ON THE FACE OF IT, PRIME Minister Benjamin Netanyahu’s late May visit to the US was a resounding success. With over 30 standing ovations in Congress, he seemed to have tapped into a bedrock of American support for Israeli positions; despite public altercations with President Barack Obama, he came away with an American undertaking to work against UN endorsement of Palestinian statehood in September; his premeditated clash with Obama had him looking like a strong leader unafraid to stand up for Israeli interests; his hawkish coalition partners showered praise on his performance; and his claim to have cracked the DNA of the Israeli consensus seemed to have been confirmed by domestic polls showing rocketing approval ratings.But for the center-left opposition in Israel, the trip was more like a disaster that will come back to haunt the beleaguered country. The prime minister had gratuitously alienated the president of Israel’s most important ally and often only friend; his refusal to accept the formula of the 1967 lines with land swaps as a basis for negotiations had left Israel with little international sympathy in the run-up to the anticipated Palestinian UN gambit in September; his resounding no to peace talks unless the Palestinians first recognize Israel as a Jewish state and disown the radical Hamas faction in Gaza seemed to spell the end of any chance of negotiations at least until the conclusion of his term in 2013; and he had proposed no way for terminating Israel’s 44 year-long occupation of Palestinian territory and the growing campaign of delegitimization that goes with it. Opposition spokesmen likened Netanyahu to the proud captain of a ship of fools sailing blithely into an iceberg everyone could see.Netanyahu counters that, given fundamental Palestinian rejectionism, he is steering the only rational course. He argues that as much as Israel might want peace, there is no partner on the Arab side and he insists that his demand that the Palestinians recognize Israel as a Jewish state is not so much a precondition as it is a litmus test of Arab intentions. In his view, their adamant refusal to meet the test stems from a deeper refusal to come to terms with Israel’s very existence and to accept the idea of a peace deal that finally ends the conflict with Israel intact and its legitimacy unchallenged.Under such circumstances, he and his more hawkish advisers argue that the status quo is better than a bad peace that could compromise Israel’s security without providing a binding end to the conflict or legal finality to Palestinian claims.Israeli opposition leaders reject this approach out of hand. They see the Jewish state issue as one of a string of bogus obstacles Netanyahu has strewn along the peace path to make sure talks with the Palestinians don’t start anytime soon.“According to our own Declaration of Independence, Israel is already a Jewish state,” Haim Ramon, Chairman of the Kadima Council, tells The Report. “Netanyahu could change its name to ‘Israel, the Jewish state’ or the ‘Jewish Republic of Israel’ and the Palestinians would recognize whatever Israel wants to call itself.”In Ramon’s view, Netanyahu’s delaying tactics are the result of a potentially tragic misreading of the Israeli predicament, as if the status quo serves Israel’s interests, when in fact it is seriously undermining the country’s long-term future. “First we’ll demand that they recognize us as a Jewish state, then as a Zionist state and then as a Revisionist Zionist state. But by that time we’ll already have a Palestinian majority and no longer be a Jewish state,” he fumes.Ramon maintains that in undertaking his Washington visit, the prime minister should have had three major goals: Ending the status quo, stopping the process of delegitimization and improving relations with the president, and that on all three, he failed abysmally.According to Ramon, Netanyahu could easily have achieved these objectives simply by accepting President Obama’s formula for renewing peace talks, with the initial focus on borders for Palestine and security arrangements for Israel. “If the Palestinians would have come on board as a result, we would have been able to change the status quo. If not, Obama would have been able to argue in Europe and elsewhere that there is no reason to meet the Palestinians’ demand for unilateral statehood if they refuse to come to the peace table on the basis of guidelines both Israel and the entire international community have accepted. And of course relations with the president, who would have seen that he was getting Netanyahu’s cooperation, would have improved,” he avers.Seasoned Israeli diplomats agree that in his speech to Congress, Netanyahu gave the president very little to help him persuade other governments not to back Palestinian statehood in September. On the contrary, according to the latest count, the number of countries that will vote for Palestine in the wake of Netanyahu’s address has leapt from about 135 to 160, well over the required two-thirds majority. According to Ramon, had Kadima, rather than Netanyahu, been in power, Israel would have been deep in talks with the Palestinians or already have reached an agreement, and the Palestinian UN ploy would have been redundant.Indeed, Ramon, who has been close to the peace process in one capacity or another for decades, believes a deal with Palestinian President Mahmoud Abbas is eminently achievable. He says that last September, just before Israel’s settlement freeze ended, Abbas made a far-reaching territorial offer that should have resulted in a dramatic peace breakthrough. In a meeting at the prime minister’s residence in Jerusalem, Abbas presented Netanyahu with a detailed map allowing for land swaps of around 4 percent – up from a previous Palestinian offer of 1.9 percent and not far from the 6.4 percent set by former prime minister Ehud Olmert in his talks with Abbas. Netanyahu, however, showed little interest. Instead, he responded with a string of new territorial demands, all non-starters from the Palestinian point of view. From this, Ramon concludes that Netanyahu does not really want the two-state solution that is there for the taking. And the result, he says, will be a constant erosion of Israel’s international standing as one of the last occupying powers in the 21st century.“Over time, the lack of international legitimacy becomes very significant,” Ramon warns. “Ultimately, regimes or countries that were not regarded as legitimate by the international community paid a heavy price, as in South Africa, or smaller prices as in other places. But they always paid a price. And when it happens to us, there will be a price – economic, political and, perhaps, a security price too.”Ramon does not anticipate UN-sponsored sanctions against Israel after September. But he thinks that individual governments or parliaments might see in UN endorsement of a Palestinian state sufficient reason for imposing sanctions of their own. And that, he says, could be the start of a very slippery slope.In Ramon’s view, the one way out for Israel is through a general election in which Netanyahu loses. But although some pundits are predicting the prime minister will precipitate an early ballot to exploit his newfound popularity, Ramon says he does not believe elections will be held until well into next year, long after Israel’s diplomatic troubles start to bite.Other opposition leaders criticize Netanyahu for lack of leadership. A leader should take the country in the direction it needs to go, not hide behind an imaginary “Israeli consensus” to justify doing nothing, says Isaac (Bujie) Herzog, former minister of welfare in Netanyahu’s government and now a contender for leadership of the Labor party, which quit the government in January, in part over the government’s failure to advance the peace process.“I had several heart-to-heart talks with Netanyahu when I was a minister in his government,” Herzog tells The Report. “I said to him, the people of Israel, paradoxically, would prefer a right-wing leader taking us into serious peace talks. If you were to put all your weight behind this, you could create a situation in which 80 percent of the people would back you. He replied that he didn’t want to cheat his voters. I think he missed a historic opportunity.He didn’t show leadership then, and he’s not showing leadership now.”In late April, Herzog announced a plan to preempt the Palestinian UN move. Israel would undertake to recognize a Palestinian state at the UN, on condition that the Palestinians agree to reengage immediately in peace talks focusing on borders and security.That would neutralize the threat of international recognition of the 1967 lines as the new border without Israeli input. It would also stave off the anticipated diplomatic storm by putting Israel in the pro-peace and pro-Palestinian state camp. Under Herzog’s plan, the parties would agree to discuss borders on the basis of the 1967 lines with land swaps, Israel would insist on the primacy of agreed security arrangements, and the parties would accept the “Clinton parameters” of December 2000 as terms of reference for all the core issues.According to Herzog, his ideas jibe perfectly with President Obama’s. “The Americans want to put borders and security first to create a Palestinian state, because once you have a state, you deflate the importance of other ideological and symbolic elements, like Jerusalem and refugees,” he observes. Herzog maintains that Netanyahu should have worked as closely as possible with Obama to avert the impending September debacle. He reckons that if there is an overwhelming majority in favor of Palestinian statehood in the UN General Assembly, the consequences for Israel could be very problematic, diplomatically, economically and on the ground. He recalls how the 1947 UN resolution recognizing the State of Israel triggered spontaneous outbursts of emotion across the country, and warns that a UN resolution on a Palestinian state could unleash similar emotions several times over in the form of mass protests against continued occupation, which would seem to fly in the face of the UN decision. “Bear in mind the amplification through facebook and twitter and the fact that there is a young generation already charged up by what is happening around the region,” he warns.According to some Israeli business people, there are already worrying signs of voluntary economic sanctions. “There is already a problem in Western Europe where large international firms in spheres I am familiar with – energy, electricity and infrastructure – are quietly refusing to do business in Israel,” says former Energy minister Moshe Shahal of Labor, a lawyer with wide international business interests.Shahal is one of a group of influential Israelis who came out in early April with the “Israeli Peace Initiative,” an unofficial response to the “Arab Peace Initiative” (API) of March 2002. (See “The Cairo Report,” on page 19.) Their aim was to induce Netanyahu to launch an official initiative that could reverse Israel’s diplomatic decline.Shahal says he has been working on an Israeli response to the API for years and that his dealings with Arab players during that time indicate that, contrary to Netanyahu’s assessment, there is a peace partner on the other side.To drive the point home, he recalls an effort he made a few years ago to pave the way for a historic peace powwow between Israeli and Arab leaders at the highest level. In January 2007, at a regional peace gathering in Madrid, Shahal suggested to the assembled Arab representatives that if they wanted an Israeli response to the API, why not invite Israel’s prime minister to address the Arab League, the way Egypt’s Anwar Sadat had addressed the Knesset? To his surprise, delegates from Jordan, Egypt, Morocco and the Gulf States, backed by the Saudis, showed interest. Over the subsequent months, Shahal received messages that the top leaders of those countries were ready to explore the idea. Armed with this potentially sensational news, Shahal approached thenprime minister Ehud Olmert. “I said to him: You have nothing to lose. If they invite you, 22 Arab states would hear an Israeli prime minister for the first time. It would be breaking out of a kind of siege. It would be great drama. The rules of the game would change. Israel would be dealing with the entire Arab world. And the moderates, for their own reasons, would have an interest in settling the dispute to block Shiite expansion in the region,” Shahal tells The Report.Olmert, however, dithered, and, days before a scheduled preparatory meeting between Shahal and Arab League representatives in Cairo, in May 2008, the “Talansky Affair” – in which Olmert was suspected of taking bribes – broke, nixing the whole idea. In Shahal’s view, however, the episode shows that there was a more than willing Arab peace partner then, and he says, meetings in late May with Egyptian Foreign Minister and Arab League Secretary General-designate Nabil al-Arabi and in late April with Palestinian President Mahmoud Abbas show that there still is. Al-Arabi, he says, spoke of broadening the peace to stabilize the region, and Abbas showed a sophisticated understanding of Israeli needs. “On the refugees he said: ‘We know we can’t return all the 1948 refugees to Israel proper. What would be the logic of making peace with you and at the same time demanding that you accept a situation that could destroy the Jewish state?’ That’s a very far-reaching thing for a Palestinian leader to say. If there were someone of stature on the Israeli side to negotiate, I think we could reach an agreement,” he concludes.Shahal, however, is pessimistic. He sees a readiness for peace on the Arab side being tragically missed by weak and short-sighted Israeli leaders. His main hope today is for a solution imposed by the Americans, and he thinks Obama could be the man to do it. “He will say, ‘I warned you, and I also warned the Palestinians against the UN route.’ He has been very generous with regard to all forms of material aid to Israel and that could make it easier for him to put his foot down. Compared to his predecessors, I think he is capable of going one step further, with a great deal of sophistication,” Shachal opines.So far, however, there has been little sign of such American assertiveness. Indeed, because of their perception of the administration’s relative passivity, Netanyahu’s visit left the Palestinians deeply disappointed in President Obama and the American role. “By threatening to go to the UN, they had hoped to create a situation in which America helps them achieve their political goals by proposing an alternative policy,” says Menachem Klein, a Bar-Ilan University expert on Palestinian affairs. “But the US is not in the picture. In his recent speeches Obama outlined a vision, not a policy.There is no operational program, no timetable and no mediator.”This leaves both sides stuck in a status quo Klein says is doing neither of them any good.“The Palestinians, denied the geographic and administrative space they need for a semblance of functioning statehood, are desperately seeking something that will prove a major gamechanger,” Klein tells The Report. The Americans, he says, could have provided one by coming out with a concrete plan for permanent borders in stages, by proposing, for example, Israeli withdrawal from the Jordan Valley in a year. That would leave 70 percent of the West Bank under full Palestinian control, with international forces in the Jordan Valley to help assure Israeli security. “This is easily doable,” says Klein. “It is sparsely populated territory, far from Israeli population centers and would create a new dynamic.”But the fact that the Americans have not come through for them, the way they did during Netanyahu’s first term in office in 1996- 1999, means that the Palestinians are left seeking game-changers of their own. One possibility being considered is dissolution of the Palestinian Authority and making Israel responsible once again for everything that happens in the West Bank; another is to mobilize the Arab world for Palestine; a third is to put pressure on Israel and the US through the UN gambit in September; and finally there is mounting pressure from below for a non-violent intifada, in the style of Tahrir Square.For now the main thrust remains in the international arena, with the push for UN recognition. But, says Klein, here the Palestinians face a huge dilemma: “Their problem is that if they go for strong action against Israel, such as economic sanctions or legal petitions to the International Court of Justice, they need Israel to be like Gaddafi, which it isn’t.That traps them in a Catch-22 situation. The more they go for something with real teeth, the fewer the countries that are likely to support them,” Klein contends.Nevertheless, Klein sees voluntary sanctions against Israel by firms or individuals, rather than countries, gathering momentum. He says this is partly because of the way Netanyahu depicts the conflict as an either/or existential one, forcing people to choose. “In this way, criticism of Israel’s conduct quickly becomes criticism of its essence. So you have an absurd situation in which Israel is actually helping to delegitimize itself,” he offers.Back home, with the cheers in Congress still ringing in his ears, Netanyahu can savor one of the high points of his political career. He has been able block the Oslo process he never liked, and to do so with America’s leading legislators and most of the Israeli public in his corner. The question his center-left critics are asking is what price the country will have to pay for the prime minister’s dazzling personal triumph.