UPDATED Israel-Palestine: Netanyahu's New Condition: "Israeli Presence in West Bank"

UPDATE 0915 GMT: Varying responses on Thursday to Netanyahu's statement. Chief Palestinian Authority negotiator Saeb Erekat declared that Netanyahu is working to end the possibility of a two-state solution: "Netanyahu calls for the Palestinians to resume peace talks, he is effectually leaving the Palestinians nothing to negotiate about." Palestinian Authority leader Mahmoud Abbas's spokesman, Nabil Abu Rudeineh, said his leadership "rejects the presence of any Israeli soldier within the borders of the future Palestinian state".

There was also criticism within Israel. Meir Sheetrit, a member of Parliament of the opposition Kadima Party, said, "Netanyahu was ruining any chance for negotiations and is proving, again and again, that he is not interested in peace. There is no way that the Palestinians would agree to such an offer, and whoever raises it should negotiate with himself."

On Wednesday, Prime Minister Benjamin Netanyahu not only harshly criticized the Palestinian Authority's "pre-conditions" for re-starting negotiations but set a new condition for a future peace agreement. Netanyahu said that Israel must have a presence in the West Bank to stop rockets from being imported even after an accord is signed.


Referring to the Gaza Strip and southern Lebanon, Netanyahu said: "We are surrounded by an ever-growing arsenal of rockets placed in the Iranian-supported enclaves to the north and to the south" and added, "In the case of a future settlement with the Palestinians, this will require an Israeli presence on the eastern side of a prospective Palestinian state."

Netanyahu was critical of the authority of Palestinian Authority leader Mahmoud Abbas. Netanyahu said that "Palestinians are climbing up a tree", as Israelis are calling them to the negotiation tent, by "piling [on] pre-conditions" such as "the refugee problem, security concerns or the Jewish state matter."

Israel-Palestine: An Economic Platform for the Peace Process?
Israel-Palestine: US Envoy Mitchell Asking for Temporary Halt to Settlements

Obama Reflects: Domestic Problems, Wars Abroad, and the Difficult Middle East

In interview with Time Magazine this week , Barack Obama faced up to disappointments at home and abroad

After covering his health care proposals and underlining the importance of financial reform, Obama turned to foreign policy. He talked of the "Administration taking out more al-Qaeda high-level operatives". He admitted that the decision to increased the number of troops in Afghanistan was one of the toughest he had ever made, adding that his Administration is doing a good job in getting troops out of Iraq even though it is not an easy process. On Iran, Obama reiterated the dual-track approach of engagement and sanctions.

Perhaps the most striking Obama reflection, however, was on the Israeli-Palestinian peace process: "The Middle East peace process has not moved forward. And I think it's fair to say that for all our efforts at early engagement, it is not where I want it to be."

The interview in full:

Klein: I talked to a bunch a folks — friends, my kids — what should I ask the President? It was almost unanimous: the thing that people remarked on is just how crazy things are. How difficult it is. Focused on the health care process — what have you learned from that process, what's your takeaway? How is it going to influence the rest of your presidency?

Obama: Look, even if we hadn't tackled health care, this year was going to be a tough year. During the transition period last year, it became apparent very quickly that we were going to have to make some fast, tough and in some cases politically unpopular decisions to make sure the financial system didn't melt down and we did not spiral into a second Great Depression. We made those decisions and executed them, and I am absolutely convinced that had we not acted the way we did that the situation would've been far worse.

Having said that, we've still lost 7 million jobs over the last two years. People who are out of work or have seen their 401(k)s diminish or their hours reduced understandably are frustrated when they see big banks getting money for a problem that they helped cause. And when you see the unemployment rate spike to 10%, it was inevitable and justifiable that the political climate would become very difficult. So health care was done against the backdrop of what was already going to be a tough political climate.

Having said that, there is no doubt that the process for doing big, important things in this country has become far more difficult because of the way Congress is working right now. I came in expressing a strong spirit of bipartisanship, and what was clear was that even in the midst of crisis, there were those who made decisions based on a quick political calculus rather than on what the country needed. The classic example being me heading over to meet with the House Republican caucus to discuss the stimulus and finding out that [House minority leader John] Boehner had already released a statement saying, We're going to vote against the bill before we've even had a chance to exchange ideas.

So I understand the strategy that the Republicans decided to pursue. There is a good political argument for it. I don't think it has served the country well, and it hasn't served the process well. Health care then became caught up in that process. And I think that what's clear is that if you have an opposition party that is determined to say no [and] sees their political survival dependent on gridlock, things can get tied up in knots. So that's the second point.

And the final point is that health care was going to be hard in any environment with any Congress. There's a reason why seven Presidents and seven Congresses have failed to do it. It is a massive undertaking. It involves every special interest imaginable. The American people know that the status quo isn't working, and yet sometimes the devil you know is better than the devil you don't. So it is very easy to caricature any efforts at reform as negative.

Now, I've given you three big reasons why this was so tough. Having said all that, I think we're going to get it done. And I think this is going to be a framework that allows us to genuinely say that every American is going to have access to quality, affordable health care. And that people who have health care have security in the coverage that they've purchased. That is an enormous accomplishment, and the thing that I'm most proud of is that not only will we have dealt with access, not only will we have dealt with accountability when it comes to insurance companies, but when all is said and done, this offers our best chance at significant deficit reduction, of any of the other options that are out there.

Klein: But it comes with a high opportunity cost, given the political hot spot of the moment. Say you're sitting in Belmont, Mass., or Needham, and you're watching the unions get their deal and Nebraska get its deal and everybody else get their deals. What would you say to that person, who probably voted for you because you promised change and — I was just reading David Plouffe's book [The Audacity to Win] — the emphasis on going after the special interests? But you've made deals with all the special interests to get this done.

Obama: Well, I'll tell you what, Joe. What I would say is, If you look at this bill when it is said and done — not where it was coming out of one committee or where it was coming out of another committee, but the bill that I actually sign. I think what you're going to see is that there have been very few instances where something of this magnitude had relatively few provisions in there that weren't for the broad public. Getting something through 535 members of Congress involves some trade-offs.

When I promised change, I didn't promise that somehow members of Congress weren't going to be looking to try to get a project in their district or help a hospital in their neighborhood. What I promised was that this White House was going to constantly be pursuing the people's interests. And this bill will pass that bar by a mile.

One last thing I'll say about this: There is no doubt that politically speaking, having this intense a focus on the sausage-making process in Congress is never helpful.

Klein: But it's impossible to avoid.

Obama: It's impossible to avoid if you're trying to do big stuff. Now it is even more difficult in a 24-hour news cycle. I have no idea what Lyndon Johnson had to do to get the Civil Rights Act done. Or if I have an idea, it's because I read Robert Caro's biography 40 or 50 years later. So that process is one that people have legitimate concerns about. And one of the things that I think is very important for us to do moving forward on financial reform, on energy legislation, on the jobs package that we're going to put forward, is we've got to do a better job highlighting what's good in these measures.

But I also think that I have to make sure that our team doesn't lose sight of our broader message. Which is that the American people have a right to see what's going on, understand what's going on. That there are some things you can compromise, but there are some things you shouldn't compromise. If you're dealing with the interest groups here in Washington, don't get too comfortable. That's something you have to constantly reinforce and remind.

Klein: What do you mean, "Don't get too comfortable"?

Obama: Don't get too comfortable in the sense that there's a culture in this town, which is an insider culture. That's what I think people outside of Washington legitimately can't stand. A sense that they're not being heard. I think we've done actually a pretty good job of working in this town without being completely consumed by it. But from the outside, if you're just watching TV and all you're hearing about is the reports, people may get the false impression that somehow [the insiders] are the folks we're spending more time listening to.

In fact, I spend most of my time listening to the people who — through their letters or through town-hall meetings or in my travels throughout the country — are telling me the stories of hardship and heartache. Losing their house because they don't have health insurance. That's what moves us here, but that's not always what comes across in the day-to-day combat that we're going through.

Klein: Well, it seems obvious that when you get through with this bill, you're going to be turning to some of the things that upset people and the perception that you're at one with Wall Street, at one with Big Government. And obviously that means financial reform and also I think budget and infrastructure are going to be big things this year. But let me ask you first about the financial reform part of it. One of your advisers, Paul Volcker, has said that none of the financial instruments that have been developed over the past 20 years have added anything to our economy. And I remember you and I talking during the campaign about how the economy was going to have to change. Do you agree with Volcker?

Obama: Well, what I agree with Paul about, and I agree with him on a lot of things, is that sophisticated financial tricks and fancy hedge instruments, etc., aren't valuable just because they're making somebody $100 million worth of bonuses. And I think it is very important that we understand first principles when it comes to our financial sector. The role of the financial sector is to raise capital for businesses that actually make things and provide services to people. To help grow this economy. They should make a profit doing it.

I think the fact that we have a diverse and sophisticated and innovative financial marketplace is a positive. It gives more businesses more tools to raise capital for good ideas, entrepreneurs to start businesses. But when you see more and more of the financial sector basically churning transactions and engaging in reckless speculation and obscuring underlying risks in a way that makes a few people obscene amounts of money but doesn't add value to the economy — and in fact puts the entire economy at enormous risk — then something's got to change.

Now, I want to go back to your initial premise of us being close to Wall Street. We knew that this would be a consequence of us managing TARP. It was inevitable. One of the things that we have to do is just remind people that having inherited this financial disaster as well as the TARP structure, this thing was managed in as prudent a way as any financial-crisis management has ever been managed.

Klein: I think they'll give you that.

Obama: And what we're now doing, for example, on the fee on these big financial institutions is not designed to punish; it's just designed to meet what was in the legislation originally, which was: This was not going to cost taxpayers a dime's worth of money. Something, by the way, that nobody believed, but something that we may actually be able to deliver on.

With respect to financial reform: This was always one of our top agendas. I started talking about this during the campaign, and I made a major speech about how we're going to move forward [last] March. My hope had been that health care wouldn't take this long. And that we would've teed up both energy and financial reform before the end of the first year. If there's one thing I have learned — you asked earlier about something I've learned about this process — it always takes longer than you think.

Let me just close on financial regulatory reform. This is going to be a top priority. You are already seeing the big banks and some of these other interests lining up in opposition to basic core reforms, like making sure that consumers know what the fine print is when it comes to their credit cards or their debit cards or their mortgages. You're already seeing them resisting the idea that they should have a regulatory regime that isn't full of loopholes.

And my attitude is that this is a fight that is entirely consistent with what we've done last year, it's entirely consistent with who I am and how I campaigned, and it's a fight that I welcome. And it'll be interesting to see how some who have tried to exploit legitimate anger at the big banks this year by trying to put it on us are going to position themselves when in fact they're going to want to protect all these financial institutions from the regulations that will prevent the kind of disaster that we've seen over the past couple of years.

Klein: They're going to have to vote yea or nay, aren't they?

Obama: Right.

Klein: During the campaign, the one program that you proposed that everybody from the left to the right loved was the infrastructure bank. And it seems to me that was another thing that kind of fell by the wayside this year.

Obama: You're wrong about that. Well, you're right that people liked it.

Klein: But that's the good government fight. That's the fight against the appropriators in Congress.

Obama: You're absolutely right, and look, one of the things we've got to do better is to tell the story of what was in the [American Recovery and Reinvestment Act]. That was the largest investment in research and development in our history.

Klein: And it's coming online this year?

Obama: And it's moving. One constituency that I know is happy with me are scientists, inventors, entrepreneurs who are in the high-tech sectors, because they are seeing already the incredible investments that are happening that are going to have 20-, 30-year payoffs. It was the biggest investment in education. And it wasn't just the usual formulas. Some of it was helping to make sure teachers didn't get laid off, but what [Secretary of Education] Arne Duncan is doing with our Race to the Top Fund — we've already had 48 states react by implementing reforms that had been resisted for years. And you're starting to see the teachers' unions really think through how can they be a partner in the process of reform. And when it comes to infrastructure, not only was it the biggest investment in infrastructure since the Eisenhower Interstate Highway System, but we actually introduced the infrastructure-bank concept in the Recovery Act.

Now, you are absolutely right that this seed that we've planted is going to have to be carefully nurtured. And for readers who aren't familiar, the basic idea is that we should not only fund the usual repaving of highways — although that's important — but we should also think, What's the 21st century infrastructure that's out there? And those decisions should be made by people who really have clear ideas about the kind of infrastructure we're going to need. As opposed to it being determined solely by, you know, "Who's the chairman of the transportation committee from what state?"

But I am sensitive to the fact that Congress has its prerogatives. We're trying to nudge them in the direction of rationalizing our transportation knowledge — particularly in a time of fiscal constraint. And by the way, that's a principle that's going to apply, Joe, to all of government. You mentioned earlier the pivot that we have to make. It's not driven by politics. We had to do what we had to do last year, whether it was politically popular or not. Now that we have begun the recovery process and the economy has stabilized, we have to deal with our long-term fiscal problems, whether it's politically popular or not. And some of those decisions are going to be just as unpopular.

But part of that pivot, then, is to say, "How are we going to make sure that we squeeze every ounce of value out of every dollar that we spend?" We began that process with Pentagon reform. And the victories that [Secretary of Defense Robert] Gates helped win are ones that this town completely discounted when we started. We are scrubbing the budget once again to make sure that every program that we're funding actually has some justification — it actually works. Yesterday we had a whole bunch of CEOs and innovators here to talk about modernization of government. The infrastructure bank falls in that broader category of, How do we make these dollars work better? Because we're going to have to make some very difficult spending decisions moving forward.

Klein: It seems to me that these are ways — the Wall Street battle — to start building trust in a small way. People have had 30 years of propaganda telling them that government doesn't work.

Obama: And my theory, Joe, has always been, A) A lot of people's skepticism is entirely justified. B) There's no reason that government should inherently be inefficient. C) At a time when we've got such enormous problems and such limited resources, people are going to be looking to government for help. But they want to make sure that their dollars are well spent, because those are the same decisions that they're having to make in their own lives. They're looking for value. Whether they're shopping for a pair of jeans or they're going to a restaurant or they're buying a new car. And right now, they don't feel like they're getting good value out of their government.

Klein: Let me ask you one foreign policy question. My sense is that — just my own personal sense, but also from people I talk to — the overall conception of your foreign policy has been absolutely right. Necessary, corrective. Subtle, comprehensive.

Obama: We have a good team.

Klein: But there have been some problems in execution.

Obama: Well, I would not deny that, but let me say that given what's on our plate — and you know the list. I don't need to tick them off.

Klein: I've been to most of them in the past year.

Obama: I actually think that our execution has been sound as well. I'll give you the examples of where I think our foreign policy team has gotten the right strategy and has executed well even though the outcomes are still uncertain — because these are tough problems that aren't subject to easy solutions. I think that in Iraq, we are moving forward and on pace to get our troops out. It's messy, it's imperfect, but I think that our team has done a very good job managing that process.

I think in Afghanistan, as difficult as those choices were — and me sending in additional troops over the next two years was probably the toughest decision that I've made this year among a lot of very tough decisions, because it involved the lives of young men and women in uniform. We are monitoring very carefully how it's being executed. And I think that General [Stanley] McChrystal, General [David] Petraeus, [U.S. ambassador to Afghanistan] Karl Eikenberry and others are working double time to successfully implement this. I know that you've written, Joe, that there may be some questions in terms of pace of getting troops in. I can assure you that a fire is lit under them about making that happen.

Klein: That's one of the reasons I wrote that.

Obama: They want it to happen. And we are more or less going to be on schedule. We are probably ahead of schedule so far in terms of recruiting and training Afghans. Although I've said that we should set very modest expectations of what's sustainable to transfer to an Afghan government.

On Iran, one of our trickiest foreign policy challenges, we have held the international community together, both in our engagement strategy, but also now as we move into a dual-track approach. Which is, If they don't accept the open hand, we've got to make sure they understand there are consequences for breaking international rules. It's going to be tough, but I think the relationship we've developed with Russia will be very helpful. The outreach we've done to our traditional NATO allies will be very helpful. The work that we've done with China — including the work we've done with China to enforce sanctions against North Korea — will help us in dealing more effectively with Iran.

I mentioned North Korea — everybody was skeptical at the beginning of this year that we could get serious sanctions. Not only have we gotten serious sanctions, but they've actually been implemented. And finally — because this has been the area of most immediate concern — when it comes to counterterrorism, this Administration has taken out more al-Qaeda high-level operatives, has been more aggressive in pinning them down, not just in the border regions of Afghanistan and Pakistan, but also working with our international partners in places like Yemen and Somalia, than a lot of what's taken place previously.

Having said that, there's no doubt, as I said, that I think our intelligence failures in picking up [Nigerian terrorism suspect Umar Farouk] Abdulmutallab shows how much more has to be done. I think everybody understands that this is an area where we have to be relentless regardless of what else is on our plate. The other area which I think is worth noting is that the Middle East peace process has not moved forward. And I think it's fair to say that for all our efforts at early engagement, it is not where I want it to be.

Klein: Why is that? My sense of it is that [U.S. special envoy to the Middle East George] Mitchell spent a number of months negotiating a settlement deal and saw some progress from the Israelis and kind of got blinded by that, because he didn't see that it wasn't sufficient progress for the Palestinians.

Obama: I'll be honest with you. A) This is just really hard. Even for a guy like George Mitchell, who helped bring about the peace in Northern Ireland. This is as intractable a problem as you get. B) Both sides — the Israelis and the Palestinians — have found that the political environment, the nature of their coalitions or the divisions within their societies, were such that it was very hard for them to start engaging in a meaningful conversation. And I think that we overestimated our ability to persuade them to do so when their politics ran contrary to that. From [Palestinian Authority President Mahmoud] Abbas' perspective, he's got Hamas looking over his shoulder and, I think, an environment generally within the Arab world that feels impatient with any process.

And on the Israeli front — although the Israelis, I think, after a lot of time showed a willingness to make some modifications in their policies, they still found it very hard to move with any bold gestures. And so what we're going to have to do — I think it is absolutely true that what we did this year didn't produce the kind of breakthrough that we wanted, and if we had anticipated some of these political problems on both sides earlier, we might not have raised expectations as high. Moving forward, though, we are going to continue to work with both parties to recognize what I think is ultimately their deep-seated interest in a two-state solution in which Israel is secure and the Palestinians have sovereignty and can start focusing on developing their economy and improving the lives of their children and grandchildren.

Palestine: Abbas to US "Represent Us in Border Talks with Israel"

According to Haaretz, an aide to Palestinian Authority leader Mahmoud Abbas has claimed that the PA has asked Washington to represent Ramallah, replacing Palestinian negotiators in border talks with Israel, since the Netanyahu Government has refused to accept Abbas's demand of a total halt to Israeli settlements in Palestinian territory. The aide alleged that U.S. negotiators would be given clear parameters: the Palestine state would have to be established in the territories Israel captured in the 1967 Six-Day War (the West Bank, Gaza and east Jerusalem), but the Palestinians would agree to swap up to 3 percent of the territory to accommodate some Israeli settlements.

It is reported that there has been no official response from Washington, but Abbas is hoping to discuss the proposal during U.S. Mideast special envoy George Mitchell's visit this week.

Israel-Palestine: Netanyahu’s New Condition “Israeli Presence in West Bank”
Israel-Palestine: An Economic Platform for the Peace Process?
Israel-Palestine: US Envoy Mitchell Asking for Temporary Halt to Settlements

Turkey-Israel: A High-Ranking Objection to the "Strategic" Relationship

On Tuesday, speaking at the Foreign Affairs Committee of the Knesset, Israel's military intelligence chief, Maj. General Amos Yadlin, said that Ankara's turn away from secularism and toward more radical Islam had led to a rift between two countries, "They are currently in the midst of a fundamental process of moving further away from the secular Ataturk approach, closer to a radical approach." And, referring to the mutual references of a "strategic relationship" during Defense Minister Ehud Barak's visit to Ankara, Yadlin added, "Turkey no longer needs a close relationship with Israel. There are still joint interests, but not the kind of close relationship today as there was in the past."

Israel-Turkey: Another Visit for the “Strategic” Relationship

Israel-Palestine: US Envoy Mitchell Asking for Temporary Halt to Settlements

U.S. Mideast special envoy George Mitchell, coming to the region on Wednesday for four days, is reportedly raising the Palestinian Authority's proposal to re-start negotiations . This proposal, modifying Mahmoud Abbas's previous demand for a total halt to construction of Israeli settlement beyond 1967 borders, asks the Israeli side for a freeze in the West Bank and also in the East Jerusalem for three to six months.

Israel-Palestine: An Economic Platform for the Peace Process?

However, senior Israeli officials say Prime Minister Binyamin Netanyahu will not agree to this demand. "This is not going to happen; it goes against everything Netanyahu says and believes in," one source in the Prime Minister's Office said. This follows Sunday's statement by Foreign Minister Avigdor Lieberman that Israel had emptied out its "arsenal of gestures" and was now waiting for concessions from the Palestinians.