European Union policy toward the Israeli-Palestinian conflict is in an interregnum. The current focus is on preserving the ceasefire negotiated after the Hamas-Israel conflagration in August 2014 and on providing reconstruction aid for the Gaza Strip in the wake of the war. A major international conference held in Cairo on October 12 centered on reconstruction.

EU policy toward the Israeli-Palestinian conflict is in an interregnum.
 
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But neither of these tasks addresses the roots of the conflict’s intensification. It is widely presumed that there is little chance of peace talks between the Israelis and the Palestinians resuming in the short term. Gaza’s isolation—in the form of restrictions on the movement of goods and people across the territory’s borders—has not been lifted to any meaningful extent. This reinforces the underlying drivers of violent resistance.

This situation gives rise to a curious juxtaposition of urgency and resignation. European diplomats concur that the conflict may stand at a watershed moment that requires a fundamental rethink. Yet they also doubt that any qualitatively different strategy is feasible in the near term. This leaves the still-impressive breadth of European activity on the ground devoid of a clear, guiding script.

While the focus on preserving the ceasefire is important and desirable, it risks diverting attention away from two issues that will determine the deeper efficacy of future EU strategy. The first is the fundamental shape of the EU’s conflict resolution efforts. The second is the question of how to improve on-the-ground European initiatives aimed at redressing structural governance deficiencies.

State Building in a Void

For more than a decade, EU policy has been predicated on a well-established logic: while direct European influence over peace talks has been relatively modest, Europeans have been a primary factor in reshaping Palestinian institutions. The EU and its member states together have long been by far the largest donors to the Palestinian Authority (PA), the governing body based in the West Bank and controlled by Fatah. They have undertaken hundreds of projects worth billions of euros aimed at creating strong, capable, united, and democratic protostate institutions. The occupied Palestinian territories have been the highest per capita aid recipient for most European donors over the last decade.

The occupied Palestinian territories have been the highest per capita aid recipient for most European donors.
 
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This agenda has partly succeeded. In 2011, the UN declared Palestinian institutions ready for statehood. The EU can be proud of the lead role it has played in improving the capacity of Palestinian governance structures.

However, this institution-building focus made most sense when it was nested within peace talks that appeared to have at least some life left in them. State building was a means to an end: an effort to improve Palestinians’ preparedness for statehood. This process included help to address Israeli security concerns too—an often-controversial question among many Palestinians.

But with peace talks now moribund and the whole future of negotiations in doubt, where does the EU approach stand?

European donors continue to implement a familiar agenda of institution-building initiatives almost by default, while acknowledging that this core approach has run out of steam. There is only so much institutional capacity building that the EU can undertake. Building state-like institutions that Israel does not allow to function fully as state bodies has only so much value.

The state-building project now stands at an impasse, neither smoothly advancing nor leading to the next stage of conflict resolution. European donors still feel that they can add the most value in the area of state building. They have sunk so much money into these efforts that abandoning the approach might see years of work undone. Yet the payback from billions of euros of support is disappointing. The Palestinian territories today are politically fractured, authoritarian, and dysfunctional.

Diplomats in East Jerusalem and Ramallah recognize the new contingency in this central plank of European strategy: if peace talks are not reassembled, the EU will need fundamentally to rethink its approach. Yet for now, much institution building continues as if little had changed in the wider strategic and political context. Something has to give.

A Dearth of Legitimacy

Diplomats on the ground lament that while initiatives aimed at strengthening quasigovernmental capacity proceed, the supposed accompanying focus on legitimacy and accountability now struggles to retain traction. In the last three years, the PA’s governance standards have deteriorated.

The reform momentum has diminished since the resignation of the erstwhile prime minister, Salam Fayyad, in April 2013. The EU relied heavily on him in its support programs and is now struggling to adjust. The Palestinian judiciary still lacks independence. The Palestinian Legislative Council has not been convened since 2007, meaning there has been no parliamentary oversight of the executive.

The PA is not sustainable in this form. It has become simultaneously more autocratic and weaker. As its authority has crumbled, some Palestinian voices have called for it to be wound up. This would be a tragic indictment of years of European support efforts.

European donor representatives in Jerusalem and Ramallah acknowledge the need to encourage more accountable and responsive governance. The EU’s policing mission in the Palestinian territories has recently extended into a whole new strand of rule-of-law work. European embassies and the EU delegation in East Jerusalem have become more critical of the PA’s abuse of due process in the rounding up of Hamas members.

Meanwhile, donors’ judicial-reform programs have begun to focus more on access to justice. The UK, the Netherlands, and Sweden individually as well as the EU as a whole are pumping funds into a large new UNDP initiative on this issue. European embassies have made a push to limit the PA’s use of decrees to circumvent opposition to even fairly mundane legislation.

Yet, the EU and European governments remain ambivalent over other aspects of political reform. Europeans recognize that long-delayed elections should eventually be held but fear the likelihood that Hamas, which the EU lists as a terrorist organization, would emerge victorious if a vote were called. The EU preference is to support the proposed unity government between Fatah and Hamas, which after many false starts may finally be moving forward thanks to a breakthrough in September 2014.

The EU may criticize the PA’s bad governance, but the union has been light in its use of conditionality, fearful of the effect of turning off the funding tap for Palestine’s nominal moderates. Palestinian NGOs berate the EU for this and lament an increasing tendency since the attacks on Gaza to overlook PA abuses. Civil society organizations in Ramallah criticize the EU for having done little to support broad-based social movements, whose pro-democracy activism in 2011–2012 was dampened and swallowed up by Fatah-Hamas rivalry and the politics of occupation.

A New Focus on Gaza

Understandably, in the wake of the summer’s war, European governments have paid more attention to the situation in Gaza than to the West Bank. This shift is overdue because the EU’s overwhelming focus on the West Bank is imbalanced and has not furthered the cause of peace. But the new emphasis raises some difficult policy dilemmas, the European response to which has so far not been adequately clarified. Simply extending to Gaza an approach that is treading water in the West Bank is unlikely to lead to any dramatic breakthrough.

If the EU helps secure the truce, Israel will in turn be more likely to acquiesce in lifting its blockade of Gaza.
 
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One of the main debates under way surrounds the kind of security role the EU might play to help shore up the ceasefire. The thinking is that if the EU helps secure the truce, Israel will in turn be more likely to acquiesce in lifting its blockade of Gaza.

The EU is cautiously considering a revival of its long-dormant mission to monitor the Gaza-Egypt border crossing at Rafah. However, the precise form in which this operation should be redeployed remains a subject of sharp debate. Officials say that the mission is more likely to engage in general capacity building for border guards than in intrusive monitoring. EU representatives caution that a new operation will not be a panacea and is not an obviously beneficial focus for new EU efforts—to the extent that is now routinely suggested.

Even before the summer, PA complaints were growing that the international community had pushed Palestinians to cooperate with Israel on security but that Israel had not reciprocated by loosening restrictions on movement across the West Bank. If anything, Israeli security incursions were increasing, causing more Palestinian unease. Europeans were contributing huge sums to building community police units that were then not allowed to function with any effectiveness.

European officials in Jerusalem and Ramallah have spoken of a swing back to core security capacity building since the summer conflict. This is now seen as a more urgent imperative than qualitative reform in the delivery of Palestinian security to citizens.

Likewise, according to insiders in Ramallah, the concern with reconstruction in Gaza is already leading donors to shift funds and personnel away from governance work in the West Bank. Governments are pressing for more of a focus on helping rebuild and develop Gaza. At the October 12 donor conference, EU member states pledged $568 million for Gazan reconstruction. But some officials on the ground are concerned that if too much funding is switched from the West Bank, the PA may collapse.

It is positive that the EU has indicated a willingness to reengage in Gaza. Yet the international community needs to rethink its whole approach to the security sector. The EU in particular must strike a delicate balance. The danger is that security measures and efforts at disarming Hamas are seen in effect to be helping Israel carry out its policy goals, with little quid pro quo in terms of improving Gazans’ daily life or bringing statehood any nearer.

Reintegration and Consensus Government

This balancing act leads to an associated challenge related to support for the still very embryonic Palestinian unity government.

Before the summer invasion of Gaza, the EU was committed to supporting Palestinian unity in the form of a national consensus government involving both Fatah and Hamas. In contrast to U.S. antipathy, the EU argued that inclusive Palestinian government would contribute to sustaining peace talks.

Israel’s operation sought to scupper this unity deal. The summer bombings aborted what seemed to be a promising moment at which an ever more isolated Hamas was looking to come in from the cold.

The EU’s central narrative is now one of helping the Palestinian Authority take control of Gaza.
 
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The EU still formally supports the principle of a reconciliation government, and its stated aim remains to reintegrate West Bank and Gazan ministerial and administrative structures. However, the union’s central narrative is now one of helping the PA take control of Gaza. Many in European ministries today talk of unity government almost as a means of marginalizing rather than including Hamas. If pursued in the wrong way, this approach could undermine rather than respect the principle of inclusive government—and it could sit uneasily with the democratically expressed will of the Palestinian population.

On the ground, a number of donors have launched initiatives to assist the process of reintegration of Palestine’s two halves; the UNDP is now particularly active. The EU identifies these efforts as an area of new priority in its technical assistance. These reintegration initiatives are making some slow progress at a technical level in sectors such as health and education.

Extending the projects to the political level will be far more problematic. Merging two different legal systems will be complicated. The unity deal was originally seen as a means of paving the way to elections and not primarily as a construct capable of overseeing effective day-to-day policymaking. The PA remains reluctant, arguing that it should be given complete control over Gaza if it is to avoid being blamed by Israel for any future return to violent resistance.

The EU’s no-contact rule with Hamas is an even greater impediment now than it was before the Gaza conflict.
 
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In this context, the EU’s no-contact rule with Hamas is an even greater impediment now than it was before the Gaza conflict. The task of reintegrating West Bank and Gazan structures will be inordinately complicated, and it will be even more difficult for the EU usefully to help in this without even talking to Hamas officials. At a practical level, it is difficult to distinguish between those officials that are active Hamas members in a strict sense and those simply working in a Hamas administration.

European policymakers have frequently argued that the summer’s conflict shows that Hamas cannot remain isolated and that the siege of Gaza is entirely counterproductive, whatever short-term victories Israel scores in degrading Hamas’s operational capabilities. Yet the EU appears unwilling to reconsider the no-contact rule—or to recognize that Hamas is far from being a monolithic body, with many connected officials engaged in practical issues of service delivery with little overt political agenda. The EU’s PEGASE funding mechanism that supports the PA will vet recipients of any new funding that flows into Gaza to ensure compatibility with European counterterrorism laws.

Against the background of the PA’s hollowed legitimacy, the assumption that it can effectively regain control over Gaza looks like a questionable foundation upon which to base near-term policy. Hamas’s popularity has, if anything, increased after the conflict, and Palestinian President Mahmoud Abbas has been obliged to rally to the organization’s cause. Hamas is already ceding control politically and shifting its focus away from governing Gaza and back to resisting Israel. In light of all this, it seems perverse for the EU to move in the opposite direction of explicitly backing Fatah further to quash Hamas from the political scene.

Influencing Israel—and Beyond?

Many commentators criticized the EU for being too soft on Israel’s attacks on Gaza. Indeed, relations with the PA are now said to be prickly for this reason. Some EU member states have revoked licenses for arms sales to Israel, but no other measures have been contemplated.

Prior to the summer conflict, relations between Israel and the EU had reached a low point. Israel’s ire was raised in 2013 by a series of EU guidelines that restricted Israeli entities’ access to European funds. These rules have begun to impede a range of sectoral cooperation and could assume wider legal significance in the future. The EU is now moving to ban the import of milk and poultry products from Israeli settlements. Israel berates the EU for funding a group of NGOs pressing for peace that hold to a partisan, anti-Israeli view of the conflict.

Even though tensions run high, European positions toward Israel contain little tangible, critical substance. The EU put on hold measures on the labeling of settlement products (a long-discussed step to curtail the number of goods made in the settlements that benefit from trade preferences) in an effort to avoid cutting across U.S.-sponsored peace talks. Since the talks collapsed, the EU has declined to put this question back on the agenda. It remains unclear whether it will do so.

The EU’s leverage over Israel appears to be close to zero.
 
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Yet despite the EU’s accommodating position, the union’s leverage over Israel appears to be close to zero. Israeli diplomats do not see the EU’s new offer of a special and privileged status agreement as particularly significant or as an attractive incentive to modify EU positions. Israel sees itself meriting a strategic partnership of the type the EU has negotiated with rising powers—instead of the same privileged status offered to the Palestinians.

If the international community cannot convince Israel to reengage in meaningful negotiations, other options will increasingly come into view. In the now-defunct peace talks, the United States tried to negotiate a basic framework for tackling all topics by consent; this approach may now have reached the end of the road.

Diplomats in Jerusalem recognize that it is now even more vital that the EU back up its financial support to the PA with high-level political influence. Several EU member states have adopted slightly less absolute opposition to the idea of recognizing a Palestinian state. This debate has been galvanized by the announcement that Sweden’s new center-left government is willing to recognize Palestine and by a nonbinding vote in the UK House of Commons on October 14 to endorse Palestinian statehood (even though this vote is unlikely to change the position of the current British government). The PA has announced it may seek to join the International Criminal Court as a means of bringing legal cases against Israeli soldiers.

However, no detailed planning or creative thinking is evident on how the EU might lead the design of a new approach to peace, should the long-standing path to two states show no signs of further life. The position is one of wait and see—and hope, against the odds, that there is no unavoidable need to entirely revamp an approach that has failed for twenty years.

The broader context has also changed in ways that raise questions marks over the existing international division of labor. It is clearer today that peace must be a wider effort than one led solely by the United States. Egypt’s role has become more influential in ways that may not augur well for peace. Egypt has now taken over as lead external monitor of the ceasefire—under a newly revived authoritarian regime committed to crushing Islamist parties through brutally repressive, nondemocratic means. This is hardly a balanced or sustainable recipe for peace in Palestine. Egypt has lost standing across the region due to its failure to support Hamas.

The regional context is more fluid now than after previous Israeli attacks on Gaza, with a cacophony of calls for a fundamental redrawing of the region’s borders, well beyond Palestine. The rise of Islamist militancy has encouraged many governments around the world to share some, if unstated, sympathy for Israeli actions. Yet the same tide of opinion and instability in the wider region also makes Israel more vulnerable. The space for pacted, consensual routes forward may soon narrow.

Conclusion

European governments and donors continue to be highly active on the ground in the occupied Palestinian territories. But they are akin to Pirandello’s proverbially directionless “characters in search of an author.”

At a moment of such uncertainty, European funding helps safeguard at least a modicum of Palestinian institutional solidity. However, uncertainty now prevails over the core end to which EU initiatives are geared. Several elements of the European response to the summer’s conflict in Gaza are welcome. Others replicate in Gaza the shortcomings and imbalances that have beset EU efforts in the West Bank.

While the immediate containment of violence is the understandable priority, the deeper imperative is more systematically and effectively to address the root drivers of conflict. If the EU is unable to make that switch in its policies, the situation is such that a fundamental rethink of how to approach the Israeli-Palestinian conflict will become harder to avoid.

The EU should redouble its efforts to encourage a more united Palestinian political system.
 
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This means that the EU should move with caution in any new responsibilities it assumes in Gaza, especially those focused on security. The union should redouble its efforts to encourage a more united and less fecklessly nepotistic Palestinian political system. This must take precedence over simply backing one party to regain control over another party in Gaza. There is even stronger logic today in a more flexible position toward engaging with at least some Hamas-linked officials.

While all this may help indirectly in laying more solid foundations for an eventual peace settlement, the EU must now invest more effort in high-level diplomatic backing for its aid initiatives. A wider and more systematic set of dialogues with regional powers could help explore new ways forward if there is no will to reconvene peace talks on the established parameters of the Oslo process.

The Middle East may indeed be in an uncertain interregnum. But this does not mean that the EU cannot seek to anticipate possible ways forward.