ANNAPOLIS UPDATE: The Mideast peace meeting announced by President George W. Bush is expected to be held on November 15th in Annapolis, MD. The list of prospective invitees is expected to include representatives of Israel, the Palestinian Authority, Syria, Egypt, Jordan, Qatar, Morocco, Saudi Arabia and the Quartet – Russia, the EU and the UN.

The extent to which any substantive breakthrough is expected at the summit remains unclear. Ma’ariv journalists Uri Yablonka and Tzah Yoked report that senior Israeli officials have been telling Palestinian President Mahmoud Abbas that “Israel will not announce an historic concession on any of the three core issues of the conflict – precise final borders, the division of Jerusalem and the acceptance of responsibility for the problem of the Palestinian refugees – even at the price of having the international conference… fail.” At the same time, Ha’aretz Columnist Danny Rubinstein notes that his “Palestinian and Israeli sources share the opinion that regular meetings between Prime Minister Ehud Olmert and Palestinian Authority Chairman Mahmoud Abbas… were significant and comprehensive. Perhaps the most comprehensive meetings ever held between the two statesmen.”

Meanwhile, moderate Arab states seem to be hedging their bets. Saudi Arabia is reportedly seeking an end to Israeli settlement expansion before announcing its intention to attend the meeting. Jordanian King Abdullah suggested that he intended to dispatch his foreign minister to the meeting. “Only if it becomes evident that the conference is going to deal with substantive issues and the final settlement will we agree to send a high-ranking delegation, which will be headed by the prime minister,” he said. Egypt has similarly hinted that it intends to dispatch its foreign minister to attend the conference, but this weekend Egyptian President Hosni Mubarak held talks with the Saudi king about the possibility of raising the level of the delegation sent. (Yedioth Ahronoth, 9/30/07; Ma’ariv, 9/30/07; Ha’aretz, 10/1/07)

ALL POLITICS IS LOCAL: The stakes for the Annapolis meeting are high in terms of Israeli and Palestinian politics. In the Palestinian daily Al Ayyam, Muhammad Yaghi explains that an international meeting devoid of substance could be suicide for the Palestinian Fatah party. “All this blabber about the international meeting is disregarding the most important truth: the attendance of this conference by the [Palestinian] Authority will weaken Fatah politically. Fatah needs real political achievements to present to its people and through which it could show that its negotiation method is about to lead to the end of the conflict...” He adds that if little of substance occurs at the meeting Fatah will be forced into a defensive posture “to justify its attendance of the conference and it will have to say: ‘We showed up and didn’t lose anything… We can’t boycott a meeting related to the Palestinian issue… We didn’t relinquish the sacred principles.’”

In this context, Palestinian President Mahmoud Abbas’ announcement this week that “if the conference ends in failure, I won’t run for president again,” should not be surprising.

In Israel, Ha’aretz’s Aluf Benn reminds us that former prime ministers “[Benjamin] Netanyahu and [Ehud] Barak lost their coalitions at the height of diplomatic moves: Netanyahu upon returning from the Wye summit and Barak on his way to Camp David. As a result they fell from office and did not achieve peace.” Therefore Benn suggests that we should not be surprised that Prime Minister Ehud “Olmert invests considerable effort in maintaining the coalition… Sectoral demands from Yisrael Beiteinu, the Pensioners and Labor are satisfied enthusiastically. Foreign Minister Tzipi Livni, who criticized Olmert, is now enjoying a weekly one-hour tête-à-tête with him. Labor’s Ami Ayalon, who called upon him to quit, has accepted a seat in the government. The main thing is that all of them remain inside the tent and feel good.”

Benn concludes that the “coming weeks hold the moment of truth. Olmert clearly wants to get to the peace meeting in Washington with Lieberman and Shas at his right hand, and not plucked and isolated like Barak was at Camp David. This has a price in the diluting of the joint statement with Palestinian Authority Chairman Mahmoud Abbas, but it also has a payoff. An agreement that wins broad political backing has much more of a chance to be implemented than a daring diplomatic document enjoying the support of the minority.”

Israel’s right is taking advantage of Olmert’s vulnerability. The Settlers Council has announced a new advertising campaign based on the slogan “The Olmert-Abu Bluff deal will blow up in our faces.” In Ynet, Efrat Weiss reports that “sources in the Yesha [Settlers] Council told Ynet that the campaign was aimed at thwarting the conference and the plan to reach a declaration of principles between Olmert and Abbas.” (Yedioth Ahronoth, 10/1/07; Ha’aretz, 9/29/07; Al Ayyam, 9/28/07; Ynet, 9/30/07)

INVITING SYRIA: Secretary of State Condoleezza Rice’s hint that Syria might be invited to the Annapolis meeting as a member of the Arab League Follow Up Committee was the focal point of some discussion in Israel.

Yedioth Ahronoth’s Orly Azulai notes that the “decision to invite Syria constitutes a reversal in US foreign policy, since the administration has refused to date to engage in any contact with Damascus… The reason for the change in the American position lies apparently in the American recognition that it would be better were Syria to be part of the process than to have it try to torpedo it. American sources who were quoted by the wire services said that the decision to invite Syria was geared to spur the other Arab states to attend the conference. PA Chairman Abu Mazen [Mahmoud Abbas] also asked to have Syria invited so as not to break Arab unity.”

Herb Keinon, writing in the Jerusalem Post, agrees that the “change in America’s policy regarding involving Syria is not an insignificant American flip-flop.” He posits that the change in the American position reflects pressure from the Arab world in which “Abbas and the Egyptians have consistently said that the Syrians needed to be invited, not necessarily because of a yearning to see Syrian President Bashar Assad at the table, but rather because his presence would give the meeting widespread legitimization… Saudi Arabia too, which is at great odds with Damascus over the situation in Lebanon, would gain legitimization on the Arab street for its own involvement in the conference if the Syrians participated.”

“There is also the idea that the Syrians could do a lot more harm outside the conference,” adds Keinon, “unleashing their Hamas or Hezbollah proxies to try and torpedo it through various terrorist actions, than if they were a part of it. One way to neutralize active Hamas opposition, according to this logic, is to involve Syria.”

Yet, Keinon adds that it “is by no means a given that Syria will accept an invitation. It is conceivable that Iran, which won’t be invited and has a huge interest in seeing the meeting fail, will tell Syria to stay home. Israeli diplomatic officials said that Russia, perhaps a bit miffed that the Americans were succeeding in bringing everyone to a meeting under their umbrella, might conceivably advise Damascus to stay away. Either way, it is extremely unlikely that just because Rice asks, the Syrians will come running.” (Yedioth Ahronoth, 9/30/07; Jerusalem Post, 9/24/07)

LAND GRAB: Right-wing activists and settlers attempted to establish five new illegal outposts throughout the West Bank yesterday, as part of a campaign announced last week. At several sites they constructed makeshift building which are being removed by Israeli police and military units.

The coordinated law-breaking forced Israeli security forces to redeploy to such an extent that Israeli counterterrorism officials told Ha’aretz that they were concerned that terrorists might have an easier time carrying out attacks in existing settlements and in Jerusalem. In clashes with security forces, settlers damaged army vehicles with stones and punctured the tire of a jeep. One soldier was injured.

The settlers attempted to take land at “Givat Ha’eitam” near Efrat, Hill 1013 in the Hebron region, “Nofei Hashmonaim” east of Bethlehem, “Harhivi” near Elon Moreh, and “Shvut Ami” in the northern West Bank. A major march to Homesh, a northern West Bank settlement vacated in 2005 as part of the disengagement from Gaza, is also expected later this week. Homesh has been the site of repeated confrontations between settlers and Israeli security officials.

A group called the Land of Israel Faithful issued a statement last week making clear that the land grab was its answer to the ongoing negotiations between the government and settler leaders over the evacuation of other illegal outposts. “We don’t agree to any compromise that requires the removal of settlements and outposts in the Land of Israel. Whoever starts with concessions and agreements will continue to give up all of Judea and Samaria,” a statement by the group said.

While Israel’s radical right is violently protesting a potential evacuation of illegal outposts, Israel’s mainstream press is faulting Defense Minister Ehud Barak for failing to take any significant action to support the peace process. Itamar Eichner writes in Yedioth Ahronoth on Wednesday that “the man, who towards the end of his term as prime minister, and with no public legitimacy, offered far-reaching concessions in the Taba talks and was willing to give up the Israeli sovereignty on the Temple Mount, is now making a big deal out of the evacuation of 24 dirt hillocks in Judea and Samaria and offering the Palestinians meaningless relief measures, such as the possibility of bringing 500 policemen into a Palestinian city in the West Bank during the daytime.” More than 100 settlement outposts, illegal under Israel law, remain in the West Bank.

Various rabbis have voiced their support for this week’s land grab. The rabbi of Efrat, Shlomo Riskin, who is known as a relative moderate, called on Efrat residents to take part at Givat Ha’eitam. Riskin’s call was seconded by other Gush Etzion rabbis. Hebron-area rabbis, led by Moshe Levinger and Eliezer Waldman, issued calls for the public to accompany the operation at Hill 1013. (Ha’aretz, 9/26 & 10/1/07; Ynet, 9/30/07; Yedioth Ahronoth, 9/26/07; AFP, 9/30/07)

HOSTILE BANKING: Following the Israeli government’s decision to declare the Gaza Strip “hostile territory,” Bank Hapoalim decided to halt banking activities with banks located in Gaza. A spokeswoman said it would take several weeks for the bank to cease these transactions completely. Bank Hapoalim is one of two Israeli banks that trade with Palestinian banks in Gaza. The second Israeli bank with ties to Gaza, Israel Discount Bank, is expected to follow Bank Hapoalim’s lead.

The Gaza economy depends on Israeli currency, long provided by these Israeli banks to finance imports, pay Palestinian Authority workers and carry out day-to-day transactions. Israeli officials reported that NIS 400 million ($100 million) was transferred to Gaza in August, while a Palestinian official said the scale of activity amounted to half that amount.

“The decision of Bank Hapoalim will lead to the collapse of the economy in the Gaza Strip,” warned Palestinian cabinet minister Ashraf Ajrami. “The human suffering there will be very serious and it will play into the hands of Hamas. It is the ordinary people who will suffer, because Hamas has ways of smuggling money into Gaza.” Moreover, the decision would make “it difficult for our government to function,” Ajram added. “If the Israeli banks sever their links with Gaza, we will not be able to transfer salaries to our employees there.”

Yet, Israel may intervene to assure that currency flows to Gaza banks continue. The Bank of Israel and Israel’s Finance Ministry have reportedly proposed that an Israeli state-owned institution, possibly the Israel Postal Bank, step in to supply funds to banks in Gaza. Avi Hochman, president and chief executive officer of the Israel Postal Company, which includes the Postal Bank, said that such a proposal was under consideration. “There are some legal, logistical and operational issues that we have to find a solution to. Once we find a proper solution that will enable us to provide the services, we will be happy to provide them,” he said. The Postal Bank has the capacity to step in, he added. (Ha’aretz, 9/25 & 9/26/07; Ma’ariv 9/26/07; Globes, 9/25/07)

AFTER ABBAS: A majority of the Israeli cabinet reportedly supports a deal with Hamas that would release Palestinian prisoners, including Marwan Barghouti, in return for captive IDF Corporal Gilad Shalit. A senior source in the Labor Party told Ma’ariv that “if the list of hundreds of prisoners which Hamas is demanding is reduced a little, or, to be more exact, the heavy murderers because of whom Israel is not prepared to accept the list are removed from it, there would be a majority in the government in favor, even if the list includes Barghouti, and he himself is an arch-terrorist.”

Environment Minister Gidon Ezra (Kadima) has been advocating the release of Barghouti for months, but now National Infrastructure Minister Binyamin Ben-Eliezer (Labor) has begun publicly promoting the idea. In an interview with Ha’aretz, he said that the current Palestinian leadership is comprised of a “triangle” composed of Palestinian President Mahmoud Abbas, Prime Minister Salam Fayyad, and Marwan Barghouti. “Barghouti, in my best estimation, is in fact the tough side of the triangle that wins a lot of enthusiasm and a lot of respect… you have to remember that we are also talking about a leader, who, even when he is a prisoner, should not be scorned and should be listened to. He is also the only leader for whom Hamas maintains a great deal of respect and I daresay there is even some awe of him in Hamas.” Ben Eliezer added that “Marwan Barghouti is, in my opinion, the next leader of the Palestinians.”

Curiously, Ben-Eliezer told Israeli Army Radio that releasing Barghouti for Shalit – a deal that would necessitate approval from Hamas – will help to strengthen Abbas and Fayyad: “Abbas has not delivered anything just yet, and Salaam Fayad is a well-respected man, but these two gentlemen are just not enough. Releasing Barghouti will help strengthen them.”

Ha’aretz reporter Avi Issacharoff expresses skepticism over this plan, writing that “several members of Ehud Olmert’s government regard clemency as a wonder drug that would instantly bolster the popularity of Abbas (Abu Mazen) and save Fatah from collapse. But it is doubtful that Barghouti can be his movement’s savior. To save Fatah, more is needed than the reemergence of this or that charismatic leader. In certain circumstances, freeing Barghouti could definitely help Abu Mazen in the internal Palestinian arena, but in other conditions it is even likely to hurt him.” Issacharoff adds that some of those closest to Abbas are skeptical about Barghouti’s potential role as a political asset. “Barghouti, they say, enjoys support among the Palestinian people, but is liable to become Abu Mazen’s most dangerous opponent once he is out of prison. At this stage, relations between the two are excellent. The rais [president] coordinates practically every significant move with Barghouti. But according to several people close to Abu Mazen, if Barghouti is released and negotiations with Israel produce significant understandings on a permanent-status accord, only Barghouti would be capable and eager enough to undermine Abu Mazen’s leadership.”

Issacharoff quotes Abbas’ associates as saying that “if Israel is interested in strengthening Abbas, it should release the veteran prisoners and remove dozens of checkpoints. Then the people would immediately feel the achievements the rais attained for them.”