Donald Macintyre: Obama can steer Israel to peace

A new President and new Prime Minister have one last chance to broker a two-state solution

The arrival of a new government in Israel headed by Benjamin Netanyahu, who while adopting a significantly more emollient tone in his own inaugural speech still managed not to commit himself to the Palestinian state, has found the international community's attitudes to the Middle East, not for the first time, in disarray. The theory behind Annapolis had a certain logic. Such rapid progress would be made in improving the lives of West Bank Palestinians and in negotiations on a two-state solution with Mahmoud Abbas that Hamas would be unable to stop a decisive majority of Palestinians voting in favour of the outcome. But that progress, other than in minor details, was not forthcoming.

Having seen that strategy fail under a prime minister who actually seemed to believe in it, the international community is now faced with an Israeli government which shows every sign of not doing so. In this context, US policy in particular is still evolving. It remains to be seen how much light President Obama will shed when he makes a speech in Turkey this week.

The first, and the bleakest, option is simply to put Mr Netanyahu's proposal for an "economic peace" to the test. When he repeated this commitment last week, he also envisaged continued political talks towards an undetermined "final status" arrangement. Some who have spoken to Mr Netanyahu recently, including Tony Blair, says this includes a Palestinian state, even though he will not say so. And maybe Mr Netanyahu really does plan to overcome the deep objections of Israel's security establishment and start dismantling checkpoints to allow freer movement of goods and people in the West Bank.

One problem with this, however, is that the vast security apparatus in the West Bank has been repeatedly judged by organisations from the World Bank down to stem from the perceived need to protect the Jewish settlements. It is doubtful whether Mr Netanyahu is ready to reduce that protection, let alone start removing the settlements themselves.

An alternative, whether combined with this "West Bank first" option, which effectively ignores Gaza, or with "parking" the Palestinian issue altogether, is to concentrate instead on brokering talks with Syria. Again, there is an internal logic to this. Mr Netanyahu was prepared to negotiate with Syria in his last premiership, as was Ehud Barak. There is a direct US interest in a rapprochement with Syria, in relation to Iraq as well as Iran. And Mr Netanyahu might just be prepared to go for substantive talks with the Syrians to avoid the kind of confrontation with a Democrat US administration which helped to bring down his first government in 1999.

A Syria-Israel deal would be a huge breakthrough. But this approach leaves the Palestinians – not only the 1.5 million suffering most acutely in Gaza – standing on the sidelines yet again. Moreover, Mr Netanyahu might well, to appease a right wing unhappy with Syrian talks, continue apace with settlement expansion that would make a two-state deal even more difficult to realise than it already is.

Some European diplomats are also worried that a Syria-only track would be all too easy to turn into a process for process's sake. Instead, they believe the answer is to think big, to see a Syrian deal as part of a wider Middle East pact, reinforced by the Arab Peace Initiative which would grant Arab, including Syrian, recognition of Israel in return for a Palestinian state broadly on 1967 borders. Given that the Netanyahu government's overwhelming preoccupation is Iran, that might even be reinforced by some US-led equivalent of an Article V Nato promise – even-handedly made to Israel and the Arab states worried by Iran's nuclearisation – of retaliation against any bellicose designs from Tehran.

Whether in such a scenario or not, a strategy for rapid progress on the Palestinian front is currently being urged on President Obama. A letter signed by some serious Washington players, including former members of the Bush Snr administration, presses for both a change in policy towards Hamas and an explicit and fairly detailed US blueprint for a two-state solution based on 1967 borders.

Acknowledging that the isolation of Hamas has failed to weaken it, it proposes that the US stops discouraging a unity government forged out of a Hamas-Fatah reconciliation and imposes new conditions for tentative engagement to encourage Hamas's more pragmatic forces. This would include a ceasefire with Israel, acceptance of Mr Abbas as negotiator for all Palestinian people, and agreement to abide by a Palestinian referendum on the outcome of final-status talks.

There is huge logic in this. It takes into account that Washington cannot content itself with merely "facilitating" the two sides to reach a solution, but must press its own solution. It sees that Hamas has to be part of the solution; and that true reconciliation between the factions will only be possible in the face of a real prospect of a Palestinian state. And it implicitly accepts that it is even harder to insist that Hamas commits itself in advance to a two-state solution when a new Israeli prime minister and his party does not do so.

The Washington document calls its blueprint "the last chance for a two-state solution". This contains an echo of Ehud Olmert's view that without such a solution, the long term prospects for the Jewish state are doomed. If taken up by the US President, who has rightly expressed his lasting friendship to Israel and his commitment to its long-term security, it would show that he understands that among the many threats Israel sees itself as facing, one of the most potent is Israel itself.