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The establishment of a Palestinian unity government, like Hassan Nasrallah's introspective speeches, could be taken as a victory for Ehud Olmert. The political isolation, the economic boycott, the arrests and the bombardments with which Israel hit Hamas did their job, and the government had to dissolve and invite Fatah into a coalition. In exchange, Olmert paid an insignificant price: He promised to meet Palestinian Authority Chairman Mahmoud Abbas (Abu Mazen) "with no preconditions."

The Palestinians can also claim that they won, with the same degree of credibility. The kidnapping of Gilad Shalit in a cross-border raid, and their success in holding on to him and continuing to launch Qassam rockets, even after suffering hundreds of casualties in Gaza, showed that there are limits to Israeli power. Palestinian resilience, backed by Hezbollah's attacks in the north, convinced Olmert to retract his unilateral convergence plan and extend a hand toward Abu Mazen.

The feeling of achievement on both sides, after a long and wearisome confrontation, is a tried and true recipe for progress in negotiations. But the government is responding with the instinctive Israeli litany of "there is no one to talk to and nothing to talk about." It explains the developments on the other side as a ploy to renew the cash flow into the Palestinian Authority, rather than as an opportunity to create a Palestinian partner. Foreign Minister Tzipi Livni, who previously called for an Israeli diplomatic initiative, has rushed to Washington in order to ensure that the boycott will remain in effect until the new government recognizes the State of Israel and ratifies the Oslo Accords.

Israel is similarly ignoring the Arab peace initiative. This initiative is not perfect and should not be taken literally, but it could be seen as a basis for dialogue. It could be viewed as an Arab readiness to accept Israel as a legitimate neighbor, and as a definite "no" by the Arab world to Iran's speeches of annihilation. The government could have proposed that Livni speak at the Arab foreign ministers' summit and invited Arab League Secretary-General Amr Moussa for talks in Jerusalem. Instead, it stammered something about "implementing the road map" peace plan and moved on.

Livni wants to maintain the pressure until Hamas surrenders. But one must ask whether this a practical goal, or whether a further crumbling of the PA would only hurt Israeli interests. Moreover, might it not be time to advance to confidence-building steps, starting with the release of Shalit and hundreds of Palestinian prisoners, and continuing with a cease-fire and the rebuilding of Gaza? If it works, this would make it possible to move forward with negotiations over the future of the territories.

The Olmert government's belated infatuation with the Oslo Accords and the road map warrants the question of what Israel has done to advance them. Its ongoing failure to evacuate settlement outposts is similar to the Palestinians' evasive maneuvers. Granted, the problem of the outposts is of less importance than the war on terror; and the shaken, scandal- and investigation-ridden government in Jerusalem is weak compared to the settlers. But leaving the outposts in place, when combined with accelerated construction work in the settlement blocs, casts doubt on Olmert's sincerity. What happened to his pre-election promise to stop government investment in the territories? He now has an opportunity to cut these budgets, on the grounds that the money is needed for rebuilding the north. But his government has put the development of the Negev on hold and left the settlements untouched.

Olmert, who took the reins as the successor of Yitzhak Rabin and Ariel Sharon, now seems to be the heir of Yitzhak Shamir. His policy toward the Palestinians can be summed up as a declaration of "no" to every change and every initiative from across the border, combined with a strengthening of the settlements, under the cover of diplomatic trickery such as his offer to meet with Abu Mazen. It seems that you can take the politician out of the Likud, but you cannot take the Likud out of the politician.