The Israeli press reports with alarm that the United States has threatened to reduce by $1 billion the guarantee the U.S. treasury customarily provides for Israel’s state borrowings, thereby assuring the nation the best commercial terms. The U.S. threat is evidence that the Obama government is serious about halting Israel’s colonization of the Palestinian territories — and about imposing, rather than merely inviting, a two-state Middle East solution.

During the next two years, Israel would lose more than a quarter of its U.S. loan guarantees, a sum equal to the estimated total the Netanyahu government now proposes to spend on the 120 West Bank colonies, where 300,000 Israelis live. This penalty excludes Israel’s borrowing for military purposes, ordinarily underwritten by the U.S. That exclusion defends President Obama from a charge of weakening Israel’s security. It is also recognition that nearly all that Israeli military spending goes to American companies.

This development out of Washington seems to have antedated the defiant announcement by Benjamin Netanyahu last Monday that Israel will construct a new housing project for Jews in Arab Jerusalem, the issue responsible for much current uproar. The prime minister declared that Israel can do whatever it pleases anywhere in Jerusalem since “united Jerusalem” has been pronounced “the capital of the Jewish people and of the state of Israel,” and “our sovereignty over it cannot be challenged.”

The statement followed Washington’s summons of Israel’s ambassador to the State Department to be told that the construction project “must stop,” as it is illegal (and, unofficially, that it is an unacceptable slap in the face to the U.S.).

Israel in fact has no sovereignty whatever over East Jerusalem, which it seized from Jordan in the 1967 war. Its presence is as a military occupier, and the legitimacy of its presence depends upon the U.N. General Assembly partition of Palestine in 1947. That resolution recognized Israel within defined borders. But it also recognized Palestinian territory outside those borders, as set by U.N. Resolution 181, as belonging to the Palestinian people, who have the sovereign right to establish their own state there. That includes East Jerusalem.

These legal considerations, generally neglected by the international public and deliberately obfuscated by Israel, have suddenly become relevant for two reasons.

The first, as set out by Henry Siegman, former national director of the American Jewish Congress, now head of the U.S./Middle East Project in New York, and the most persistent, conscientious and learned of American Middle East experts, is that President Obama intends to get an Israeli-Palestinian two-state settlement, and is going about it by first focusing on an issue where the Netanyahu government and its Likud allies in the United States are the most vulnerable, the settlements.

The settlements are illegal in international law, condemned by the international community, an enormous political and security liability to Israel, and a burden on the state budget, and they enjoy relatively little support from the American Jewish community and the ordinary citizens of Israel. The notion that popular support for the colonies makes them untouchable by the government is, Siegman says, “absurd.”

“Draconian laws” on illegal construction are regularly enforced inside Israel, and anyone who pleaded “natural growth” as a reason to be exempted from such law would be told to move: There are plenty of empty apartments in Israel, where the Jewish population of European descent is diminishing.

A recent book, “The Hebrew Republic” by Bernard Avishai, notes that up to one-third of the children of the Israeli elite live abroad, and a 2006 study found that 44 percent of young Israelis “would seriously think of leaving Israel” if it would improve their living standards.

Siegman says that Obama is determined to establish a settlement based on U.N. resolutions, agreements Israel has signed but ignores, and international law.

Such an approach would be powerfully reinforced by the second new factor in the situation: the European Union proposal made last week by its foreign policy chief, Javier Solana. This would have the U.N. Security Council set (an early) deadline for Israel and the Palestinians to agree on a settlement. If they fail, as they have until now, the Security Council would employ its own legal authority over the still unresolved Palestinian partition decided by the U.N. in 1947, and would itself set the borders for Israel and the new Palestinian state, as well as establishing Security Council terms for settling the other permanent issues: Jerusalem, refugees and security.

The responsibility to settle the matter, if the parties can’t do it themselves, is implicit in the U.N. resolutions that created Israel and awarded a right to self-determination to the Palestinians.

If the United States and the European Union join forces to impose such U.N. settlement terms, and back them with their combined political and economic resources, sending an international force to enter the currently occupied Palestinian territories to establish the rule of law, assist the Palestinians in building government institutions, and to assure Israel’s security, this dangerous and endlessly painful stalemate might at last be ended, to everyone’s relief, the profound benefit of the whole region, and to the credit of Barack Obama and Javier Solana.

Visit William Pfaff’s Web site at

© 2007 Tribune Media Services Inc.

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