THE LEFT BANK: Palestinian Prime Minister Salam Fayad is expected to ask donor states at a conference in Paris today to pledge $5.6 billion over three years in financial assistance to help build the future Palestinian state. The Paris conference is the first forum for international states to make pledges to assist the Palestinian Authority since 1996.

According to its development plan, the Palestinian government will cut government spending – including payroll and utility subsidies – and reform institutions. About 70% of the requested aid would go to budgetary support, while 30% is expected to pay for development projects. Over time, the balance would gradually shift towards development projects as the Palestinian budget deficit shrinks.  The Palestinian development plan predicts an annual economic growth of about 5%, provided that Israel gradually eases its restrictions on travel and trade.

The Palestinian plan received praise from the World Bank, the International Monetary Fund, and a number of international leaders last week. Quartet envoy and former British Prime Minister Tony Blair characterized the plan as “coherent.” He added that this “is the moment, where if we are not to back the Palestinians in this endeavor, when they are presenting that type of plan, in a way that I think they have never done before... if we are not prepared to back the Palestinians now, then we are not prepared to give them a chance.”

Speaking in Paris today, Israeli Foreign Minister Tzippi Livni said that Israel welcomes “the Palestinian reform plan as a serious effort to build the basis for a responsible Palestinian state that the Palestinian people so deserve and that peace so needs.” Her comments echoed remarks by Prime Minister Ehud Olmert to his cabinet Sunday. Olmert said that Israel “certainly support[s] the strengthening of the Palestinian Authority and the appropriate international mobilization in order to bring about an improvement of the Palestinian residents’ daily lives, especially by upgrading their own economic infrastructure that will not be dependent on the State of Israel once the appropriate administrative institutions are established.”  Israeli government spokesman Mark Regev observed earlier that Israel understands “that a healthy, successful, prosperous Palestine is in the interest of the State of Israel.” He added that “living next to a failed state, a failed economy, would only be a recipe for further violence.”

However, a World Bank report issued Thursday warned that the Palestinian economy will continue to deteriorate, regardless of large international aid donations, if Israel does not ease Palestinian movement and trade. 95% of Palestinian trade is with Israel, the World Bank noted, but shipping goods from the West Bank has become more difficult following the construction of the Israeli barrier. Israeli-imposed roadblocks have also complicated the shipping of goods, even within the West Bank. Moreover, the West Bank and Gaza are cut off from each other, and Gaza has been largely isolated since June.

The World Bank report estimated that even if “donors pledge the full amount requested, but Israeli restrictions remain in place, the Palestinian economy would keep shrinking by about 2 percent a year,” despite planned reforms by the Palestinian Authority (PA). The World Bank added that “if Israel’s closures remain in place, these large sums [of aid] would at best slow a downward cycle of crisis and dependence.” The World Bank noted that in the worst-case scenario – lackluster international aid and continued Israeli restrictions – growth will fall sharply and the already growing poverty levels will rise dramatically. In contrast, a considerable easing of Israeli restrictions – both within the West Bank and vis-à-vis Gaza – could reveal the PA’s “potential to yield double-digit growth rates,” the World Bank predicted.

Ron Pundak, who heads the Peres Center for Peace, advised donor countries to see to it that Israel and the Palestinians follow through on their commitments. “Otherwise, if you are investing in a factory or an agricultural center and the goods cannot move from one place to another, it’s a waste of money,” he said. The United Kingdom appears to be heeding Pundak’s advice. British Secretary of State for International Development Douglas Alexander announced last week that his government is “willing to pledge an amount up to 243 million pounds, around $500 million, over the next three years on the basis of progress we wish to see coming out of the Annapolis conference.” (Israeli Cabinet Communiqué, 12/16/07; Ha’aretz, 12/11, 12/13 &12/17/07; Israel Radio, 12/13/07; Jerusalem Post, 12/11 & 12/13/07)

QUAGMIRE: As casualties and tensions mount along the Israel-Gaza border, Israeli pundits are once again talking about a possible large-scale Israeli military operation in Gaza. Such speculation may have been stoked by comments made by IDF Chief of General Staff Gabi Ashkenazi on Wednesday. “I don’t think that this reality can continue for much longer,” Ashkenazi said at a conference on Israel's future security challenges. Ashkenazi indicated that Israel was “drawing closer” to a major operation, but that all other options needed to be exhausted first. “We need to think about what will happen the day after [an operation] and until then to exhaust all possibilities,” he said. “There is value to the strikes against Hamas and Islamic Jihad, but we are not succeeding in bringing the rocket fire down to zero and it could be that we will reach the point when we will need to launch a large-scale operation.” In today’s Ha’aretz, former Likud Defense Minister Moshe Arens latched onto some of Ashkenazi’s comments, writing that the “army’s chief-of-staff has said what everybody, other than this government’s ministers, knows – that the only way to stop the rockets from coming down on the heads of the population living near the Gaza Strip is for the IDF to move in and move the rockets out of range.”

Yet celebrated Yedioth Ahronoth columnist Nahum Barnea wrote Friday that “[Prime Minister] Olmert and [Defense Minister] Barak are not convinced that a large-scale military operation will free the communities surrounding Gaza from the rocket threat. In the short term it could even make matters worse, to say nothing of the price that it will cost in the blood of IDF soldiers, in innocent casualties on the other side and the trouble from which we will hardly emerge. Even Chief of Staff Gabi Ashkenazi, according to statements he made in the security cabinet two days ago, is not convinced that he has a successful operation in hand.”

Ha’aretz columnists Avi Issacharoff and Amos Harel seem to agree. “Contrary to the impression sometimes created in the media, neither the government nor the army is eager to invade Gaza,” they write on Sunday. “There have even been estimates that such an operation would cost the lives of 100 soldiers.” But they also explain the rationale for an Israeli strike now: “the General Staff sees only a narrow window of time – a few weeks to a few months – in which it would be possible to launch an operation that would fall short of reoccupying the entire Strip. That window will close the moment Hamas solves two technical hurdles: extending the Qassams’ range beyond 15 kilometers and learning how to store the rockets for long periods, thereby enabling it to stockpile them. It is close to solving both. And once it does, any operation in Gaza will be much costlier, involving more casualties in southern Israel, while the army's room to maneuver will be much smaller.”

Nevertheless, opposition to an Israeli invasion is commonplace. Ha’aretz’s editorial on Sunday observed that there “is no dispute that a country is obligated to protect its citizens, and sometimes it is even justified to go to war to do so.” Yet, it also voiced concerns with a potential “broad, deep operation” by the IDF. The editorial recalled that “Qassam rockets were fired at Israel even when it controlled Gaza completely. The smuggling of arms and explosives took place under its nose even when IDF patrols controlled the Philadelphi route on the Gaza-Egypt border. The claim that the Qassam attacks began only after the withdrawal from Gaza has no basis. Nor has Israel refrained from using its military might to try to stop attacks. A temporary reoccupation of northern Gaza, targeted killings, aerial bombings, penetrations into Gaza, total closures, sealing the border crossings - all these are part of a military repertoire aimed at thwarting attacks on Israeli soil. In other words, the claim that the IDF has been sitting on its hands is also false. The military option is not a plan that has been gathering dust on the shelf; it has been extensively employed - and has failed. A wider war does not promise anything better.”

“Therefore, it would be better to reexamine the alternative,” advocated the editorial. “Hamas understands that Qassam rockets cannot destroy the State of Israel, but they can certainly block diplomatic progress - because stopping the fire is Israel’s first and most important demand of the Palestinian Authority, and without this, there will be no negotiations. What is needed is a courageous Palestinian stance to spur renewed cooperation between Fatah and Hamas, and the formation of a new Palestinian national unity government. Such a joint leadership would be able to propose a real cease-fire and institute civilian cooperation. Israel should not fear such a development - especially when the military option appears dubious.” (Jerusalem Post, 12/12 & 12/13/07; Ha’aretz, 12/16 & 12/17/07; Yedioth Ahronoth, 12/14/07)

QUAGMIRE, PART II: Former Director General of Israel’s Foreign Ministry David Kimche sees diplomacy vis-à-vis Hamas as the alternative to an Israeli military operation. Writing in the Jerusalem Post, he predicts that “we can expect one of two scenarios in the near future: either a renewed effort to reach a Fatah-Hamas unity government, despite the tremendous antipathy that exists between the two, or a massive Israeli military operation in the Gaza Strip, aimed at crushing Hamas.” Kimche  makes his preference clear: “A preferable course of action would be to engage Hamas, not directly, nor even indirectly through Israeli peace groups unconnected with the government, but via third parties - Egyptian, Saudi or whatever - and to propose a long-term hudna, a cease-fire, in which Hamas (and Islamic Jihad) would cease Qassam  rocket attacks and all other forms of violence against us, and we would halt our operations against them. There are strong indications that Hamas would not be adverse to such a proposal; on the contrary, it would probably welcome it. We had such an arrangement in the past, under prime minister Ariel Sharon, and Hamas abided by it… A long-term cease-fire would let the government off the hook - an inability to stop the Qassam  attacks is something that no government should allow tolerate. Such a cease-fire would neutralize Hamas resistance to the peace negotiations, and enable the talks to continue.”

“Hamas today is the one major factor that can stymie any move to an agreement between Israelis and Palestinians,” explains Kimche . “It is, by every count, the joker in the Annapolis pack. The talks that began on Wednesday, the beginning of the official negotiations that were decided upon at Annapolis, will come to naught unless a solution is found for Hamas violence… the division of the Palestinians geographically and ideologically into two virtually enemy camps makes a settlement almost impossible unless Fatah and Hamas can come to terms with each other. There is no way that we can solve our problems with the Palestinians in Judea and Samaria, and leave Gaza to fester under Hamas rule as a separate entity. This fact is well understood by Palestinian Authority President Mahmoud Abbas and PA Prime Minister Salaam Fayad. Moreover, they know that they cannot, by force of arms, fulfill the demand of the road map to dismantle terrorist infrastructure and stop violence; the only way for them to do that is to reach an agreement with Hamas. Both the Palestinians and the Israelis have to fulfill the conditions of the road map as a prelude to the implementation of any agreement they reach in the negotiations that began on Wednesday.”

“One thing should be clear,” concludes Kimche : the only way to weaken Hamas is to give the Palestinian people hope for a political solution. They will not support Hamas, not vote for it in the next elections, if they believe that the negotiations that began on Wednesday can bring positive results. If, on the other hand, the talks falter or fail, we will see Hamastan not only in Gaza but in Judea and Samaria as well, and no military operation will be able to prevent this.”

Israeli public opinion appears to understand the need to involve Hamas in peace talks. 71% of Jewish Israelis believe that it is impossible to reach a peace settlement with the Palestinians without Hamas’s consent, according to the latest poll by the Tami Steinmetz Center at Tel Aviv University. Pollsters Ephraim Yaar and Tamar Hermann ascribe this belief as a contributing factor to the skepticism with which Israelis view the current negotiations between Israel and the Abbas-led Palestinian government. The poll also found that 62% of Jewish Israelis view the Palestinian demand for an independent state as justified. 58% believe that Israel can afford itself the establishment of an independent Palestinian state.