Proposals by the International Board of the. U.S./Middle East Project for a Middle East Peace Initiative and Parameters for Permanent Status Negotiations

Submitted to: Secretary of State Condoleezza Rice and UN Secretary General Ban Ki-moon

April 6, 2007

BACKGROUND ASSUMPTIONS

• In the aftermath of the Lebanon war and given broader regional dynamics, there exists an opportunity - albeit only temporary -- to revive Middle East diplomacy. While all parties have been weakened - the Israeli government by domestic problems and the outcome of the Lebanon war; President Abbas by Hamas' electoral triumph and Fatah's disorganization; Arab regimes by the rise of Islamism and of Hezbollah; and the U.S. by loss of regional credibility - the weakness itself could trigger bolder peace moves. A breakthrough on the Arab-Israeli front would boost all the above parties. The revival of the Arab League peace initiative at the Riyadh Summit presents a significant opportunity to move forward.

• Any initiative must begin with a satisfactory resolution of the intra-Palestinian crisis and of the current diplomatic and financial boycott of the Palestinian Authority. Attempts to bypass or marginalize Hamas are destined to fail as the Islamist movement will possess the strength and incentive to undermine any political initiative it views as hostile. The U.S. and others should seize upon the Mecca agreement and the establishment of a national unity government to adopt a new approach that seeks to gradually change Hamas rather than forcibly oust it. There are significant, encouraging elements in the government platform: endorsement of a comprehensive cease-fire; implicit acceptance of past Arab League resolutions; identification of a state in the 1967 borders as the common objective; designation of Abbas as the negotiator; and acceptance of a peace agreement if endorsed by legitimate Palestinian institutions or a popular referendum. While these may not go far enough, they do serve as a basis for initial dialogue with the government.

• Israelis and Palestinians share a desire for quiet - an end to Qassam rocket firings on the one hand, a halt to targeted killings, military operations and the physical and economic siege of the occupied territories on the other. Any initiative can and should build on that common interest.

• Efforts on the Israeli-Palestinian track also must be anchored in a vision of the political goal of a two-state solution, without which such efforts will not be sustainable.

• The Middle East crises are intimately interconnected. In particular, it is virtually impossible today to resolve the Israeli-Palestinian crisis without tending to Syria's interests given its influence over Hamas; likewise, it is difficult to satisfy Israel's needs in terms of recognition and normalization with the outside world absent a comprehensive Arab-Israeli solution. An Israeli-Syrian breakthrough would have a significant impact on the regional landscape (including Israel-Palestine, Lebanon, Iraq, and Iran).

THREE TRACK PROPOSAL

A. Stabilizing the Israeli-Palestinian Theater

• Support for the Palestinian National Unity Government if it is committed to a reciprocal cease-fire and moves toward a prisoner exchange; the international community - or as many of its members as possible -- should welcome the government and ease the economic and diplomatic boycott, in particular by resuming payments to the single treasury account. It also should engage in discussions with the new government in order to map out concrete, gradual steps that would trigger an end to the boycott, including implementation of the cease-fire and unequivocal statements that it will recognize and accept a negotiated and ratified two-state settlement (e.g., through formal acceptance of the Arab peace initiative);

• Exchange of Prisoners, including but not limited to Palestinian ministers and parliamentarians;

• Halt to all Palestinian attacks against Israelis anywhere; halt to all Israeli attacks against Palestinians anywhere; this should be an agreement reached by Olmert and Abbas, acting on behalf of the PA.

• Resumption of Israeli transfer of tax receipts to the PA, perhaps under supervision of an independent international auditing board to ensure proper expenditure;

• Relaxation of security measures (road blocks, movement at cross points, etc.) and implementation of the Israeli-Palestinian Agreement on Movement and Access (November 2005) aimed at restoring traffic and trade between Gaza and the West Bank;

• Freeze Israeli settlement expansion in occupied Palestinian territory;

• Dispatch of an independent, mutually acceptable third party monitoring presence whose mandate is to verify both sides' adherence to the cease-fire; monitor border areas and crossing points in the Gaza strip; and monitor the cessation of weapons smuggling by all Palestinian factions;

• Agreement on mechanism to deal with inevitable infractions to the cease-fire, which should not be used as pretext to stop the peace process so long as both parties are acting in good faith;

• Provision of substantial international economic and security assistance to the PA.

B. U.S./EU/Arab Israeli-Palestinian Initiative

• Palestinians will agree that the refugees will return primarily to Palestine, not Israel, with some possible exceptions that are subject to Israel's sovereign decision (e.g., Palestinians who left in 1948 and are still alive);

• Israel will agree that the borders will be based on the June 1967 lines with minor, mutually agreed and reciprocal modifications; and

• Arab leaders will agree to begin talks with Israel on the scope and content of normalization that will follow resolution of Israel's conflicts with Palestinians and with Syria.

• Two states living side by side on the basis of the 1967 lines, with reciprocal, mutually agreed modifications;

• Jerusalem to be divided so that both states have their capitals in the city, according to the demographic principle that what is Jewish is Israeli and what is Arab is Palestinian;

• Each side commits to respecting the other's religious rights and access to holy sites; the status quo regarding each party's respective control over the holy sites will be maintained and respected;

• The State of Israel will be the national homeland of the Jewish people; the state of Palestine will be the national homeland of the Palestinian people. The rights of Palestinian refugees will be met by offering them a series of resettlement options as well as compensation for material losses and hardship, and resettlement assistance;

• Any agreement reached between Abbas and Olmert will be put to a referendum among Palestinians, including those living in the diaspora, and Israelis.

C. Syrian Track

• If he is serious, and a peace agreement can be reached, it would dramatically alter the regional landscape. Israeli-Syrian negotiations came very close in the past, and creative ideas (such as an international park under nominal Syrian sovereignty) have been raised concerning the single most controversial issue: who would control the area to the northeast of Lake Tiberius.

• Even if Bashar is more interested in the process than the outcome, having Syrian and Israeli officials speaking to one another would have extremely important regional ramifications. At a time when the rejectionist message of Syria's allies (Iran, Hezbollah, Hamas) is on the ascent, the sight of a high-level Syrian official

• Engaging Syria and signaling that a deal is possible is critical in order to stabilize the Palestinian-Israeli arena and promote chances for an agreement on that track. Indeed, Damascus possesses significant influence, in particular through Hamas.

• An agreement with Syria is required if Israel wants to achieve normalization with the Arab world.

The U.S.