The two-state solution remains viable. That is the message sent out this weekend by the Washington Institute for Near East Policy. Nodding to Palestinian demands to use the pre-1967 lines as a basis while at the same time ensuring that a strong majority of the 327,000 Jewish settlers presently living in Judea and Samaria would stay put, David Makovsky, a former Jerusalem Post editor and senior fellow at the institute, presented options for resolving the territorial aspects of a two-state scenario, complete with maps and statistical data. It is based on a land swap that would grant the new Palestinian state Israeli lands adjacent to the Gaza Strip, the Sinai Peninsula, and parts of the West Bank, in return for leaving up to 80% of the settlers in place.

The plan comes at a time when prospects for a negotiated two-state solution are deadlocked. To the familiar “core” obstacles of the disputed status of Jerusalem, the gulf on the issue of Palestinian refugees, and disputes over border demarcations and security arrangements, are added the complication of a split Palestinian leadership: Hamas in Gaza and Fatah in the West Bank. Unable to make peace among themselves, one wonders how the Palestinian people can possibly resolve its differences with the Jewish state.

Hateful incitement against Israel, officially sanctioned by the Palestinian Authority, and an integral part of a Hamas’s very being, further exacerbates the situation, and underlines the widespread Israeli concern that the Palestinians have yet to internalize fundamental Jewish sovereign rights in this region. In addition, the Palestinian leadership has taken the Obama administration’s lead in insisting on a complete Israeli building freeze over the Green Line, including in blocs in the West Bank that would remain under Israeli control in any future deal and in consensus neighborhoods in east Jerusalem, as a precondition for a return to the negotiating table.

While President Mahmoud Abbas claims he has ruled out, at least for the time being, the option of a unilateral declaration of statehood, the Palestinian Authority he leads continues to seek and garner recognition from countries around the world for precisely such “a Palestinian state within the pre-1967 borders.”

On top of all this, a fateful date is looming. A one-year goal to reach a comprehensive peace agreement was set before the start of the short-lived direct talks in September of last year. The objective at the time was to calm Palestinian worries that the negotiations would continue ad infinitum. But if no significant headway is made by the September 2011 deadline, there are concerns about the possibility of a third intifada. In fact, this seems to be one of the few points of agreement between the sides.

Last year Foreign Minister Avigdor Lieberman warned against setting a deadline for precisely this reason, while over the weekend both Abbas and chief Palestinian negotiator Saeb Erekat warned that a protracted deadlock in talks could lead to a popular uprising.

IN THIS bleak diplomatic environment, the Washington Institute’s reassertion of the viability of a two-state solution is potentially promising. As Makovsky told the New York Times, “The idea here is to bring the two-state solution down to earth.” But it can be potentially dangerous as well. Agreeing to borders before solving the refugee problem, which is not addressed in the institute’s initiative, would likely be disastrous. The two-state solution is an inherently Israeli interest precisely because, assuming it is wisely negotiated, it would ensure that Israel remains both Jewish and democratic. A Palestinian “right of return” to today’s Israel involving potentially millions of Palestinians – the offspring of those who left or fled during the War of Independence – would, by contrast, spell the end of Jewish sovereignty.

If Israel is to negotiate the borders of a new Palestine, wrenchingly conceding territory, this can only be done as part of a wider equation in which the Palestinians abandon the demand for a right of return. It would be for a new “Palestine” to represent the solution for Palestinian refugees, just as Israel built a thriving nation absorbing Jewish refugees from the Middle East and North Africa.

Another issue not addressed by the institute is security. Hamas’s takeover of Gaza, and the relentless salvoes of mortar and rocket fire directed at nearby Israeli residential areas, underlines the potential danger of a misconceived pullout from the West Bank. That’s why Prime Minister Binyamin Netanyahu’s 2009 Bar-Ilan University speech, in which he endorsed a two-state solution, highlighted that a Palestinian state must be demilitarized. Here at least, unlike on the refugees, however, there have been some positive signals from the PA.

The Washington Institute’s initiative should be appreciated as a sincere attempt to help implement a two-state solution. A breakthrough on the territorial issue might indeed encourage progress on the other core disputes.

But those core issues cannot be resolved in isolation from each other. Either they are all solved in a viable framework, or none of them is.

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