Whether we like it or not, the settlers have won. The two-state solution is now impossible

Whether we’re willing to admit it or not, Israel’s the Palestinian “peace process” is dead. There’s no hope of any success for a two-state solution.

They can’t say they weren’t warned. In 1987 and 2000, after the eruption of the first and second intifadas in the occupied territories, Israeli officials could plausibly claim to have been taken by surprise. Not this time. Nitzan Alon, the Israeli general responsible for the West Bank, has warned publicly about the possibility of a third intifada by the repressed and stateless Palestinians. If the latest round of US-led diplomatic efforts fails, he told the Jerusalem Centre for Public Affairs, a think tank, on 18 June, “I’m afraid we will see the escalation . . . strengthen.”

Alon’s comments follow similar warnings from, among others, the former Israeli intelligence chiefs Yaakov Peri and Yuval Diskin, as well as Israel’s former head of general staff, General Shaul Mofaz. “We are on the verge of a third intifada,” said Mofaz in January. “The fuel vapor may already be sensed in the air.” Four months earlier, in September 2012, the Palestinian Authority president, Mahmoud Abbas, had responded to demonstrations over political gridlock and soaring unemployment by declaring that a “Palestinian spring” had begun.

It is now a matter of when, not if, the West Bank boils over into violent protests. All eyes are on events in Damascus, Cairo and Istanbul while Israel continues to oversee the longest military occupation in the world, 46 years and counting.

Perhaps the most offensive phrase, still deployed by the laziest observers in the west, is “peace process”. There is no peace; there is no process – despite an astonishing five visits to the region in the past three months by the US secretary of state, John Kerry.

Negotiations between the two sides were “frozen”, to quote Dov Weisglass, the then chief of staff to Ariel Sharon, almost a decade ago. “[W]hat I effectively agreed to with the Americans was that part of the settlements would not be dealt with at all,” Weisglass told the Israeli newspaper Haaretz in October 2004. “Effectively, this whole package called the Palestinian state, with all that it entails, has been removed indefinitely from our agenda.” Or, as a smiling and confident Dani Dayan, the outgoing chairman of the Yesha settlers’ council, put it to me in an interview for al-Jazeera English: “The conflict right now has no solution.”

Dayan and his fanatical friends can take credit for burying the “two-state solution”. Between 1993 and 2000, as Palestinians and Israelis met for summits, conferences and “peace talks”, the number of settlers in the West Bank and East Jerusalem doubled. “It’s like you and I are negotiating over a piece of pizza,” as the Palestinian-American lawyer Michael Tarazi told an audience at Iowa State University in 2004. “How much of the pizza do I get? And how much do you get? And while we are negotiating it, you are eating it.”

Today, the relentless colonisation of occupied Palestinian land continues apace, in defiance of the Geneva Conventions, with 121 settlements and 102 unauthorised “outposts” occupying 42 per cent of the West Bank.

The settlements, therefore, have rendered a two-state solution impossible. The evidence for this? “The idea that a Palestinian state will be formed in the land of Israel has come to a dead end,” declared the former Yesha Council leader Naftali Bennett on 17 June. “Today there are 400,000 Israeli residents of Judaea and Samaria and another 250,000 in eastern Jerusalem.”

Whether we want to admit it or not, the settlers have won – they have what they call a “wet dream” government, protecting and promoting their interests. Israel’s foreign minister-in-waiting, Avigdor Lieberman, is a West Bank settler; so is his deputy. Both Uri Ariel, the housing minister, and Shai Piron, the education minister, are residents of illegal West Bank settlements. Bennett, who leads the pro-settler Jewish Home party, is also the minister for the economy.

Settlers make up 5 per cent of Israel’s population but more than 10 per cent of Israel’s parliament, the Knesset. Beyond the political sphere, settlers have mounted a concerted effort to dominate the Israel Defence Forces. Settlers in the government will not sanction a withdrawal from the occupied territories and settlers in the military would never enforce such a withdrawal. Thus, the “peace process” is a sham, “one of the most spectacular deceptions in modern diplomatic history”, according to the former foreign minister Shlomo Ben-Ami.

On my last visit to the West Bank, I met Dr Mohammed Shtayyeh, the influential head of the Palestinian Economic Council for Development and Reconstruction, and Diana Buttu, a Stanford-educated lawyer and former Palestinian negotiator. “The two-state solution is not possible any more and we are slipping into a one-state situation . . . which is a comprehensive colonisation of all of Palestine,” Shtayyeh said.

Buttu said she no longer backed two states for two peoples, preferring a single, secular, binational state. But is that feasible? “Is it more feasible to try and get the Israelis to agree to the division of Jerusalem – or is it more feasible for us to start pushing . . . Israel to give us our rights, rather than begging for a little piece of land to be carved out [for us]?” she asked me, as we sat sipping tea in a Ramallah café.

Buttu is right. The choice on offer is stark: either a democratic, one-state solution, in which Jews, Muslims and Christians can live side by side as equals – one person, one vote – or Bennett and Dayan’s “status quo” vision, in which nearly four million Palestinians continue to live under a de facto Israeli military dictatorship, denied the right to vote and offered only a divided, bantustan statelet.

I know which I’d prefer. Either way, no matter how many visits John Kerry makes to Jerusalem, it is time to consign the two-state solution to the dustbin of history.

Mehdi Hasan is a contributing writer of the New Statesman and the political director of the Huffington Post, where this column is crossposted 

US Secretary of State John Kerry and Israeli Prime Minister Benjamin Netanyahu at a meeting in May 2013. Photograph: Getty Images

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

This article first appeared in the 08 July 2013 issue of the New Statesman, The world takes sides

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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