WATCH: May 2019 Two-State Index
The Index Moved Up 1.1% This Month, Here's Why:

  • Israel is heading back to elections after Netanyahu is unable to form a right-wing coalition, halting efforts to begin annexing parts of the West Bank.
  • The US announces its Economic Workshop in Bahrain, Palestinians will not attend.
  • As a result of Israeli elections, political components of the American plan are likely on hold, decreasing chances of implementing an "economic peace" framework that ignores the two-state formula.
  • PA Economic crisis continues in the West Bank.
  • After intense days of violence and casualties on both sides, the Egyptian-UN brokered ceasefire is holding in Gaza.
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US Announce Economic Workshop in Bahrain, American Plan Likely On Hold

The White House announced it will co-host an economic workshop with Bahrain to encourage investment in the Palestinian Territories. The workshop, scheduled for June 25-26, is expected to bring together government, business, and civil leaders to gather support for potential economic investments and initiatives that may be possible in light of a peace agreement, and is intended to kick off the Trump peace plan.

Palestinian officials announced that they will not take part in the economic workshop. In addition, the Palestinian Authority (PA) is urging other nations to boycott the event. Meanwhile,  Bahrain has agreed to host and Saudi Arabia, the United Arab Emirates, and Qatar have publicly declared that they will attend, and Russia and China announced that they will not.

The recent news that Israel is, again, going to elections following Prime Minister Netanyahu’s unsuccessful negotiations to form a coalition further adds to the challenges that the U.S. plan faces, likely putting the Administration's’ efforts on hold, possibly indefinitely, as the U.S. election is just over a year away.

How does this affect the TSI?

With the Palestinians not attending the proposed economic workshop and the political component of the peace plan unlikely to be released because of Israeli elections, it is difficult to see the U.S. re-establishing its relevance as an honest broker in the Israeli-Palestinian conflict, all this leaves the U.S. parameter at its all-time low of 2.


How Trump’s approach to the Middle East ignores the past, the future and the human condition (Brookings Institution)

‘Hello’ elections means ‘goodbye’ Trump Peace Plan (Jerusalem Post)

Netanyahu Unable to Form Government, Israeli Elections To Be Held September 17

The 21st Knesset has been dissolved just weeks after being sworn in after Prime Minister Netanyahu was unable to form the necessary majority coalition. Avigdor Liberman, holding the required mandates needed to form a government, refused to budge over a conscription law that would have affected the number of exemptions given to the Ultra-Orthodox community, forcing Netanyahu to bring forward the vote to disband the Knesset.

With the support of the right-wing, Ultra-Orthodox, and Arab parties, the vote passed 74 to 45, confirming elections will take place for the second time in 2019 on September 17.

While the political parties start to map out their strategies for the unexpected election cycle, it remains unclear whether the move will strengthen the right by giving Naftali Bennett’s New Right party and Moshe Feiglin’s Zehut party a second chance to enter the Knesset after their initial failure to pass the 3.25% threshold, or whether it will revitalize the opposition.

How does this affect the TSI?

For now, the legislative attempts to limit the court's ability to curb unconstitutional laws have been put on hold, as are the talks of annexing settlement blocs / Area C. The renewed uncertainty about Israel’s next government moves Israel’s government, legislature, and prime minister parameters to where they were before April elections, all moving up one point.


The final results of April’s election are in: No one won, Netanyahu lost (Times of Israel)

Even Netanyahu knows it’s over (Haaretz)

PA Economic Crisis Continues

The financial crisis in the Palestinian Authority escalates as Israel continues to withhold millions of dollars of tax revenues a month collected on behalf of the PA. The move, made in February, is intended to pressure the PA to stop support payments for Palestinian prisoners and their families.

As a result, the PA has refused to accept any of the tax revenues estimated at $166 million a month - around half of its total budget. While efforts have been made to curb the financial crisis by cutting PA salaries by up to 50%, Israeli security defense officials estimate that the PA has two to three months before economic collapse begins.

While the month of Ramadan might have had a calming effect in the West Bank due to Israel easing some movement restrictions on Palestinians and granting extended access to the Haram al-Sharif, unrest may be right around the corner. This belief has prompted Israel to approve the transfer of 10 U.S.-made light armored military vehicles from Jordan to the PA in order to allow Palestinian police forces to better deal with the foreseen unrest.

How does this affect the TSI?

As Ramadan comes to an end and with the growing financial crisis, the next couple of months may be pivotal. For now, though, the current PA parameters remain steady.


How long can PA keep borrowing money from Palestinian banks?


The Latest Round of Fighting Ends with a Ceasefire Brokered by Egypt and the UN

The month began with a short but deadly round of fighting between Israel and Hamas that left at least 22 Palestinians and four Israelis dead. Brokered by Egyptian and UN efforts, a fragile ceasefire between Israel and Hamas has taken hold, bringing this short cycle of violence, in which over 600 projectiles were fired at southern Israel and over 300 targets were attacked in Gaza by the Israeli military, to an end.   

A new equation has been put in place linking the use of incendiary balloons with restrictions on fishing zones - otherwise broadened to 15 nautical miles, as well as the reintroduction of Israel’s “targeted killing” policy in Gaza.

How does this affect the TSI?

As Qatari money starts entering the Gaza strip once again and with only minor breaches to the ceasefire, so far it has been reported that Israel and Hamas reached a 6-month agreement, although that report is being denied on both sides. In lieu of the calming situation, Gaza-related parameters stay the same.


Why Do Israel and Gaza Keep Fighting? Because It’s in Their Leaders’ Interests(New York Times)

Israel's Renewal of Targeted Killings in Gaza Sends a Message: This Round Is Different (Haaretz)


Additional Resources:

Peace Now Annual Settlement Report 2019

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