The Palestinian Authority — Fatah and Hamas Seek Unity Government

Calls for direct action are based on the arguments that negotiations are no longer feasible because of enduring political divisions on both sides and the changing dynamics inspired by the Arab Spring, which demand that leaders take more populist positions in line with anti-Israel public sentiment. But some advocates of this approach have also said that they believe the door should remain open to negotiations, suggesting that unilateral steps could be phased in over many years and be designed, in part, to give Israel a stronger hand in final status talks.

The Palestinian Authority has opposed any effort by Israel to decree the contours of its territory and abandon a negotiated settlement on a wide variety of issues, including the future of Jerusalem. The Palestinian Authority, however, did take its own unilateral steps last fall, when it pursued United Nations recognition, something it is considering doing again. Israel has criticized such efforts for stepping outside the bounds of negotiations. The Obama administration has strongly opposed unilateral action by either side, and some senior Israeli officials have worried that such a move by Israel could provoke an uprising by Palestinians.

Planning a New Unity Government

Initial talks with Hamas in the spring of 2011 appeared to lead nowhere. And while Mr. Abbas made his U.N. bid in a dramatic speech in September, the effort fizzled, with American opposition blocking its path in the Security Council.

In February 2012, Mr. Abbas and Khaled Meshal, the leader of Hamas, announced that they had broken a long political deadlock to form an interim unity government led, at least at first, by Mr. Abbas.

Nevertheless, as spring approached, the Palestinian leadership found itself orphaned within the region, marginalized by the attention drawn by the Arab revolts and the rising tensions over Iran’s nuclear program. Politically divided, its peace talks with Israel collapsed and its foreign support waning, the Palestinian Authority is sidelined, confused and worried that its people may return to violence.

In May, Fatah and Hamas worked out the details of an agreement that was meant to lead to elections and a new unity government for the West Bank and the Gaza Strip. In November, Mr. Abbas met with Khaled Meshal, the political leader of Hamas. The two agreed to go ahead with elections in the Palestinian territories in 2012, even as they failed to resolve differences over an interim unity government to prepare for the vote.

The Arab Spring may have increased popular attention to the Palestinian cause, freeing Egyptians and others to express anti-Israel sentiments. But that has actually made things harder on the Palestine Liberation Organization, which negotiated with Israel. Popular affection has shifted to Hamas. Yet they, too, have had difficulties: they abandonedtheir political headquarters in Syria, have faced reduced help from Iran and had to contend with increased divisions within the organization.

The result is a serial splintering of the Palestinian movement, a loss of state sponsors and paralysis for those trying to build a state next to Israel. As momentum for a peaceful two-state solution fades, and the effort for recognition at the United Nations remains stymied, no alternatives have emerged and attention has focused on other conflicts.

Economic Troubles

Economic growth for the West Bank, which from 2008 to 2010 averaged 10 percent, slowed to 5.7 percent in 2011 with unemployment remaining at 17 percent, according to the International Monetary Fund. In 2011, Arab countries together gave only $340 million to the Palestinian Authority, leaving it with $200 million less than expected.

The Authority has been unable to pay its debts to private companies and the public pension fund, leaving it some $500 million in arrears, in addition to its debt of $1.1 billion to private banks.

Agreements between the Palestinian and Israeli finance ministries to improve Palestinian revenue collection have not been implemented because the Israeli government has not signed off. Prime Minister Salam Fayyad said that unless those measures go into effect, he may not attend a donors conference planned for Brussels this month.

At the same time, Israeli troops have stepped up their nighttime raids on West Bank cities, recently shutting down two television stations and contributing to the sense of impotence.

In January 2012, Palestinians in the West Bank began taking to the streets to denounce Mr. Fayyad, the prime minister of the Palestinian Authority, and to protest soaring prices and recently enacted tax increases.

The tax changes proved so unpopular that Mr. Fayyad suspended their enactment until mid-February, pending the outcome of talks to resolve the matter.

Condemnation of the fiscal policies of Mr. Fayyad, a Western-educated economist and a political independent, has come from the private sector, the unions and Fatah, the mainstream nationalist movement that dominates the Palestinian Authority.

The Palestinian Authority has suffered a worsening financial crisis over the past two years, a situation that Mr. Fayyad, who is also the finance minister, has been trying to address.

The rising prices are a function of global processes and more particularly the high cost of living in Israel, because the West Bank economy is intrinsically linked with Israel’s under the political accords of the 1990s.

Seeking U.N. Recognition

In 2011, with the winds of change swirling through the Arab world, Mr. Abbas shifted gears. Convinced that the talks with Israel were unlikely to resume, he began focusing on getting the United Nations to recognize Palestine as a sovereign state, which could increase Palestinian leverage for rolling back Israeli settlements.

Full membership in the United Nations would require the approval of the Security Council, where the United States promised a veto. But the General Assembly can on its own grant status as an observer state. Even that limited step would give the Palestinians greater access to international forums and to institutions like the World Bank.

Israel vehemently opposed the idea, saying it would amount to a unilateral repudiation of the Olso agreements. The American-Israeli view was that the only way to achieve peace is through direct talks, although each side maintained that the other presents the obstacles to negotiations.

Mr. Abbas made the formal request for full United Nations membership as a path toward statehood on Sept. 23 when he appeared before the General Assembly.

In October, Hamas received a boost when Israel agreed to exchange more than 1,000 Palestinian prisoners for an Israeli soldier held captive in Gaza for five years, Staff Sgt. Gilad Shalit, in a deal brokered by Egypt that left Mr. Abbas on the sidelines.

Later that month, Unesco — the United Nations Educational, Scientific and Cultural Organization — defied a legally mandated cutoff of American financing and approved a Palestinian bid for full membership by a vote of 107 to 14, with 52 abstentions.

By early November, the prospect of full membership was inching closer to failure, even without an American veto. In a private meeting of Security Council members, France and Bosnia said they would abstain on a vote, which would leave the Palestinians short of the nine votes needed in favor.

Also in November, to protest the Palestinians’ membership efforts at the United Nations and pursuit of power-sharing with Hamas, Israel carried out a threat to suspend the transfer of about $100 million in tax payments to the Palestinian Authority. On Nov. 30,  under strong American and international pressure, Israel agreed to transfer the money.

After their success at Unesco, the Palestinians are now expected to try to join other United Nations organizations, whatever the outcome of their bid for full membership through the Security Council, or for observer status through the General Assembly.

But that could cause financial problems for a number of those organizations.

Legislation dating back more than 15 years stipulates a complete cutoff of American financing to any United Nations agency that accepts the Palestinians as a full member. Unesco depends on the United States for 22 percent of its budget, about $70 million a year.

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