EA Exclusive: Israel Unravels Obama's "Grand Design" for the Middle East

On Monday, Benjamin Netanyahu had a chat with President Obama. We wrote at the time, "The very public refusal of the Israeli Prime Minister [to accept separate Israeli and Palestinian states] is likely to damage, if not sink, far more than the American position on Israel-Palestine. The bigger casualty may be Obama’s strategy towards the Middle East and the Islamic world."

We wrote too soon. What happened after Netanyahu left the White House--- according to Israeli media, unnoticed by most US outlets --- is even more important.

President Obama, contrary to our earlier assessments, may have had a grand plan to offer on 4 June in Cairo. And Israeli officials, publicly and privately, have spent the last 96 hours ripping that plan apart.

The first revelation came on Wednesday in the Hebrew-language newspaper Yediot Arhonot. A report, summarised by the English-language Jerusalem Post, claimed that the Obama Administration was preparing the proposal of "a demilitarized Palestinian state, with east Jerusalem as its capital, within the next four years....[The] independent, democratic and contiguous Palestinian state would not have its own army and would be forbidden from making military agreements with other states, in order to provide for Israel's security." Palestinians would give up their claim of a "right of return" to land previously held in Israel, with Europe and the US arranging compensation for refugees.

The newspaper, citing Palestinian sources, claimed that the plan was developed in recent talks between President Obama and King Abdullah. There would also be wider talks with Syria and Lebanon, and an effect to get a general agreement between Israel and Arab States.

Some of Yediot Arhonot's information is shaky. There is an inconsistency between East Jerusalem as a Palestinian capital and the paper's later assertion of Jerusalem as an international city, and Abdullah's meetings in Washington were to brief him as an emissary for the plan. Still the revelations, when matched up to the diplomacy of Obama officials and allies like Abdullah and Egyptian President Hosni Mubarak in recent weeks, make sense.

Most importantly, Israeli officials believe this is a possibility. That is why, on the plane back from Washington, Netanyahu advisors told reporters that Obama's two-state plan was "childish" and "juvenile". (I first read this news on Wednesday, again via Yediot Arhonot; it was later picked up by the Associated Press, although I saw no mention of it in US newspapers or television.) Far from contradicting those advisors, the Prime Minister --- speaking on Jerusalem Day, which commemorating the Israeli takeover of the city in the 1967 Six-Day War --- declared yesterday, "Jerusalem was always ours and will always be ours."

Netanyahu has made other, balancing manoeuvres. He held out the prospect of renewed discussions with Syria, although he pointedly added that there must be no preconditions, such as a Syrian demand for the return of the Golan Heights. Israeli forces destroyed an illegal settlement yesterday.

These, however, are only sidesteps as Israel re-stakes its position both against specific US demands and the general Obama plan. On Wednesday, Secretary of State Hillary Clinton renewed Obama's call for a halt to Israeli expansion, putting it in stronger terms, ""We want to see a stop to settlement construction - additions, natural growth, any kind of settlement activity - that is what the president has called for." The removal of one illegal settlement could not cover up the resounding silence of the Netanyahu Government to Clinton's demand.

More importantly, the Obama Administration appears to be stuck --- in the face of far-from-subtle Israeli opposition --- on how to re-shape the grand design for a Palestinian state and Arab-Israeli agreements. Having found a way to exclude Hamas from the "engagement", Obama has been unable to bring Netanyahu on board.

Which means --- with 13 days to the Cairo speech --- that Israel has sabotaged Plan A. Is there any prospect of a Plan B?