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Tensions mount in Jerusalem; cooler heads prevail in Gaza (for the time being); U.S. diplomacy grinds to a halt, as does aid to the Palestinians; Israel passes a major controversial law, and more: Here is why our Two-State Index (TSI) went down 2.9% in July.
To learn about the Geneva Initative's TSI, read our introductory newsletter and visit our methodology page. You can also check our log page for complete inventory of developments. 
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Tensions over the Holy Esplanade in Jerusalem escalated during July. Israeli Prime Minister Benjamin Netanyahu approved visits by Israeli members of Knesset, albeit sparingly, while a record number of 1,400 Jewish visitors ascended the plaza to mourn the destruction of the ancient temples. Jordan condemned acts of prayer by Jewish visitors, some of whom were arrests by Israeli police. Palestinian worshippers and Israeli police have clashed on the plaza throughout the month, including last weekend. In another development, the council of Palestinian muftis barred Muslim Jerusalemites from participating in the city's municipal elections this fall. Finally, a 100-kilogram boulder fragment dislodged and fell from the Western Wall on July 23. Experts say the structure is sound but warn abasing lack of proper supervision.

The July incidents added to late June tensions over the opening of an Israeli police station near a sensitive archeological site not far from the Al-Aqsa Mosque. The station was removed after a meeting between Netanyahu and Jordan's King Abdullah. Subsequently, the Holy Sites parameter is adjusted from 6 to 5, as tension may rise toward the Muslim holidays later this month.
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Gaza came "within minutes" away from war. The U.N. Middle East envoy, Nickolay Mladenov, reported to the Security Council that only a last-minute intervention he conducted together with Egypt on July 21 convinced Israel and Hamas to "step back from the brink" and restore a fragile ceasefire. The drama highlighted continued violence during the month of July, in which one Israeli soldier and 21 Palestinians were killed, and scores injured. The West Bank also saw its share of casualties, with a stabbing attack that left one Israeli settler dead and three injured. Among the Palestinians, three were killed and 93 injured.

As Gaza stabilization efforts — including Israel-Hamas ceasefire and internal Palestinian reconciliation — continue to falter, 'more-of-the-same' dynamics leave the Gaza category largely unchanged at a dire weighted value of 2.41.
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American diplomacy is at a deadlock. U.S. envoys did not receive sought-after endorsement from Arab leaders for their peace plan. America then switched its attention to Gaza, but found itself ill-positioned to affect dynamics in and around the Strip. Still, the White House insisted its plan would be detailed and include a vast economic package that the Palestinians should seriously consider.

In Gaza, the United States largely plays a spectator role due to its strained relations with the Palestinian Authority and its nonexistent relations with Hamas. It took credit for introducing and securing a majority for an amendment that blamed Hamas for Gaza hostilities to a U.N. General Assembly resolution that had blamed Israel exclusively. Whatever ingenious diplomatic moves were at play, it is Israel's 2005 territorial withdrawal from Gaza to the 1967 lines that allows the international community to be more attentive to Israeli security needs there. Separately, despite early hopes by U.S. envoys to receive Arab support for its peace plan, the administration encountered Arab resistance to cross traditional Palestinian red lines, especially with regards to Jerusalem and refugees. The United States parameter is therefore adjusted from 5 to an ineffective 3. However, the Third-Party Engagement parameter stays put at 6, since the U.S. failure is balanced out by the enhanced U.N. role: Mladenov speaks to all relevant players and remains strategically balanced, attentive and assertive.
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American aid to the Palestinians is still frozen pending the Trump administration’s 'review.' Frozen aid includes direct security assistance to the Palestinian Authority, UNRWA support and humanitarian, development and civil society projects, mainly through USAID.

The full effect of the freeze is hard to foresee, but some West Bank projects are stalled and some organizations are already making cutbacks, bringing the Palestinian Civil Society score from 6 to 5. Separately, after cutting support to UNWRA, the prospects of 270,000 Gazan children staying at home at the start of the schoolyear sent the Trump administration searching for additional assistance to help mitigate its own doing. These cutbacks are expected to bring about further unemployment. Consequently, the Governance parameter in the West Bank is adjusted from 5 to 4, and in Gaza from 3 to 2.
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The Knesset passed a controversial bill that codifies Israel as the nation-state of the Jewish people, failing to include the principles of equality or democracy. The law declares "united" Jerusalem as Israel’s capital and stipulates that Jews "have an exclusive right to national self-determination" in Israel. Separately, Israel passed another law limiting Palestinians’ access to its High Court of Justice, which has become a key venue for securing Palestinian rights, directing administrative petitions — including those challenging land seizures — to the Jerusalem District Court, where they can be effectively buried.

The nation-state bill drew major criticism from within Israel (including a visible Druze outcry), from the America-Jewish community, from the international community, and from the greater Arab World. The Palestinians called the law "racist," and one that "officially legalizes apartheid and legally defines Israel as an apartheid system." We therefore update the Palestinian Public Opinion parameter from 4 to 3. For his part, Netanyahu doubled down on the law and turn it into a loyalty test in the coming election season. Former Israel Prime Minsters Shimon Peres, Ehud Barak, and Ehud Olmert all stated clearly and publicly that Israel’s occupation of the Palestinians and ultra-nationalist trends undermine Israel’s democratic nature and threaten to push it toward an Apartheid regime. The recent laws certainly move in this direction.
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In additional developments this month: Europe continued its heightened involvement in Israeli-Palestinian affairs: EU Ambassador to Israel Emanuele Giaufret reportedly criticized the nation-state bill as one that "reeks of racism," foreign policy chief Federica Mogherini joined other EU officials in criticizing Israel for its decision to relocate the West Bank Bedouin herding village of Khan al-Ahmar (which was postponed by the Israeli High Court of Justice delayed to mid-August). Two-state advocate Tzipi Livni was designated to head the opposition; Israel’s withholding of Palestinian tax revenues because of Palestinian payment to families of jailed prisoners continues to be a focus of Palestinian outrage; Abbas accepted but Netanyahu rejected Russian proposal for a peace summit; and a former U.S. defense official will lead the United Nations' Gaza violence probe.

You can see all events on our ongoing
TSI log.
TSI Original Analysis
The Devil You Know: Israel and Hamas
By CELINE TOUBOUL, Geneva Initiative Steering Committee Member and Deputy Director of the Economic Cooperation Foundation (ECF)
Gaza is at a dead end. Caught between the conflicting interests of Hamas, Israel, Egypt, and the Palestinian Authority, it is politically deadlocked. It is also on the verge of economic and humanitarian collapse. Only violence draws international attention to it, but at great cost to the Strip’s population.

To better understand Gaza's dynamics, one should examine the two players that affect it most: Hamas and Israel.

Hamas's core interest is to maintain effective control over Gaza as a platform to fight Israel and compete with Fatah for leadership of the national Palestinian movement. It aspires to enter and take over the PLO.

To control Gaza, Hamas needs to do two things: first, to maintain control over Gaza's internal security forces — the police and the internal security apparatus — as well as the group's military wing. Second, it needs to pay salaries to the 43,000 Gaza employees and the 18,000-20,000 members of its military wing at a cost of $30-$40 million per month. The payment of these salaries affects a broader circle of about 200,000-250,000 Gazans.

Together with military strength, socio-economic cohesion is key to Hamas's ability to assert its control. To this end, Hamas is ready to make tactical compromises involving the transfer of civilian responsibilities to the Palestinian Authority and control of Gaza's border crossings.

Iran, Turkey and Qatar are all interested in strengthening their role as guarantors of Palestinian rights, and see in Hamas a central player to that end, albeit for different reasons: Turkey and Qatar stand together against Egypt as they seek to enhance the Muslim Brotherhood's regional role, whereas Iran is interested in using Hamas as a military proxy against Israel.

The perspectives of key leaders within Hamas reveal its strategic dilemmas. Some in Gaza, like Mahmoud A-Zahar, hold a pro-Iran line and oppose reconciliation with Fatah, as well as rapprochement with Egypt. Abroad, Khaled Meshal relies on Qatari and Turkish backing as he plots his political comeback while also opposing a larger ceasefire with Israel. 

But the strongest Hamas figure currently is Yahieh Sinwar. His leadership rests primarily on public support and that of the military wing and its leader, Mohammed Def. Sinwar has moved Hamas's center of gravity to Gaza. He is interested in reinforcing ties with Egypt at the expense of relations with the Muslim Brotherhood and its backers, Qatar and Turkey. His priorities are to improve conditions in Gaza by dealing with the crossings, to reach power sharing arrangements with Fatah, and to improve Hamas's national and internationalstanding as he seeks to lead the movement as a national Palestinian movement rather than as the ruling power in Gaza.

Through its control of the Strip's security forces, Hamas is responsible for enforcing the tenuous ceasefire with Israel. For its part, Israel plays a crucial role in both the stability of the ceasefire and Gaza’s economic situation.

Four core interests guide Israel's policy vis-a-vis Gaza. The first is maintaining quiet. To this end, Israel is building defensive capabilities, preventing Hamas's ability to enhance its military capacity, and deterring it from using the capacity it has. Notably, Israel wants to maintain Hamas's ability to enforce a ceasefire and therefore has not sought to bring down its rule. This equilibrium has guided all previous Israel's military operations in Gaza. 

Second, Israel aims to prevent Hamas from achieving political recognition and legitimacy. Thus, Israel has rejected a more formal and long-term ceasefire with Hamas, as well as other economic initiatives that require direct dealing with it. Still, this interest has not led Israel to empower the PA role in Gaza; Israel does not believe the Palestinian Authority has the capacity to enforce Gaza ceasefire, and empowering the Palestinian Authority would imply a broader shift of policy beyond Gaza.

Third, Israel seeks to maintain cooperation with Egypt and enhance its role. Israel has therefore refrained from formally opposing the Egyptian initiative for Palestinian reconciliation, although it has also not actively supported the initiative.

Finally, Israel seeks to maintain political and security separation between Gaza and the West Bank. From a security point of view, it aims to prevent the strengthening of Hamas in the West Bank. Politically, the Gaza-West Bank split reinforces the argument that an agreement with the Palestinians is unattainable.

There are different views within Israel in regard to the way these principles should be translated into policy, ranging from Shin Bet's 'zero risk' policy, to COGAT's focus on humanitarian and economic needs, to the prime minister's attentiveness to his political base.

On the backdrop of the larger Gaza question that involves the Palestinian Authority and its insistence on an "all-or-nothing" approach to its redeployment in the Strip, Israel and Hamas continuously test a makeshift ceasefire. The fate Israeli soldiers and civilians held by Hamas, and the plight of thousands of Hamas prisoners in Israel also complicate their ability to come to agreement on a more stable ceasrfire and other stabilization measures.
The Two-State Index (TSI) is brought to you by the Geneva Initiative, a Palestinian-Israeli organization working to promote a negotiated peace agreement in the spirit of the two-state vision. The TSI is produced by an Israeli-Palestinian team, and reflects a unique bilateral perspective.
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This publication was produced with the financial support of the European Union. Its contents are the sole responsibility of the Geneva Initiative’s Two-State Index (TSI) editorial team and do not necessarily reflect the views of the European Union.
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