On February 16, Palestinian Authority President Mahmoud Abbas told a group of 300 left-wing Israeli students that he would not recognize Israel as a Jewish state and he ruled out any Jews remaining in a Palestinian state. Of course, Israeli Prime Minister Netanyahu has made recognize a number one condition for a settlement. Obviously, Abbas was telling them an impasse had been reached. What does this mean?

A new dimension has appeared that could apply significant pressure on Israel to settle. The Dutch pension giant PGGM divested their business ties with Israel’s five largest banks. Other major European investment funds announced they were considering following suit. Norway’s largest pension fund KLP indicated it had reservations linked to the West Bank settlement. These are only some of the dark clouds beginning to settled over the agreement process. Israel’s major hi-tech industry could become a target of such aggressive financial actions.

Do sanctions work? Ask South Africa that ignored the threat until it sank their boat. Ask Iran that stumbled to the negotiating table after the USA and its allies tightened their economic boycott and froze their assets. Yes, sanctions can become monstrous.

Israel’s continual expansion of settlements across the green line (the debated border with the Palestinians) has been bad PR with much of the rest of the world. Moreover, many question whether Netanyahu is serious about negotiating a settlement and see him as intentionally dragging his feet. The weight of public opinion in those holding these view has shifted behind the Palestinians.

On the other hand, American Secretary of State John Kerry has been working on a trade-off deal in which the Palestinians would recognize Israel and Israel would offer East Jerusalem as the Palestinian capital. The ultimate goal would be to reach a final agreement by the end of 2014. Of course, such an agreement would be painful and difficult for both sides, but that is how these matters usually end.

Kerry’s position is that such a settlement would be a win-win for both sides, bringing great economic rewards for both countries. I have been in Jordan both before agreement was reached with Israel and many times afterward. The dramatic difference is obvious. Jordan has greatly prospered. No question that this would be true for the Palestinnians.

Christian evangelical groups have resolutely stood behind Israel in these conflicts and their influence has been significant. However, in the world of politics and economics, the big bucks swing the pendulum. If an economic boycott is pressed against Israel, the game will be changed. The next few months will prove crucial.

Probably, the ball is in Bibi’s court. Caught in his own political squeeze between the right wing and his current government coalition, Netanyahu is faced with fierce career shaping pressures. The consequences for Israel are huge.

Can Abbas change his mind about recognizing Israel? If not, then the weight of economic pressure could well swing in the other direction. The problem is that the Palestinian’s economy is zero compared to Israel.

Stay tuned.

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Filed under Israel, middle east, Muslims, Palestinians

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