The Palestinian Bid for U.N. Recognition: What Can Israel Do?

Ilkka Uimonen / Polaris

Where others see adversity, Israeli parliamentarian Tzipi Hotovely sees opportunity. The decision by Palestinian Authority President Mahmoud Abbas to sidestep further statehood negotiations with Israel and go straight to the United Nations may be a poke in the eye for the Jewish state, but Hotovely, a member of Prime Minister Benjamin Netanyahu’s Likud Party, says it’s a chance for Israel to take unilateral action of its own. In response to the Palestinians’ bid for full U.N. membership, she’s urging her country’s government to start formally annexing Jewish settlements in the West Bank. “It was a mistake not to extend Israeli [sovereignty] over the settlements long ago,” she says. “Now the mistake can be fixed.”

When Abbas formally takes his request to the U.N. this week, Israel’s response will shape the future of the Middle East. Hotovely and other hardliners in Netanyahu’s government intend to make the Palestinians regret having ever heard of the U.N. But other members of Israel’s ruling coalition say they’re waiting to see the precise wording of the resolution—whether it stipulates the borders of the Palestinian state, for instance—before taking a position. Their caution is understandable: as the U.N. debate proceeds over the coming weeks, any punitive measures by Israel would likely make it harder for the Palestinian Authority to govern. And given how deeply entwined the Israelis’ and Palestinians’ fortunes are, such retaliation would almost surely rebound on the Jewish state. “It’s hard to see how this ends well for either side,” says political analyst Yossi Alpher, co-editor of the Middle East issues site

The simplest and most obvious form of punishment would be to squeeze the Palestinians financially. Almost half of the Palestinian Authority’s roughly $3 billion budget comes from tax revenues collected on its behalf by Israel, mostly at the Israeli ports and border crossings where goods are shipped into and out of the Palestinians’ territory. When Israel withholds those funds (as it did earlier this year to punish Abbas for reconciling with the militantly anti-Israel Hamas organization), the PA’s day-to-day fiscal operation quickly starts to unravel. The approach is believed to have support among top members of Netanyahu’s cabinet, including Finance Minister Yuval Steinitz and Foreign Minister Avigdor Liberman, who warned last week that a Palestinian request for U.N. recognition would bring “severe and harsh consequences.”

The trouble is that in weakening the PA, Israel would risk strengthening Hamas—or worse yet, creating a power vacuum. Once a militant breeding ground, the West Bank has evolved under Prime Minister Salam Fayyad’s management into a hub of stability and economic growth—8 percent last year—underpinned by daily coordination between Palestinian and Israeli security officers. Suicide bombers from the occupied territories have carried out only two attacks in Israel since 2007, compared with scores in previous years.

The Israeli military wants desperately to maintain its security arrangement with the Palestinians. In closed meetings over the past year, the Army’s top brass has appealed to Netanyahu’s government not to undermine the PA, officials familiar with the discussions say. And destabilizing Abbas might not require much of a shove. A World Bank report last week warned that the Palestinian Authority is already facing a fiscal crisis, and earlier this summer the PA had to withhold paychecks for 160,000 civil servants, the breadwinners for about a quarter of the Palestinian population. “The problems are accumulating even without any Israeli steps against the PA,” says economist Samir Abdullah, who directs the Palestine Economic Policy Research Institute. “If Israel suddenly stops transferring the revenues, the Palestinian Authority will simply collapse.”

Officials in Washington are fully aware of the PA’s precarious situation. Nevertheless, cutting U.S. aid to the Palestinians may be the only area of agreement between Republicans and Democrats in Congress these days. More than a third of the Palestinian budget comes from foreign aid, including hundreds of millions of dollars from the United States, and back in July the leaders of the House Foreign Appropriations Subcommittee, chairwoman Kay Granger (R-Texas) and ranking member Nita Lowey (D-New York), sent a letter to Abbas warning him against seeking U.N. recognition: “Current and future aid will be jeopardized if you abandon direct negotiations and continue your current efforts.” Speaking to Newsweek, House Foreign Affairs Committee chair Ileana Ros-Lehtinen (R-Florida) sums up the broad consensus on the Hill: “I don’t think elevating the Palestinian status at the U.N. helps us get to the peace negotiations at all.”

In fact, when it comes to aid cuts, Congress may be even more zealous than some prominent figures in Washington’s pro-Israel circuit. David Makovsky, a senior fellow at the Washington Institute for Near East Peace, believes “there should be a price” in U.S.-Palestinian relations for going ahead with the U.N. move. But appearing before Congress last week, he warned against reflexive moves that might endanger Israel. “If congressional aid to the Palestinian Authority is suspended and Palestinian security officials engaged in this security cooperation go unpaid, the risk of terror attacks against Israel will grow,” he told the House Foreign Affairs Committee. “So who pays the price for such a cutoff? Let us not kid ourselves. We know what the consequences will be.”

If nothing stops Abbas’s U.N. bid, will Israel annex parts of the West Bank, as Hotovely urges? Twice since the Six-Day War, Israel has declared sovereignty over territory it captured from the Arabs, effectively annexing East Jerusalem in 1967 and the Golan Heights in 1981, and supporters say the world eventually accepted the Israeli expansion. “We can explain to people that the Palestinians were just unwilling to compromise and so it was time to do this,” Hotovely says.

Nevertheless, annexation now would almost certainly lead Israel into a major confrontation with the Obama administration, and could well ignite another Palestinian uprising. Political analyst Alpher says Netanyahu would consider it only if Abbas really pushes matters—for example, by using the PA’s upgraded U.N. status to challenge Israel at the International Court of Justice. “In that case, [Netanyahu] might try annexing one settlement, and hope that Obama is too caught up in his reelection campaign to respond.” There’s plenty of opportunity—for disaster.

With Daniel Stone in Washington