Cease-Fire That Wasn’t

“Cease-fire” means many things in the Middle East but it hardly ever means a complete cessation of fire. This one was to prove no exception. To enforce it, Arafat faced a severe political problem: what had been gained by the intifada if the next step led merely to a new negotiation for less than Barak had offered? Arafat therefore fell back on a familiar tactic: “yes, but.” Yes, he would agree to a cease-fire but this could mean only Area A where he had control; no one could hold him accountable for events in Areas B and C. The Hamas bombers would be arrested only if they tried it again. And confidence-building measures had to commence immediately with the cease-fire. In this way, Arafat could continue to exact Israeli casualties, albeit on a lower level, the better to advance his objectives of getting more while setting in motion an American-Israeli quarrel over settlements.

As Arafat quibbled, Sharon stole a march by declaring a unilateral cease-fire and announcing that there had to be complete quiet for ten days before anything else could happen. The confidence measures, including a freeze on “natural expansion” (the Israeli coalition had already declared no new settlements) might then be negotiated.

Powell himself praised both the “yes, buts” and trod a narrow path between the combatants. He denied linkage of cease-fire to confidence measures, remaining faithful to Sharon but emphasized “100 percent effort” by Arafat thus cutting the Palestinians more slack than Israel’s demand for 100 percent results.

Ten days passed in fruitless exchanges until Friday, June 1, when a Palestinian suicide bomber killed twenty-two young Israelis at the Dolfin night club on the Tel Aviv strand. What had happened to Israel was what Arafat had hoped would happen for the Palestinians: a horrific act of violence that dramatically shifted international sympathies. Under great pressure from the U.S., the Europeans (German Foreign Minister Fischer was on the scene), and with Israel mobilizing its forces for a heavy blow, Arafat called for a cease-fire in English and Arabic on June 2, his first call since the beginning of the intifada on September 28, 2000.

The U.S. Intervenes

At last possessed of a constructive Palestinian signal Washington hurried to throw Mitchell into motion. But CIA Director George Tenet, sent to revive security cooperation, encountered the “buts” rather than the “yeses.” His tempestuous visit yielded an agreement on June 13th that began by restoring the pre-Sharon election “sanctuaries:” Palestinian area A and Israel pre-1967 were off limits. He also got the parties to promise confidence building measures as part of the “work plan.”

The fortnight following Tenet registered little progress on the ground and a growing casualty list. Eight Palestinians and six Israelis had been killed. This ratio was substantially worse for the Israelis than before the cease- fire. Sharon and Peres could not accept Areas B and C as a free-fire zone for long.

In Washington, the Bush Administration was assailed daily by pleas from the Arab Gulf states for more actions, especially by the Saudi Crown Prince who had been instrumental eighteen years earlier in rescuing Arafat, then besieged in Beirut. When Secretary of State Powell decided to intervene himself to save the cease-fire, the mood was set by President Bush, who differed at a press conference with General Sharon over whether progress had been made. The Americans also emphasized nuances important to Arafat, such as shortening the time between “real cease-fire” and the next stage of diplomacy. “It is a package,” Powell said, “but it’s a sequenced package.” There could be international observers as Arafat wanted but these had to be mutually agreed. Still, Powell could not certify that Arafat was making the 100 percent effort needed to start the countdown.

Publicly, Powell played down his own expectations: he had little evidence that either Arafat or Sharon wanted to get to the next stage. Two weeks after his visit, the death toll counted since the Tenet agreement reached 22 Palestinians and 11 Israelis. On July 13, Powell condemned various provocative acts — most of them Israeli— including house demolitions and rhetoric attacking Arafat. But Arafat was still not defensible in Washington. Three days later, amid reports of numerous bomb interceptions, and additional killings of Israeli settlers on the roads, a Palestinian exploded himself and two Israeli soldiers at the town of Benyamina, well within the 1967 lines. A spike of violence was capped on July 27 when the Israelis killed several senior Hamas officials in Nablus (Area A) bringing a State Department rebuke over “excessive” Israeli actions.

Washington’s regional discomfiture was complete when, in early June, the U.S. and Britain were forced to drop a “smart sanctions” resolution at the U.N. in the face of Russian opposition. This struck a distinctly discordant note, coming in the wake of President Bush’s generally enthusiastic meeting with Vladimir Putin.

Between War and … War

It had been a frustrating six months. The U.S. had tried in vain to revive the Arab-Israeli peace diplomacy but the Mitchell Plan, Tenet paper, and the Powell interventions could not put Humpty Dumpty back together again. Meanwhile, the attempt to add “smart sanctions” on Saddam had encountered an insuperable Russian veto.

Nonetheless, the most important strategic facts established a decade earlier by the Gulf War still endured.

(1) The Sharon-led Israeli government, like its predecessor, was resolved upon a territorial division with the Palestinians despite the failure of the Oslo process to yield a partner for an end to the conflict.

(2) The Palestinians lacked strategic depth because none of the militarily important Arab states would confront Israel on their behalf. This was a significant “fire-break” that barred the way between war and war: the Israeli-Palestinian war of attrition and a broader regional conflict.

(3) Egypt and the Gulf states were not prepared to invite Iraq back into Arab good graces nor to dispense with American protection even though they seemed equally unwilling to increase military pressure on Saddam.

(4) The U.S. remained the dominant power, the most influential in mediating diplomacy, or supplying arms and money. As Israel’s indispensable ally, guarantor of Gulf security, and the best possible patron for a Palestinian state, Washington, not Brussels or Moscow, would decisively affect Israeli, Palestinian, or Arab decisions.

The Israeli-Palestinian war of attrition or a “breakout” by Saddam— or both together— could change these facts but they are unlikely to do so if the United States can make headway in three directions. The first is to facilitate the minimal understanding between the Israelis and Palestinians. This comprises not only the “rules of war” but, more significantly, whether an additional political agreement is possible: one that allows a Palestinian state but, in lieu of an end of the conflict, is smaller than what might have been possible before the intifada. A crucial step here will be whether the Oslo leftovers can be completed, the only step that might rehabilitate the once promising idea of Israeli-Palestinian partnership.

The second is to strengthen the firebreaks. This means to protect bilateral relations from the Israeli-Palestinian disturbance by re-emphasizing the ties that matter most, such as the military-to-military relationship with Egypt and Gulf security with Saudi Arabia. One U.S. friend, Jordan, faces pressures from both the Palestinians and Iraq, and it will need shoring up more than any other.

The third step is to develop a plan for harassing Saddam that does not depend on the UN Security Council. In 1990-91 the war against Saddam was waged by an inner and outer coalition. The “inner”— Saudi Arabia, the Gulf States, Egypt, Turkey, and Syria — was critical to the military campaign while the “outer” — the Europeans, Russia, and China — provided the UN diplomatic cover. If the containment of Saddam becomes subject to the veto of the outer coalition, then the U.S. may find its military options hamstrung. The U.S. objective should be to reach an understanding with a few key coalition members on ways to harm Saddam and especially to act in the event that he surfaces weapons of mass destruction. A similar understanding may be needed with Israel in case Iran does the same.

It may very well be that as in earlier moments in Middle Eastern history only a very large clarifying act of violence will shake the existing deadlock permitting another opportunity for creative American diplomacy. Still, a policy of testing for the minimum with Sharon and Arafat, strengthening the firebreaks, and concentrating the inner coalition in the Gulf may prevent the worst. The Israeli- Palestinian war need not become a larger regional war that might undo all that has been done since Egypt and Israel made peace, and Saddam was defeated in the Gulf.