Netanyahu's Aipac speech: paying lip-service to peace

The Israeli prime minister's intransigence makes peace talks implausible.

In a speech to the American Israel Public Affairs Committee (Aipac) last night, the Israeli prime minister, Binyamin Netanyahu, appeared to give a two-fingered salute to the Obama administration, which has pushed for a freeze on settlement-building with the hope of peace talks with the Palestinians resuming.

"Jerusalem is not a settlement. It is our capital," Netanyahu told the powerful pro-Israel lobby. "All these neighborhoods are within a five-minute drive from the Knesset . . .

"Everyone knows that these neighborhoods will be part of Israel in any peace settlement. Therefore, building in them in no way precludes the possibility of a two-state solution."

He added:

Israel is unjustly accused of not wanting peace with the Palestinians. Nothing could be further from the truth. My government has consistently shown its commitment to peace in both word and deed.

From day one, we called on the Palestinian Authority to begin peace negotiations without delay. I make that same call today. President Abbas, come and negotiate peace.

It is a deliberately reductionist comment, and one that is likely to stoke anger.

Lest we forget, Netanyahu's proclaimed backing for a two-state solution comes with conditions that are unacceptable to the Palestinians. The Israeli newspaper Haaretz explained, a year ago:

Netanyahu seeks to deny the Palestinians four rights of any sovereign state: control of its airspace; control of its electromagnetic spectrum; the right to maintain an army and to sign military alliances; and, most importantly, control of the border crossings where arms and terrorists could pass. Netanyahu believes Israel must retain all of these.

In a landmark address in June last year, he said for the first time that he supported a two-state solution -- but one that denied the right of return to Palestinian refugees ("any demand for resettling Palestinian refugees within Israel undermines Israel's continued existence as the state of the Jewish people") and gave Israel an undivided Jerusalem (the Jerusalem law was deemed at the time to be in contravention of international law). He also rejected the suggestion that settlement-building be suspended.

At the time, many foreign leaders expressed cautious approval at the prospect of dialogue reopening, although it was also widely accepted -- within the Arab world and without -- that these terms were not viable.

Sadly, Netanyahu's speech to Aipac shows very little movement. Responding to his June 2009 address, Ben Caspit wrote in the Hebrew-language paper Ma'ariv:

If Netanyahu had the slightest belief that there was some chance that the Palestinians would be capable of acquiescing to any of the conditions he had set, he would have refrained from saying what he did.

This was borne out last night. While paying lip-service to diplomacy, the Israeli prime minister remains unwilling to make the concessions necessary to make real progress.

As the diplomatic spat between Israel and the US rumbles on, Barack Obama would do well to capitalise on the momentum gained by the successful passage of the health-care bill to push for a freeze on settlement-building, and substantive peace talks.

As many commentators have noted, this is the only way to shore up security for Israeli civilians, and give Palestinian civilians the "security, dignity and peace" that Netanyahu claims to desire.

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Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation