Why the U.S. and Saudis Want a Two-State Solution, and Israel Doesn’t

Amid the war in Gaza, a major crisis has been brewing, largely behind the scenes, between the United States and Israel over the need for a Palestinian state. The two governments’ positions have long diverged—except during the administration of Donald Trump, whose peace proposal envisaged Israel annexing an additional 30 percent of the occupied West Bank and enveloping a conditional Palestinian state in an even more empowered Greater Israel. Now that divergence has a harder, sharper edge than ever: Washington’s strategic goals in the region require a Palestinian state in the long run and Israeli acknowledgment of that aim in the short run; the Israeli government is having none of it.

Much expectation attends a purportedly comprehensive peace proposal that the U.S. and its most important Arab partners have reportedly been working on, soon to be unveiled and then implemented as the Gaza war winds down. The centerpiece of the plan would be a firm commitment to, and timeline for, the creation of a Palestinian state—a process that President Joe Biden has already mapped out in remarks. This agenda is especially important to Saudi Arabia, whose foreign minister has made clear that a commitment to the two-state solution is a prerequisite for normalizing relations with Israel. The plan for a new postwar dispensation that Israeli Prime Minister Benjamin Netanyahu released on Friday made no such commitment, though it left just enough ambiguity about a possible “permanent arrangement with the Palestinians” not to foreclose that scenario.

This contradiction between U.S. and Israeli policies raises troubling quandaries. The Biden administration appears to be working to confront Israelis with the stark choice they face: security through an agreement with Palestinians and normalization with Saudi Arabia (and other Arab and Muslim countries), or inviting further conflict by clinging to occupied Palestinian lands at a heavy cost of antagonized regional relations and declining American sympathies.

[Hussein Ibish: Were the Saudis right about the Houthis after all?]

But if confronting Israel with that scenario is not enough to move its leaders, will Washington be prepared to make Israeli cooperation with Palestinian statehood a demand rather than a hint?  

Even before the current conflict, Washington recognized the urgency of unifying its alliances against the advances made in the region by the pro-Iranian bloc. Reconciling America’s two most significant partners, the militarily mighty Israel and the financially potent Saudi Arabia, became a particular priority of Biden-administration foreign policy. Before the October 7 attack on Israel by Hamas, Washington had ironed out most of their differences with Riyadh over defense and nuclear issues, while simultaneously negotiating with the Israelis over a package of benefits for the Palestinians that could make normalization possible for Saudi Arabia and win the backing, however grudging, of Palestinian President Mahmoud Abbas.

The October 7 attack froze this diplomacy. Saudi Arabia quickly announced that it had “paused” all discussion of normalization, until early January, when officials indicated that the kingdom was still interested. Predictably, however, the price Israel would have to pay appears to have gone up. Riyadh now insists that no normalization of relations with Israel can occur without full Palestinian statehood.

Nobody expects Israel to immediately withdraw from the West Bank or agree to a formula for the creation of such a state. Instead, what Saudi Arabia and many Western states, possibly including the U.S., want to avoid is any repetition of the Oslo framework’s failures: the lack of an explicit Israeli acceptance of a Palestinian state as an agreed goal, and the overreliance on purely bilateral talks between Israel and the Palestinians.

The Saudis know they face a very delicate task in reopening a path to normalization amid such a brittle political landscape; at stake are Riyadh’s claims to both regional Arab leadership and global Muslim leadership. Nevertheless, the carnage in Gaza—with its potential to provoke a wider conflict involving Lebanon, Syria, and Yemen—is a stark reminder for the Saudis that they cannot ensure their own stability and security without a resolution to the Palestinian issue.

[Graeme Wood: Hamas doesn’t want a cease-fire]

The Biden administration has registered all of this and its implications for U.S. interests. The war has been devastating for the Palestinians in Gaza, but it has very much strengthened Iran’s position in the region. This success has led the Iranians to caution their allies to exercise restraint now, to avoid dragging the region into a broader conflict that would put its gains at risk. (The Houthi radicals in Yemen, however, seem not to be listening too carefully.) For its part, the Biden administration has similarly cautioned Israel against attacking Hezbollah in Lebanon.

As Washington also ponders how to strengthen its position in the Middle East—by shoring up its alliances in the region, checking Iran’s influence, suppressing terrorist groups, ending conflict—virtually everything now appears contingent on securing Israel’s buy-in to the establishment of a Palestinian state. The Biden administration has therefore been open about looking for ways to revive that prospect; these could include recognizing a nascent Palestinian state, a Palestinian state with some conditions to be met, or merely affirming an incontestable Palestinian right to a state. The United Kingdom and France have also signaled that they are considering recognition of a Palestinian state in an effort to salvage the long-neglected aim of final settlement.

In sharp contrast, Israel is more explicitly opposed to Palestinian statehood now than at any time since the original Oslo process began, in December 1992—Netanyahu has repeatedly declared as much in recent weeks. When Biden suggested that the Israeli leader might consider a nonmilitarized Palestinian state, Netanyahu’s office issued a flat denial.

Netanyahu has repeatedly taken credit for having “for decades blocked the establishment of a Palestinian state,” and he knows that, on this point at least, he enjoys solid domestic backing. Last week, Israel’s cabinet, followed by the Knesset, rejected any additional Western recognition of Palestinian statehood or other such “international dictates”—regardless of the fact that Israel’s own establishment in 1948 was achieved by such recognition.

[Roya Hakakian: What Hamas promises, Iranians know too well]

Worse, Netanyahu has repeatedly insisted that, following the war in Gaza, “Israel will maintain full security control over all territory west of the Jordan River.” This means not only a total repudiation of Palestinian statehood, but also a pledge to rip up what’s left of the Oslo Accords. That would erase the long-standing division of the occupied Palestinian territories into three zones (known as Areas A, B, and C), which has since Oslo formed the notional basis for a permanent settlement involving partition.

If Israel acts on this vision, it will be rewarding Hamas with one of its dearest wishes. The Palestinian Islamist group hates Oslo as much as Netanyahu does. Keeping the Palestinian movement split, with Hamas in power but contained in Gaza and with Fatah exercising unpopular control over the Palestinian Authority in the West Bank, has been an effective strategy for Netanyahu of stalling Palestinian statehood. But it also helped create the conditions that led to the horrific mayhem of October 7.

As a result of all this, the U.S.-Israel relationship faces its most intractable challenge since the 1967 Arab-Israeli war. The U.S. will be unable to achieve its strategic aims of strengthening its position in the Middle East without securing Israeli cooperation toward Palestinian statehood. At the same time, Israeli public opinion is largely behind the political right that dominates the current government in being implacably opposed to Palestinian statehood of any kind.

The U.S. can’t force Israel to do anything it regards as anathema to its interests. All Washington can do is lay down its own markers, including open recognition of a Palestinian state and a clear warning to Israel that its rejectionism will do significant damage to bilateral relations. The bear hug of support that Biden has provided for Israel over Gaza, at times with no international backing, cannot be gratis. The U.S. has a right, indeed a responsibility, to demand Israeli cooperation on this indispensable priority. Failing that, Washington will have to reevaluate the merits of America’s special relationship with Israel.

[Hussein Ibish: Israel’s impossible dilemma]

That is unlikely to happen before the U.S. election. But Biden might be more willing to apply the full weight of American influence on Israel if he wins a second term. Historically, second-term presidents—freed from the domestic political constraints of seeking reelection—tend to take on such issues with more determination. And if Biden really believes that U.S. interests—and ultimately Israel’s future—rest on the creation of a Palestinian state and normalization with Saudi Arabia, he could act decisively.

The same reflex that produced Biden’s immediate support for Israel’s war in Gaza could flip, and he could become the first U.S. president since Dwight Eisenhower to use the full measure of American power to shape Israeli decision making. To influence Israeli public opinion, he would have to speak directly to Israeli citizens, over the heads of the current ruling coalition, much more than he has done to date. But the absolute intransigence of Netanyahu and his supporters leaves internationalist Americans who, like Biden himself, are committed to maintaining U.S. global leadership little choice but to try.