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Israeli-Palestinian Relations Since the Gulf War

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William L. Cleveland

From A History of the Modern Middle East. 2nd edition
© 2000, Westview Press
With the permission of Perseus Books Group All rights reserved.

The Road to the Oslo Peace Accords: The Madrid Conference of 1991


The effect of the Palestinian intifada on Israeli society, the dominance ofU.S. power in the world, and the election of a Labor government in Israel formed part of a series of interconnected developments that contributed to a stunning breakthrough in Palestinian-Israeli relations. In the aftermath of the Gulf War, the Bush administration embarked on an extensive effort to achieve a resolution of the Arab-Israeli conflict. Washington had doubtless promised its Arab coalition partners that it would address the issue once the war with Iraq was over. Moreover, the logic of the liberation of Kuwait -- that a people had the right to live free from occupation -- offered a compelling reason to seek a settlement of the Israeli-Palestinian question. The proposed instrument of conflict resolution was an international peace conference jointly sponsored by the United States and the Soviet Union. The historic gathering opened in Madrid on October 30, 1991. In the short term, the Madrid Conference was more about public gestures than substantive discussions, and subsequent events have tended to relegate it to thebackground. However, the gathering at Madrid should not be overlooked;it was a significant step in bringing Israelis and Palestinians to a new level ofcontact. It brought together, for the first time, representatives from Israel,the Palestinian community, and the neighboring Arab states that had not yetrecognized Israel's right to exist -- Jordan, Lebanon, and Syria -- to discusspeace. And the negotiating sessions that it set in motion conferred a sense ofnormalcy to the practice of Israeli and Palestinian spokespersons engaging inface-to-face meetings. The Madrid Conference also focused attention onthe Palestinian delegation, which was composed of "insiders," that is, Palestinians who lived and worked in the occupied territories. They presentedtheir case with clarity and in tones of relative moderation and made the aging PLO exile leadership appear politically stale and out of touch with the realities of life in the occupied territories.

Between December 1991 and spring 1993, the Arab and Israeli delegations met several more times in Moscow and Washington. In these post-Madrid meetings, the sticking point was, as it had been in all discussions since 1967, Israeli settlement policies in the occupied territories. But this time, the U.S. administration adopted a firm stance against continued settlement activity.

In 1990, in the midst of the intifada and on the eve of the Gulf War, Israel embarked on the most ambitious program of settlement construction in the occupied territories it had yet undertaken. The settlement program continued during the Madrid conference and the subsequent peace talks. In the opinion of the Bush administration, Israel's provocative actions in the occupied territories constituted the main obstacle to a successful outcome of the peace process. Israel's refusal to heed U.S. requests to freeze the settlements embroiled the two countries in a bitter dispute that finally drove President Bush to take a step that no U.S. president before him had taken: He linked U.S. financial aid to Israel to Israel's willingness to curb the settlements inthe West Bank and Gaza Strip. The policy that Bush adopted was not new- -- every U.S. administration since 1967 had expressed its opposition to Israeli settlements in the occupied territories -- but Bush was the first to enforce that policy.

The U.S.-Israeli dispute reached a climax in February 1992, when the United States announced that it would not approve a $10 billion loan guarantee to Israel unless Israel agreed to a freeze on the construction of all settlements in the West Bank and the Gaza Strip. Israel's Prime Minister Shamir was defiant and insisted that his government would never back down in its determination to populate the occupied territories with Jewish settlers. Shamir's uncompromising attitude caused the most serious strain in U.S.--Israeli relations since Israel's formation.

Despite Shamir's defiant rhetoric, Israel badly needed the U.S. loan guarantee so that it could borrow money on the international markets to help defray the costs of absorbing the new wave of Jewish immigration from the former Soviet Union. Israel planned to use the borrowed funds for housing construction and other measures required by the immigrants. Without the loans, Israel could not afford to finance its settlement policies in the occupied territories and at the same time prepare for the influx of Soviet immigrants.

All of the controversies associated with Shamir's government received intense public scrutiny during the buildup to Israel's national elections scheduled for June 1992. The elections pitted Shamir's Likud bloc against a Labor Party led by former Prime Minister Yitzhak Rabin. In a bitterly fought campaign, Shamir stressed Likud's commitment to Greater Israel, whereas Rabin expressed a vague but conciliatory position on the future of the occupied territories and pledged to restore friendly relations with the United States. The Israeli public rejected Shamir's ideological hard line and gave Rabin's Labor Party an overwhelming victory. The election results created an intriguing historical irony: Twenty-five years to the month after Rabin, as chief of staff of the Israeli army, commanded the campaign that captured the West Bank and Gaza Strip, he was given a popular mandate to negotiate a resolution of the problems caused by Israel's continued occupation of those same territories.

Rabin was no dove (as defense minister he had recently been charged withcrushing the intifada, but he was willing to support measures designed torestore good relations with the United States. Immediately after forming agovernment, he announced a freeze on all settlements that were plannedbut not yet under construction. However, he also stated that all buildingscurrently under construction, even if only at the excavation stage, would becompleted. That was far from the total freeze demanded by Washington,but it was enough to persuade the Bush administration that it should encourage Rabin's moderation. When the new Israeli Prime Minister made his first state visit to the United States in 1992, President Bush announced the authorization of the contentious $10 billion loan guarantee. In taking this action, the United States surrendered some of its financial leverage over Israel without gaining a complete freeze on Israeli settlements.

During his first weeks in office, Rabin proclaimed his willingness to meetpersonally with Arab heads of state and, in a departure from long-standing Israeli policy, indicated that his government would not be averse to negotiating with Palestinians who were directly affiliated with the PLO. Palestinian leaders showed cautious optimism toward the new Israeli government, but they reserved judgment on its policies until it produced concrete proposals for compromise on the West Bank and Gaza Strip. After twenty-five years of Israeli occupation and five years of Palestinian rebellion, the gap between Israeli policy and Palestinian aspirations was as wide as ever.

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