With their warm words and smiles for the cameras in the Oval Office last week, President Barack Obama and Israeli Prime Minister Benjamin Netanyahu took an important step toward surmounting what has lately been a serious obstacle to progress in the Middle East peace process – a frosty U.S.-Israel relationship. Like galaxies in an expanding universe, each party to the process — Americans, Israelis, Palestinians and Arabs — seems to have been moving farther away from all of the others.

Even if last week’s summit succeeds in halting this retrogression, it will only have returned the peace process to square one. If the president in fact achieves his stated goal of commencing direct Israeli-Palestinian talks by the end of September, the parties will be no closer to — and arguably much further from — an actual agreement than they were three years ago, when the Annapolis Conference kicked off the last round of negotiations.

Once the Israelis and Palestinians finally make their way to the negotiating table, the primary barrier to progress will not be the issues themselves, but rather the zero-sum mindset that pervades their relationship.

After decades of hostility, each party sees any gain by the other as a loss for itself, leading them to stake out apparently self-defeating positions. For example, Israel last year effectively blocked the launch of a second Palestinian mobile telephone company, despite the fact that it would have created thousands of jobs and a much-needed jolt for Palestinian economic development, both of which are patently in Israel’s interests.

This zero-sum attitude is readily perceived by anyone who has labored at Israel-Palestinian peace. Israelis harbor suspicions — fueled by the duplicity of former PLO leader Yasser Arafat and the proclamations of Hamas leaders — that the Palestinians’ true intent is to push them into the sea; Palestinians believe that Israel intends to engage them endlessly in negotiations while creating “facts on the ground” that render Palestinian statehood infeasible.

Ironically, this zero-sum mindset endures despite the increasing convergence of interests among Israel, the Palestinians, and their Arab neighbors. All sides are threatened by Iranian progress toward a nuclear weapons capability, terrorism and the proliferation of and advanced conventional capabilities to extremist groups, and stagnant regional economic growth. Regional cooperation would amplify the international effort to reverse these malign trends, but is absent.

Because of this pervasive zero-sum mindset, proposals that borders or settlements be tackled first and in isolation are misguided. These are the ultimate zero-sum issues — one party can gain only what the other yields. Likewise Jerusalem is a matter of dividing a fixed plot, and one which both parties consider sacred to boot.

Overcoming the zero-sum mindset and making progress in the negotiations requires a threefold approach. First, Washington must begin the process with a focus on “win-win” issues. Foremost among these are Palestinian economic development and institution-building. Progress on these fronts would not only deliver prosperity and good governance to Palestinians, but assure Israelis that a future Palestinian state will be stable and viable. Likewise, the further expansion and improvement of Palestinian security forces will relieve from Israel the resource and moral burden of policing much of the West Bank, while providing Palestinians with a further measure of dignity and autonomy. Other examples abound, such as restoring a PA role in Gaza and countering Iranian in Second, the core issues themselves must be negotiated as a package, in order to take advantage of differences in how much each party values each issue. To take one example, Israel is likely to be more forthcoming on borders if it receives assurances on refugees. Any dealmaker, whether his background is in politics or finance, can confirm that thorny issues are far more difficult to address in isolation than as part of a package.

Finally, Washington must use its unique position and capabilities to clear away potential distractions and obstacles to progress. This should comprise a spectrum of actions, both to counter potential spoilers such as Iran by interdicting Iranian shipments to Hezbollah and Hamas, and to empower agents of change such as PA Prime Minister Salam Fayyad by providing him with budget support. While the U.S. administration may be called upon occasionally to prod the parties or provide them with bridging proposals, the majority of its energies should be expended on this track, working with or against the ancillary players in the region and beyond who can help or hinder progress.
While history gives us every reason to be pessimistic about Israeli-Palestinian peace, there is also good reason to be hopeful. Palestinian statehood is the ultimate win-win issue; a prosperous and democratic Palestine is the best guaranty of Israel’s long-term security, and the only answer to Palestinian aspirations.