A strategic retreat is the most difficult of all maneuvers. This is the nightmare that has tormented all Israeli leaders since the modern Arab-Israeli peace diplomacy began after the October 1973 war. But the experience of this diplomacy has taught Israel certain lessons; three are fundamental.

First, as is often pointed out, there is an asymmetry built into the negotiation in that Israel is asked to give up the physical buffer of territory in exchange for political commitments, which are by their nature more easily reversible. Israel's dilemma is that these political quids pro quo, though intangible, can be quite real--not only buffer zones that add to strategic warning, but broader strategic gains such as splitting the coalition of Israel's enemies, keeping international pressures off Israel's back, strengthening the U.S. strategic position in the Middle East, and so forth. These may be not only useful, but vital.

In the conduct of these negotiations, however, Israel can never be seen to yield to force majeure. The same concessions that may be harmless in one context might be dangerous in another, depending on the dynamic of events. It is essential that Israel be seen to negotiate from strength and to make concessions, if any, by its own choice--thus making realism and a substantial quid pro quo mandatory on the Arab side. Should Israel ever be seen to be "on the run", more extreme Arab programs become tempting and Arab radicals gain ground at the expense of Arab moderates.

But a third principle, as we have seen demonstrated in 1996, is that Israel pays a huge price whenever the diplomacy breaks down--if explosions take place that intensify the pressures on it. Israel's international position then becomes seriously weakened. It must therefore be a basic goal of Israeli foreign policy to have a political strategy--that is, an approach that maintains the initiative in order to shape the form and direction of the diplomacy and head off such disasters.
When Benyamin Netanyahu was elected prime minister at the end of May 1996, he faced an intellectual as well as a political challenge. His electoral mandate was to negotiate in a stronger and more balanced way, to pursue peace and also to reassure Israelis that their security, personal as well as national, would be enhanced by the process. His challenge was to demonstrate that his approach could produce better results. To do this, he needed to keep the negotiating process alive while re-shaping it in accordance with his mandate. For the Israeli public also attached great value to the country's burgeoning political relations with moderate Arabs from North Africa to the Gulf and to the expansion of Israel's economic entrée into European and Asian markets--all of which were byproducts of the diplomatic breakthroughs at Madrid (1991) and Oslo (1993). Netanyahu was not elected prime minister to preside over the loss of these major gains in Israel's political and economic position. His problem was how to square this circle.

When the political explosion occurred in late September over the (contrived) issue of the tunnel in Jerusalem, international pressures instantly coalesced against Israel (as they are wont to do). It became clear that Netanyahu had lost control over events. He was thrown on the defensive and has been the demandeur in negotiations ever since. This is not how it was supposed to turn out.

Getting to Hebron

Netanyahu started out lucky in that he inherited a diplomatic agenda that included a number of short-term issues left over from Oslo. In addition to the Israeli commitment to redeploy troops from most of Hebron, these loose ends included Palestinian promises to do more to suppress terrorism, turn over captured terrorists to Israel, respect the ground rules in Jerusalem, and produce a new National Covenant that drops the language calling for Israel's demise. Israel was also obliged to complete a release of Palestinian prisoners, create a safe passage between Gaza and the West Bank, and ease the economic closure of the territories if the Palestinians did their part on the security side.

These issues were inherently soluble--in contrast to, say, the larger permanent-status issues (for example, Jerusalem, sovereignty, borders) on which the two sides' positions were hopelessly irreconcilable. There were many possible ways to slice the onion in the city of Hebron, fulfilling the Oslo obligation yet demonstrating that Netanyahu drove a tougher bargain than Shimon Peres. Defense Minister Yitzhak Mordechai reportedly submitted a plan in the summer as to just how to handle this onion.

Had there been a deal with Palestinian Chairman Yasir Arafat in the summer of 1996 on Hebron and the other loose ends of Oslo, it would have been Netanyahu's vindication. He would have shown that he could make a deal on his own terms; the Palestinians would have grumbled but would have taken what they could get; the world would have breathed a sigh of relief that the peace process was still alive. In the afterglow, Netanyahu would have bought at least a year of relief from serious pressures to do much more. He would have had the initiative in his hands.

But instead, Netanyahu sat tight after his election, as if his honeymoon would last forever. The frustrations built; the explosion came. Certainly, the immediate pretext (the opening of the other end of a long-used archeological and tourist tunnel) was contrived; certainly, the performance of the Palestinian police (in turning their guns on the Israeli army) was a grotesque breach of Oslo; certainly, most of the international and media reaction was biased against Israel. But what else is new? In the wake of the September explosion, Netanyahu stared into the abyss: threats of renewed terrorism, of Arab countries downgrading relations, even war scares on the Syrian front. Toward the end of the negotiation, it was obvious that Arafat was stretching it out in order to extract the maximum from a beleaguered Israeli government that sorely needed an agreement.

The January 15, 1997 agreement on Hebron fulfilled the historical pattern that Israel's concessions were more tangible than its gains. Netanyahu agreed to an August 1998 deadline for completion of Oslo's three required Israeli redeployments, which he had wanted to postpone for at least a year longer. In return, the Palestinians agreed--for the third or fourth time--to work harder at such things as suppressing terrorism and producing a new Covenant. Ensuring that this reciprocity has teeth would be highly desirable (as Charles Krauthammer argues), but experience suggests that such things are always elusive, and the double standard will be difficult to overcome. In the end, in other words, Netanyahu may have given more concessions on Hebron than he would have had to earlier, and which, had he done them earlier, would have headed off the explosion--and he did so in return for much less of a diplomatic payoff. The credit he is getting now for doing the deal is grudging; the respite that he gains from renewed international pressures will be measured in weeks or a few months.

In retrospect it is not clear that Netanyahu had any strategy at all in his first three months. I knew Netanyahu when he was Israeli deputy chief of mission in Washington in the 1980s, and over lunch I often made to him the Kissingerian argument about the strategic benefits to Israel of the peace diplomacy: Israel gained not only whatever security and political provisions were in any particular agreement, but also broader benefits, such as ensuring that the diplomacy remained under the control of Israel's American ally, bolstering the American position in the Arab world, keeping Russian and European troublemakers out of the picture, strengthening the Arab moderates while separating them from their radical brethren, and so forth. But Israel could not get this service for free; it had to contribute something; it had to find some issues on which it was willing to be flexible, which the United States could then promote to the Arabs as a hopeful avenue of diplomacy under U.S. auspices. If the diplomacy were hopelessly deadlocked, the United States would find its important strategic relationships with the Arab world under enormous strain, the Russians and Europeans re-injecting themselves in the diplomacy, Syria radicalizing the Arabs, Iran and Iraq fanning the flames, and the American ability to shield Israel from all these dangers simultaneously slipping away. Netanyahu used to listen quietly, smile at me, and ask why the United States of America was so sensitive to international pressures, and why we didn't just have the courage to hold fast.

That is where Netanyahu started. Today, for better or worse, he has been impelled by events in the opposite direction, and at a pace obviously not of his own choosing.

Where Do We Go From Here?

In the wake of the Hebron agreement, the imperative for Israel (and the United States) has been to formulate a coherent strategy for the next phase. The Oslo formula that Netanyahu inherited (and to which he has now given a Likud imprimatur) calls for a series of further interim redeployments, whose extent is not specified, along with talks on the ultimate (permanent-status) issues. Needless to say, there are many traps for the unwary on both tracks.

A negotiation on permanent-status issues has looked, until recently, to be a doomed negotiation. The two sides' positions were so utterly irreconcilable that such a dialogue seemed likely to deadlock immediately, only inviting a new crisis. It has long been a rule of thumb in Arab-Israeli negotiations that if the ultimate issues are insoluble, a step-by-step approach is the only alternative. Thus, it seemed advisable to delay the start of serious permanent-status talks while concentrating on additional incremental steps left over from Oslo--the extent of further redeployments and perhaps other increments of turning over authority to the Palestinians, in addition to the issues on which Israel sought satisfaction. This seemed to some--including me--to offer the best hope for avoiding a blowup that would jeopardize everything that had been achieved.

But the Middle East is a moving target. The biggest hangup of the Hebron negotiation was, in fact, not the devilish details of partitioning the city but the jockeying of both sides for advantage in the diplomacy that would follow. Both sides ended up trying to link the Hebron deal to their respective plans for the next phase--Arafat seeking to bind Israel to a rapid timetable for further interim withdrawals, Netanyahu seeking a longer timetable or to persuade Arafat to make the leap directly to the core issues of a permanent-status negotiation.

Netanyahu had a point, for the evolution of his thinking had made a permanent-status negotiation suddenly more promising. In a stunning development (unreported in the international media), Netanyahu was in the process of making two major concessions of principle.

One has been to accept the concept of a semi-sovereign Palestinian state. In a Jerusalem Post interview in December, his close aide David Bar-Illan stated flatly that Netanyahu has conceded Palestinian sovereignty; the only issues left are the limitations on its geographic extent and its powers (demilitarization, for example). Invoking Netanyahu's arch-rival, Infrastructure Minister Ariel Sharon, who had been saying the same thing (and thereby giving Netanyahu important political cover), Bar-Illan said the Palestinians already had a state, whatever one calls it. The Likud goal of a "Greater Israel", Bar-Illan said, has been a lost cause since Oslo; partition was now a fact.

Netanyahu had left himself some wiggle room. At other times, he and Bar-Illan have stressed the negative: that the Palestinians would get "less than full sovereignty." But the semantic evasions aside, there was no hiding the sea change that had occurred in a Likud doctrine that had insisted for decades on full Israeli sovereignty in an indivisible "Greater Israel."

Talks had indeed been underway for several months between Labor and Likud legislators on a common platform for the permanent-status negotiations, along these lines. As made public in mid-January, they agreed on the principles that would govern on issues like borders, settlements, and Jerusalem. Unofficial as it was, the document reflected an emerging national consensus (and might also become the basis for a national unity government once permanent-status talks begin in earnest).

The second major development has been a Likud retreat on settlements. Ever since the summer of 1996 the Netanyahu government had been signaling that, while the Jewish settler population in the occupied territories would be allowed to increase, the increase would be confined to "areas of national consensus"--that is, by and large, to communities near the 1967 line which, even under Labor's plans, would almost certainly be incorporated into a post-agreement Israel.

An announcement in early August (much criticized for its formal lifting of Labor restraints on settlement building) in fact pulled the reins of decision making on settlements tightly into Netanyahu's hands--reducing the influence of Minister Sharon. A December cabinet decision to restore financial incentives to Jewish settlers (also much criticized) turns out to have been a cover for a Netanyahu decision to postpone any ground breaking on new settlements while permanent-status talks were pending. Netanyahu said as much in a television interview on December 15; Bar-Illan spelled it out in his media briefings that no new settlements would be authorized, and "not one square inch" would be added to the boundaries of any existing settlements.

Taking these policy shifts and Hebron together, one can see the Israeli government's strategy emerging. Netanyahu has moved in the direction recommended by, among others, Henry Kissinger, who has urged that Israel plunge as soon as possible into a permanent-status negotiation. Kissinger, the father of the step-by-step approach, now believes it has run its course. Rather than be pummeled by international pressures during each stage of interim redeployment, ˆ la Hebron, better to face the core issues directly and bear down on the real questions left open to Israel--that is, limits on the extent and powers of a Palestinian state so that it cannot threaten Israeli security.

For Netanyahu, this makes sense. Depending on how they are carried out, further redeployments under Oslo could well determine de facto the extent of territory with which Israel is left. This was built into Oslo; for a Labor government it was a way to sneak up on a final territorial partition in the guise of fleshing out the transitional "autonomy" arrangements. A Likud government--if it is prepared to go to that destination--has no need to sneak up on it, nor is it inclined to delude itself that it is all only "transitional." This was the basis of Netanyahu's willingness to cut short the Oslo procedure. And since the scope of further redeployments is to be determined by Israel unilaterally, Netanyahu retains some leverage, which he can use to continue pressing Arafat to come to grips with the permanent-status issues. The two tracks (interim and permanent) are converging.

U.S. Policy: A Shield for Peace

Netanyahu is embarked on a high-risk strategy, unnerving to many of his Likud Party colleagues and supporters. But he has learned the hard lesson from last September that standing pat is not an option. Oslo and the creation of a Palestinian Authority have created a new reality, and this has forced an evolution in Likud doctrine more rapid than many imagined possible. A grand negotiation on the ultimate issues between Israelis and Palestinians--sovereignty, borders, Jerusalem, water, refugees--now seems not only inevitable, but plausible.

But is Israel dealing from weakness or from strength? Is Netanyahu still reeling from the pressures of last fall, or is this strategy the best hope for keeping the initiative in his hands? These questions will be debated passionately among Israelis and among friends of Israel in America. Even Netanyahu may not know the answer.

The United States bears a responsibility to guide the diplomacy in realistic directions and to shield Israel from outside pressures that will try to accelerate its concessions beyond what its security, or domestic consensus, will bear. Washington should insist on the reciprocity of obligations (as it is now committed, in writing, to do). The United States will need to keep its eye on the ball--that is, keeping the main negotiation on track--and not get caught up in the emotional international reaction to subordinate issues like settlements or tourist tunnels. (The Clinton administration deserves credit in this regard.)
Outside the negotiating room, a heavy responsibility still falls on the United States to shape the strategic context. Syria--embittered and increasingly isolated, especially if the Palestinian negotiation advances--needs to be deterred. There have been too many war scares in recent months on the northern front; Damascus needs to understand that if it starts a war, the United States will interpose no obstacle to a crushing Israeli counterblow that could spell the end of the regime.

The Europeans and Russians need to be encouraged to support the diplomacy as it unfolds, not to egg the Palestinians into unrealistic positions. The United States should consolidate its strategic partnership with Jordan, which has proven its acumen and support for the diplomacy; we should begin to distance ourselves from Egypt, whose strategic perceptions in the region seem not to parallel ours as much as before. The United States must continue to bolster its other moderate friends in the Arab world--maintaining military dominance in the Gulf, for example, and ratcheting up pressures against Iran and Iraq. Islamist extremism must be opposed, not appeased.

Even a final peace with the Palestinians will not end the dangers to Israel that now come from other directions (Iran, Iraq, Islamic extremism). At best, it will put Israel in a better position to confront those dangers as we enter a climactic phase of the half-century-old Arab-Israeli conflict. It will not be a quiet time.