IN MID-MARCH, EHUD BARAK DECIDED ENOUGH was enough. Israel, the defense minister warned, was facing a “diplomatic tsunami” with potentially horrendous consequences for the country’s future and time for bold government action to meet the gathering storm was running out.Speaking at the Institute for National Security Studies in Tel Aviv, Barak argued that unless Israel puts a credible plan for peace with the Palestinians on the table within the next several weeks, its status as an upstanding member of the international community would be in jeopardy.“It would be a mistake to ignore this tsunami. Israel’s delegitimization is just over the horizon, even if the public doesn’t see it. It’s very dangerous and we need to act,” he declared.What worries Barak is a scenario in which, with Israel failing to offer any alternative, the Palestinians take their case to the UN in September and get wall-to-wall international backing for a state along the 1967 lines, without their having to make concessions on borders, refugees or Jerusalem or even to declare an end to the conflict. Once that happens, Israel will find itself under increasing international pressure to withdraw to the 1967 lines, without its most basic security demands being taken into account. Worse: The longer it refuses to comply, the more it will find itself facing delegitimization as an occupying power in defiance of the international will.In Barak’s view, to preempt that outcome, and for Israel to have a say in shaping its future alongside the Palestinians, it urgently needs to put a peace plan of its own on the international agenda.Over the past few months, warning signs for Israel have been lighting up across the globe. Starting with Brazil and Argentina in December, a total of 10 South American countries have now recognized a Palestinian state; seven European countries, Britain, France, Ireland, Portugal, Spain, Norway and Denmark have upgraded the level of their diplomatic ties with the Palestinians; and in mid-March French Foreign Minister Alain Juppe went a step further, suggesting that the possibility of the EU countries soon recognizing a Palestinian state en bloc should “be borne in mind.”There were also signs that leaders of countries traditionally most friendly to Israel were losing patience with the Netanyahu government’s perceived foot-dragging on peace. In late February, German Chancellor Angela Merkel scolded the prime minister for not having taken “a single step to advance peace.” And in early March, US President Barack Obama told American Jewish leaders that they and “their colleagues in Israel” should “search your souls” with regard to Israel’s seriousness about making peace. This growing international impatience is causing profound concern among senior Israeli diplomats. Like Barak, some believe that unless Israel acts soon, the free fall in its international standing could quickly go beyond isolation on the Palestinian issue to global pariah. In late February, Ilan Baruch, a former ambassador to South Africa, resigned from the Foreign Service over the government’s failure to take any meaningful steps on the Palestinian track, which, he said, had triggered “a malignant diplomatic dynamic, which threatens Israel’s international standing and undermines the legitimacy not only of its occupation but of its very membership in the family of nations.”IN AN EFFORT TO REVERSE THAT dynamic, Prime Minister Benjamin Netanyahu has begun working on a peace plan he hopes will turn the tables and put the onus on the Palestinians to respond. His basic argument is that the sides are too far apart to go directly to talks on a final settlement and that a precipitate move in that direction could jeopardize Israeli security.Therefore, the new idea he is mulling is to take play away from the Palestinians by dramatically proposing a formula for a two-state solution to be achieved in stages: First a Palestinian state in interim borders, then stateto- state negotiations on all the outstanding issues. In a speech at Bar-Ilan University in June 2009, Netanyahu made a huge ideological leap in accepting the notion of two states for two peoples. Now, his advisers say, he is crafting a speech, already dubbed “Bar-Ilan 2,” in which he will outline his vision of how to get there.But will this be enough for the international community? Will it persuade the Palestinians to reengage? Or will it simply be dismissed as yet another empty exercise in PR? Indeed, given the pressure of Likud and coalition hawks, will Netanyahu feel he can go far enough to convince the skeptics in Israel and abroad? Netanyahu’s position has been further complicated by recent events. For example, the account of the Palestinian negotiation with the Olmert government leaked by the controversial Doha-based al-Jazeera satellite TV network, ostensibly to embarrass the Palestinian Authority, was interpreted by most of the international community as further evidence of Netanyahu’s failure to build on a promising foundation for peacemaking. The so-called “Palileaks” brought into sharp relief the fact that between December 2006 and September 2008, his predecessor Ehud Olmert and Palestinian Authority President Mahmud Abbas met 36 times, and although they did not achieve a breakthrough agreement, they significantly narrowed the gaps on all the core issues.On territory, they agreed on the 1967 lines as the basis for new permanent borders, with one-on-one land swaps to enable Israel to retain most West Bank Jewish settlements. Olmert proposed swaps of around 6.3 percent of the West Bank, the Palestinians countered with 1.9 percent.The main stumbling blocks were the city of Ariel and the Jerusalem neighborhood of Har Homa, which Olmert insisted on locating in Israel proper, a demand Abbas rejected on the grounds that it would impinge on Palestinian territorial contiguity. On security, the parties agreed on a demilitarized Palestinian state, with an international military presence to help secure the peace and protect Israel’s eastern flank. On Jerusalem, they agreed on divided jurisdiction, with Jewish neighborhoods going to Israel, Arab neighborhoods to Palestine, and the holy places under an international administration. On refugees they agreed that Israel would take in a token number, but disagreed on how many. Both Olmert and Abbas say that had they been able to continue the negotiation for a few months more, they would almost certainly have achieved peace.Abbas’s widely perceived dedication to peacemaking with Israel compounded Netanyahu’s difficulties in the international arena. In September last year, Abbas presented Netanyahu with a detailed territorial map and a proposal to negotiate borders and security first. That would have meant picking up the negotiations more or less from the point Olmert left off. Netanyahu, however, failed to respond, and when Israel resumed building in the West Bank settlements a few weeks later, the newly resumed process broke down, with Netanyahu getting most of the blame.In mid-March, Abbas ratcheted up the pressure on Netanyahu by appealing directly to the Israeli public in interviews on Israel Radio and Channel Two TV. In the TV interview, Abbas insisted that if Netanyahu accepted the principle of borders based on the 1967 lines with appropriate land swaps, they could wrap up a peace deal in “15 minutes.” He also seemed to suggest that the Palestinian UN strategy was of limited value, arguing that widespread international recognition of a Palestinian state without agreement with Israel to end the occupation would be virtually meaningless. The message was clear: Peace was within reach, Abbas desperately wanted it, but in Netanyahu he did not have a genuine peace partner.The regional turmoil has also put new pressure on the Israeli leader. The process of democratization makes the Israeli occupation even more untenable in Western eyes; moreover, for the US an Israeli-Palestinian accommodation would bolster its regional standing in an era in which popular sentiment has a growing influence on government decision-making. No one in Netanyahu’s entourage is saying much on the record about the substance of the prime minister’s planned initiative to get Israel back in step with the international community.But from the few hints that have been dropped, the following outline can be pieced together: Israel will offer to hand over swathes of West Bank territory now categorized as “B” (areas under Palestinian jurisdiction but subject to Israeli security control) and “C” (areas under full Israeli jurisdiction) to the Palestinian Authority, and agree to have them reclassified as “A” (areas under full Palestinian jurisdiction), while retaining a military presence in the Jordan Valley. Israeli building would only continue in settlements that remain in areas still classified as “C” and destined to remain in Israel in any final peace deal.There is some speculation that the cut-off point might be the West Bank security barrier, with everything east of the fence (apart from the Jordan Valley IDF presence) being transferred to Palestinian control, and everything west of it, remaining Israeli. Israel would then be ready to recognize a Palestinian state in those temporary borders, and to call for state-to-state talks on core issues like final borders, security, Jerusalem and refugees. To reassure the Palestinians that the temporary borders will not become permanent, the US might guarantee the contours of a final settlement. Talks between Israel and the US on the proposed new peace package are already underway. Israeli officials point out that although Netanyahu may be considering handing over more territory to the Palestinians, he is not contemplating a unilateral withdrawal similar to the 2005 pullback from Gaza. “We do not want to repeat past mistakes,” a senior official told The Report.EVEN THOUGH THEY WOULD MUCH PREFER TO GO straight to final status, Netanyahu’s critics on the left are not ruling out the prime minister’s new phased approach altogether.Former Meretz leader Yossi Beilin, one of the architects of the Oslo process and a leader of the unofficial 2003 Geneva peace initiative, says if Netanyahu’s offer is no more than an empty PR gesture, it will be torn to shreds by the international press, eroding Israel’s diplomatic position even further. But if it is genuine and well thought out, Beilin believes it could reignite the dormant peace process.An astute analyst with his finger firmly on the pulse of both sides of the Israeli-Palestinian equation, Beilin urges Netanyahu not to present his plan as an invocation of the second phase of the 2003 Road Map for peace, which provides for the establishment of a Palestinian state within interim borders. According to Beilin, this would lay him open to the charge that Israel has not yet carried out its first phase Road Map undertakings: freezing settlement building and dismantling settler outposts built since March 2001. It would also enable the Palestinians to point out that the interim state idea is referred to in the Road Map as no more than an “option,” which, as they have repeatedly made clear, they prefer not to exercise.Nevertheless, Beilin sees a ray of hope in a rare comment a few months ago in which Abbas intimated that he might be ready to accept an interim state on one condition: that the contours of a final Israeli-Palestinian territorial deal are made abundantly clear, a position he repeated in the mid-March Channel Two TV interview.Taking all of this into account, Beilin sees two scenarios in which the interim approach could work: • Israel makes a major unilateral move. Instead of invoking the Road Map, Netanyahu goes back to the “Further Redeployment” he still owes the Palestinians from his first term in office. Then, when he came back from Wye River Plantation talks with the Palestinians in October 1998, he passed a government decision to transfer another one percent of the West Bank to full Palestinian control as Area A. This was never done.Now, under this scenario, instead of just making good on the one percent, which would be meaningless, Netanyahu declares that he is withdrawing from a further 20 percent, pulling back more or less up to the security barrier in fulfillment of his outstanding “Further Redeployment” obligation. “Then he can go to Congress and say, I know the Palestinians won’t accept my proposal for an interim settlement, so I am hereby announcing that Israel will withdraw from another 20 percent, turning all of that into Area A under full Palestinian jurisdiction,” Beilin tells The Report. “That would be very significant. Even if the Palestinians say it isn’t, the international community will say it is. And even if in public the Palestinians say it’s not enough for them, in private they will welcome every centimeter.”Unlike in Gaza, the withdrawal would be what Beilin calls “back to back,” in full coordination with the Palestinian Authority, with their law and order forces moving immediately into areas vacated by the IDF. Israel could then recognize the Palestinian state in the interim borders and call for state-to-state negotiations on all outstanding core issues, putting the onus on the Palestinians to respond.Israel makes a coordinated move with the US. In this scenario, the US talks to both sides about its vision of a final peace deal. With their tacit agreement, Obama then makes a major policy speech spelling it out. “The sides won’t have to adopt the Obama vision,” Beilin explains. “It won’t be like the Clinton parameters of December 2000, which they had to accept or reject. It will simply be there to give them the confidence to negotiate over the interim settlement.”According to this scenario, once the interim settlement is agreed on and implemented, it will be followed by state-to-state negotiations on the remaining core issues with the Obama vision as a guide.FOR THE HARD-LINERS IN THE LIKUD AND THE coalition, the interim plan entails a dangerous handover of territory for very little in return. As soon as reports of Netanyahu’s new strategy surfaced, Likud hawks tried to preempt it by attacking Barak as its Machiavellian instigator and debunking the notion of land for peace, on which the two-state model is based. Minister Without Portfolio Benny Begin dismissed what he called “Barak’s ideas” as “delusional,” and Strategic Affairs Minister Moshe Ya’alon, who like Barak is a former IDF chief of staff, argued that it is dangerously naïve to think the conflict can be solved by territorial concessions when the real problem is a fundamental Palestinian refusal to come to terms with Israel’s existence.The hard-liners’ security fears were reinforced by the brutal murder on the West Bank settlement of Itamar of five members of the Fogel family on the Friday night of March 11. The parents and three of their six children, aged 10, 4 and three months, were found dead in their beds with multiple knife wounds and their throats cut.The government announced that it would authorize the building of 500 new apartments in response. “They murder, we build,” Netanyahu declared during the shiva, the seven-day mourning period.The statement, meant to express sympathy with the settlers, earned the prime minister scathing criticism from both left and right. Settlers complained that it made it seem as if building was a punishment for Palestinian terror, not an inherent right. Left-wingers charged that it seemed to suggest that killing was the Palestinian norm, rather than the long period of calm achieved at least partly through the Palestinian Authority’s impressive control of law and order. And political opponents on both sides of the spectrum said it showed once again that Netanyahu had no real policy, saying only whatever he thought his interlocutor of the moment wanted to hear.Indeed, given Netanyahu’s checkered record, it is still too early to gauge whether he is serious about peacemaking or simply playing for time, balancing contrary pressures off against each other, as many in the international community believe him to be doing. With Barak pressing one way and the hard-liners the other, Netanyahu remains profoundly torn about his new peacemaking initiative. More than two years into his term and with little to show on the peace front, the onus is on him to prove that this time he means business.