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U.S., Israel clash over future role of Palestinian Authority in postwar Gaza

Biden and Netanyahu appear set for a collision over handling the PA. But it’s not clear if Israel will face any consequences for rebuffing the U.S.

For months, Israeli leaders have made clear that they are not on the same page as the Biden administration when it comes to the governance of postwar Gaza. The U.S. has said a unified Palestinian Authority (PA) — the governing body in the West Bank — should have control of Gaza after the war ends. 

Israel disagrees

The result is a repeated tit-for-tat between Washington and Jerusalem, where Biden administration officials weigh in on the future role of the PA. Israel then often ignores the White House’s guidance. 

Consider the issue of Palestinian tax revenues being held by Israel. Israeli Prime Minister Benjamin Netanyahu, under pressure from the far-right flank of his governing coalition, said he would not transfer certain tax revenues owed to the PA that would go to Hamas-run Gaza. 

The PA, though, refuses to accept only part of the revenue — so none of it has yet been transferred, leaving the PA on the precipice of financial collapse. Washington has sought to push Israel to transfer all of the money.

“This is Palestinian money. We’ve been clear that those revenues should be released to the Palestinian people,” John Kirby, the National Security Council’s coordinator for strategic communications, said earlier this month. Israel has not listened. 

The public disagreements take place against the backdrop of an Israeli public that is both supportive of President Joe Biden and also deeply skeptical of the PA, an institution racked by corruption and widely disliked by Palestinians. 

“I think the disagreements are going to continue until Netanyahu has to actually be forced to make a choice about something, and I think he’s going to continue to choose not to make the choice,” said Michael Koplow, chief policy officer at Israel Policy Forum. “I don’t think we’re at that inflection point yet.” 

The question, then, is when — or if — Biden and Netanyahu will clash on dealing with the PA, and whether Israel will face any consequences for rebuffing the U.S. 

That hasn’t happened yet, perhaps because many of the disagreements remain theoretical: The finances of the PA have not yet collapsed, so Israel holding onto the revenues hasn’t had a strong impact, even if that is likely to change. And the matter of who will rule Gaza after the end of the war is purely speculation until the war actually ends, which is unlikely to occur soon, even as Israel’s military has begun to shift to a less intense phase. 

“I think the disagreements are going to continue until Netanyahu has to actually be forced to make a choice about something, and I think he’s going to continue to choose not to make the choice,” said Michael Koplow, chief policy officer at Israel Policy Forum. “I don’t think we’re at that inflection point yet.” 

Secretary of State Tony Blinken said last week that he had secured a “commitment” from the PA to “pursue meaningful reform” in service of negotiating a two-state solution. Blinken has not explained what such reform would entail. A State Department spokesperson declined to comment when asked for further details on the commitment Blinken received from the PA. A spokesperson for the White House National Security Council did not respond to multiple requests for comment.

“You’re talking about a governance, a government and a structure of governance that maximizes the ability of the authority to actually deliver what the Palestinian people want and need,” Blinken said on Wednesday in a speech at the World Economic Forum in Davos, Switzerland. “But it also has to be able to operate in what you might call a permissive environment — in other words, with the support of, with the help of Israel, not with its active opposition.” 

In the aftermath of the Oct. 7 terror attacks, Netanyahu made clear that he opposed any PA involvement in postwar governance in Gaza. But in recent weeks, officials close to Netanyahu have signaled that they might rethink that full-throated opposition, suggesting that Israel is open to changing course as the war goes on.

“If you uphold this value of a two-state solution, then there have to be two partners that can enter into that solution,” said David May, a senior research analyst at the Foundation for Defense of Democracies who studies the Palestinian financial system. “There is no Palestinian partner right now that is capable and willing to commit to enacting the compromises necessary for a two-state solution.”

“Israel is aware of the desire of the international community and the countries of the region to integrate the Palestinian Authority the day after Hamas, and we make it clear that the matter will require a fundamental reform of the Palestinian Authority,” Israeli National Security Advisor Tzachi Hanegbi wrote in a December op-ed. Days later, Netanyahu told The Wall Street Journal that it is a “pipe dream” to expect the PA to demilitarize Gaza after the war. 

Blinken has not said whether the reforms discussed with PA President Mahmoud Abbas would include changes to the PA’s payments to Palestinian prisoners in Israeli prisons, including many who committed terrorist attacks, or so-called “martyr payments” to the families of terrorists killed by Israeli security forces. But the PA has been resistant to ending the payments, which were targeted by Congress; the 2018 Taylor Force Act prohibits the U.S. from giving financial support to the PA so long as it pays terrorists. 

“If you uphold this value of a two-state solution, then there have to be two partners that can enter into that solution,” said David May, a senior research analyst at the Foundation for Defense of Democracies who studies the Palestinian financial system. “There is no Palestinian partner right now that is capable and willing to commit to enacting the compromises necessary for a two-state solution.”

What remains unclear is whether the Biden administration will exact a cost on Israel for countering its public messaging about the PA. 

“I think the zeitgeist of the White House is that, ‘We are not an administration that goes and blasts Israel from the White House podium. We want to work things out behind closed doors,’” said The Washington Institute for Near East Policy distinguished fellow David Makovsky, who noted that Biden and Netanyahu have lately been speaking much less frequently than in the fall. “It isn’t done publicly, but it’s unmistakable that the administration is frustrated.” 

Biden and Netanyahu are both, in part, responding to political pressures. Netanyahu is catering to his right flank, who threaten to leave the ruling coalition if he gives in on the PA. 

“He’s depending on [Itamar] Ben-Gvir and [Bezalel] Smotrich, and they don’t want to hear the word PA,” Makovskysaid, referring to two of the most extreme members of Netanyahu’s coalition. Ben-Gvir, the national security minister, and Smotrich, the finance minister, disavow any Israeli coordination with the PA.

Biden, meanwhile, is working to end the war as he runs a grueling reelection campaign — and may not be in office to continue to push toward a two-state solution.

“Both Bibi and President Biden are basically arguing disparate visions for policies that they may or may not be around to implement,” said Jonathan Lord, a former Department of Defense official and the director of the Middle East security program at the Center for a New American Security. 

“There need to be policies discussed, not so much about the day after yet — which I submit is important — but we need to be talking more about the day in between. Because if there aren’t better policy solutions posited to stabilize Gaza in the interim, I’m not sure we ever get to the day after.”

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