Q&A: Mideast peace talks face collapse over settlements

JERUSALEM Sun Oct 3, 2010 6:34am EDT

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JERUSALEM (Reuters) - A month after they were launched, direct talks between the Israelis and Palestinians are already in enormous difficulty. The United States is looking for ways to push the negotiations forward, but there are no easy solutions at hand.

Here is a look at some of the problems and issues.

WHAT IS THE STATUS OF THE TALKS?

The Israeli and Palestinian leaders were expected to meet every two weeks for direct talks. The last such encounter was on September 15 and no new date for a meeting has been fixed. The Palestinian leadership says direct talks will not resume unless Israel halts building settlements on occupied land. Israeli Prime Minister Benjamin Netanyahu has so far refused to extend a 10-month partial freeze on construction which expired September 26.

WHY IS NETANYAHU REFUSING TO EXTEND THE MORATORIUM?

Netanyahu believes an extension to the freeze would bring down his coalition government, which is packed with pro-settler supporters. Allies say he is looking to avoid a repeat of his last term as prime minister, from 1996-1999, when he agreed to hand over parts of the West Bank to Palestinians under the terms of the Wye River Memorandum. Some political partners opposed the deal, his government collapsed and he lost power at subsequent elections.

IS THERE NOTHING THAT COULD WIN OVER HIS ALLIES?

A senior Israeli official has confirmed media reports that the U.S. has offered Netanyahu a package of incentives to put before his cabinet to help him persuade them to extend the freeze by 60 days, including security guarantees and increased military aid. The official said the prime minister rejected them, with Israeli media reporting on Sunday that Netanyahu was hoping to extract more concessions from Washington.

WHY DOESN'T NETANYAHU REACH OUT TO OPPOSITION PARTIES?

There has been much speculation in recent months over whether Netanyahu will ditch hardline allies and create a government of nation unity with the centrist Kadima party, which backs the settlement freeze and endorses the peace talks. Senior figures in the prime minister's Likud party say such a deal at this early stage in the negotiation process, with a full peace deal still only a remote possibility, would alienate Likud's core supporters. However, if talks with the Palestinians did somehow progress and a firm deal started to take shape, then this option would almost certainly rise to the fore again.

WHY DO THE PALESTINIANS INSIST ON THE FREEZE CONTINUING?

The Palestinians say the construction work undermines the very notion of a peace deal, arguing that every house built on the West Bank for Jewish families takes land away that they will need to create a viable state. Netanyahu argues that no previous Israeli leadership has been forced to halt building while peace talks were under way. The Palestinians say the building is now so extensive, the situation has become critical. The United States and European Union have both called for a settlement freeze, but they have yet to find a way of getting Netanyahu to budge.

WHAT HAPPENS NEXT?

Palestinian President Mahmoud Abbas has made his views clear, but his position will not become definitive until he gets the backing of the Arab League -- a pan-Arab organization whose support boosts Abbas's credibility amongst divided Palestinians. It is due to meet on October 8. If, as seems likely at this point, it agrees with Abbas, the direct talks will be mothballed. The United States may decide to switch back to indirect talks, but they have yielded almost nothing in previous months.

WHO WILL LOSE OUT IF THE TALKS COLLAPSE?

U.S. President Barack Obama's administration will look weak for launching talks that collapsed almost immediately. Questions will be asked of why it kicked off the negotiations without first resolving the obvious problem of the settlement freeze.

The Palestinian Authority will look to maintain the status quo in the West Bank and few locals believe there will be a repeat of the generalized uprising seen in 2000 following the collapse of Camp David peace talks. However, the settlement building will continue and their land will shrink still further.

Netanyahu will shore up his domestic position, but he can expect no favors from Washington until Obama leaves office.

(Writing by Crispian Balmer, Editing by Philippa Fletcher)

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