This is the first part of a two-part series. Read part two here.
The Israel-Hamas war is dangerous for many reasons, but most significantly because neither side has a sustainable political objective. Mired in narratives of messianic conquest of promised lands, and of rights of return to the historic homeland, neither Israel nor Hamas has a vision for the resolution of their conflict except the expulsion and/or annihilation of the other.
Making this collision of non-negotiable aspirations particularly threatening is the rather precarious position of leadership cadres on both sides who increasingly see the continuation of the war as a way to stay in power, given the almost unlimited access to weapons by both parties – the U.S. willing to re-supply the Israeli army and Hamas’ so-called “weapons industry” and suppliers holding out. Fighting, then, becomes an end in itself, a theatre for voicing aspirations, without groups in the respective communities having a stake in the fighting and a subsequent peace process.
Hamas on Oct. 7, 2023, by its brutal attack on Israel, killing 1,200 people, mostly civilians, took the great risk of making worse the already unbearable conditions under which Palestinians lived in Gaza, an area which the Israeli blockade since 2006 had turned into an open prison. Israeli response unleashed a genocidal process in Gaza killing upward of 23,000 civilians, destroying infrastructure including hospitals, and water supplies, blocking food, and aid, and threatening famine and the spread of diseases.
Hamas, an Islamic anticolonial organization seeking an end to Israeli occupation of Palestine, was at a political impasse. The leverage it acquired following the second intifada (2000-05) or the Palestinian uprising, had led to a split in the government of occupied Palestinian territories in Gaza and the West Bank. In the elections held in Gaza in 2006, Hamas won 44% of the votes and has held power since, while the West Bank was administered by the Palestinian Authority consisting of the former Palestine Liberation Organization (PLO). Israel also played a part in Hamas’ ascendancy to power, as it was seeking to temper the influence of the secular and Marxist PLO with Netanyahu even persuading Qatar to direct funds to Hamas.
Before Oct. 7, 2023, the support for Hamas in Gaza was declining. Could Hamas’ attack on Israel be a move to recover its former legitimacy in the eyes of Gazan Palestinians? Or was Hamas responding to an even more immediate threat of expulsion of the Gazan population under Israel’s far-right government?
No doubt, Israel’s Prime Minister Netanyahu and his extreme-right government saw in Hamas’ attack an opportunity to take direct action in Gaza. The stated objective of the military action in the Gaza Strip (40 km long and 6-12 km wide) was to annihilate Hamas.
Yet, at home, Netanyahu does not have the full backing, especially of Israeli elites and the opposition. The fact that Hamas could cross the border to attack Israel has shaken up the image of invincibility of the Israeli intelligence and army and of Netanyahu and his boast that he had Hamas under control. The economy will take a hit too: According to a survey by the Start-Up Nation Policy Institute in Tel Aviv, a large proportion of the Israeli army of reservists (350,000) work in the tech industries and the economy will feel their absence if the war is prolonged.
Is a solution to this tragic condition of the two states, Israel and Palestine, possible? The political and economic compulsions have changed.
The Oslo Accords – often a wishful imagining of a step in the direction of a two-state solution to the Palestinian plight – was based on UNSC resolutions recommending the end of Israeli occupation in the Palestinian territories of Gaza and the West Bank, recognizing them as self-governing entities under the Palestinian Authority. The political hope the Accords held out for a two-state solution took place in the context of an expanding global economy led by the U.S. and secured by American armies, with the promise of capital flows and investments to develop the Palestinian economy on its way to statehood. It was also an era of Western dominance, with U.S. allies like Israel and Türkiye, a NATO member in line for EU membership, firmly positioned in that alliance.
All this has changed dramatically since the 2000s as Israel, the poster child of the West, and Türkiye, the faithful ally of the West during the Cold War, are turning into significant regional actors in the highly fluid scene of world politics. In the present context of the Gaza war, the resistance of the Israeli administration to pressures from the Biden administration for a ceasefire in the face of mounting criticism in the U.S. of the genocidal process unleashed by Israeli bombings in Gaza as well as Israel’s success in having the U.S. veto a UNSC resolution for a ceasefire, suggest Israel is not an ally which the U.S. can dictate.
The Hamas attacks, therefore, may provide the Netanyahu administration with the opportunity to put an end to the Palestinian issue by dismissing the possibility of a Palestinian state, finalizing Jewish settlements in occupied territories, pushing the Palestinians out of Israel and into the Sinai from Gaza – or to any place which accepts them – and using the remainder as slave labour in a then “legitimately” enlarged Israel. If there is a world conjuncture which is supportive of such a “solution”, opposition in Israel will be marginal.
This will not be an overly cynical but a realistic assessment, if relations among the great powers were stable and if Western hegemony in Middle Eurasia were intact. Since this is not the case, multiple solutions including the two-state solution – as much a dead horse as it is – will be on the table, and both Hamas and Netanyahu will keep on fighting to be in the game. For Israel, the leverage it may have in the emerging power equations may require it to act more responsibly and to re-consider, for instance, its aspiration for the evacuation of Palestinians in relation to global concerns for immigration. For Hamas, the changing situation may mean that it reconsider its anti-colonialist, expulsionist position vis-à-vis Israel and choose between being in a position of a viable political party cooperating with other Palestinian groups in occupied territories to speak for Palestinians in the new power equation or condemn itself to annihilation through irrelevance in the new world.
Israel’s alliance with the West is increasingly one among its multilateral engagements. It is a high-technology partner for China in the context of its Belt and Road Initiative. Israel has normalized its relations with the Gulf states, and was in the process of forging an alliance with Saudi Arabia before the Gaza war as a bulwark against Iran, while securing markets for Israel’s high-tech war industries in this security-obsessed region. Israel also has economic relations with Egypt and Jordan as an exporter of gas to these countries – which may explain the rather subdued response of both Cairo and Amman to Israel’s continued bombing of Gaza.
Central Asia is within Israel’s reach too. Israel has a major economic presence in Azerbaijan. Alongside Kazakhstan and countries in West Africa, Azerbaijan provides Israel with oil. Israel has achieved independence through discoveries in the 2000s of offshore natural gas reserves in its Mediterranean coast. Presently two major oil fields, Leviathan and Tamar, provide the domestic market as also export markets in its immediate neighborhood, with a projected East Mediterranean pipeline connecting Israel’s reserves to southern Europe via Greece and Italy.
The status of the Gaza Marine field 36 km off the Gaza coast of the Mediterranean, is yet to be settled with Israel expressing concern that it may turn into a source of revenue for Hamas and with some confusion regarding who owns it – Royal Dutch Shell which acquired it in 2016, or the Palestinian Authority. Recently, the Biden administration has been exploring the possibility for Gaza Marine to provide a revenue stream for a future Palestinian state in the context of the realization of the two-state solution after the war ends.
In this context, the two-state-solution, even when sanctioned by reformed institutions of the international order, does not go beyond yearnings for a bygone dream of a past international order, amidst a reality of warfare and conflict. Nor can it go beyond short-term calculations of gains to be made from reconstruction or economic development of Gaza and the West Bank (which Türkiye would like to develop).
It is very difficult to imagine a young Palestinian state sustaining itself in the highly competitive and combative environment of the present Middle Eurasia. The failure of the Oslo peace process which was to give the start for the two-state solution, did not simply show the lack of support of both Palestinians and Israelis to the process. It also revealed the issues involved in state-making in a region subjected to colonial violations – communities divided, differences sharpened and turned against each other, reaction taking over reason. This is a picture we have seen in Afghanistan, in post-U.S. invasion Iraq, post-partition India, and given us the failed states of Taliban, present divided Iraq, of Pakistan. In occupied West Bank and Gaza, Israel stroked a religious opposition – which crystallised into Hamas and Islamic Jihad – against the PLO, secular and Marxist, in the process dividing the Palestinian community.
Under present conditions, any attempt at making a Palestinian state could, at best result in the creation of an ‘autonomous’ administrative unit. It may be realistic to assume that any such formation, its extent, who administers, who is responsible for its security, and the nature of that security, will be subject to Israeli consent and approval. In fact, Israeli ministers’ proposal for an arrangement in the occupied territories after the present war, approximated the creation of an administrative unit in Gaza and with security provided and leadership approved by Israel. The optimistic interpretation was a government of technocrats possibly coordinating investments from countries, and agencies approved by Israel. But on what kind of development or economy these technocrats would design for Gaza, the ministers remain mute. Somewhat along the lines of development and technocrats, recently a group of Palestinian economists, claiming a new economic realism, suggested that economic development under occupation may be a possibility, retracting from the ‘no sovereignty, no development’ position of the Oslo Accords.
The Biden administration, in a flight of fantasy and unable to stop the Israeli bombings of Gaza’s civilians, suggested that oil from the Gaza Marine field could be revenue stream for a Palestinian state. The administration’s statement did not say what kind of a state this would be, who would make the rules, or whether the creation of the Palestinian state would allow for the return of the existing 6 million in camps of the UN in Syria, Lebanon, Jordan and in Egypt. Or whether more than one-third of the land in occupied territories appropriated by the Israeli military and settlements will be returned to Palestinians. Nor did the statement mention what the economy or society would be: a service economy providing tax shelter? A gambling hub (like Monaco and Macau)? A finance hub (like Dubai)? Or would it be an adjunct to the Israeli economy providing primarily cheap labour (including domestic) along the lines of the townships in South Africa?
Leaving aside the two-state plan, a possible long-term solution to the Palestinians may lie with a one-state solution – as utopian as it may sound in the midst of the present fighting and polarization. It will mean 5.3 million Palestinians and 9.1 million Israelis agreeing to live in a society where they both have equal rights – one person, one vote; to live under a non-Apartheid regime which does not discriminate one community against the other. South Africans did it and are still struggling with it, but it can be done.
For Israelis, the one-state solution will be possible when occupation is simply too costly. Beyond the heavy burden of security on Israel’s budget, there are the human costs – for reservists in the army taking time from their high-tech work which might have saved lives; for parents sending their children for military service in the West Bank knowing they will be damaged by the experience of their own violence as they had been when doing their military service; for citizens living under constant threat of war. In this, a lot depends on Israeli political elites but it also depends on transnational investors in Israel’s high-technology economy – will there be a point at which the ongoing war threatens their interests?
For Palestinians, it is already too costly to remain in their homes under the onerous conditions of the occupation. The energies of a young Palestinian population can be channeled to changing those conditions and to do it with the cooperation of Israelis, mending their fractured community. For both Palestinians and Israelis. forgetting the long years under an apartheid regime but making sure that no other community becomes victim to it, may sound utopian. But such may be the only option for peace.
Huricihan Islamoğlu is Professor of Economic History, Boğaziçi University, Istanbul and former Visiting Fellow, Gateway House.
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 ‘Difficulties in Fundraising: Key People Called for Reserve Duty,’ Start-up Nation Policy Institute, December 2023, https://snpi.org/insight/difficulties-in-fundraising-key-people-called-for-reserve-duty/
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 Raja Khalidi, ‘The Two-State, Two-Economy Solution,’ Project Syndicate, 22 November 2023, https://www.project-syndicate.org/commentary/palestinian-economy-key-to-two-state-solution-by-raja-khalidi-2023-11