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Jerusalem Center for Public Affairs
Strategic Alliances for a Secure, Connected, and Prosperous Region

The Conflict Between Israel and the Palestinians: A Rational Analysis

Filed under: Israel, Palestinians, Peace Process, Terrorism, The Middle East
Publication: Jerusalem Viewpoints

No. 448     February 2001

Israel’s Confused Leadership

Recently, Israel Television asked Shimon Peres, the architect of the Oslo process, whether he still believed in the efficacy of that process, to which he replied that the question should be put to Yasser Arafat.

This answer appears to be symptomatic of a widespread refusal by Israel’s political leadership to think about the current situation in a systematic, analytical fashion, giving rise to a suspicion that Israeli society, as a collective, has a basic difficulty with thinking about our relationship with the Palestinian Authority, in general, and about the recent violent confrontations with it, in particular. We appear to be bewildered by it all.

The director general of the Foreign Ministry, Alon Liel, stated more than once in a recent television interview that he was baffled by Arafat’s behavior, saying that Arafat appeared to have made an inexplicable U-turn. He had assumed that Arafat had resolved to make peace, and he could make no sense of Arafat’s recent behavior. In addition, Shimon Peres has stated several times in recent weeks that we must make Arafat understand that his policy is detrimental to the true interests of his own people. This notion was echoed by Ha’aretz columnist Joel Marcus, quoting former Foreign Minister Abba Eban who said years ago that Arafat never misses an opportunity to miss an opportunity. Knesset Speaker Avraham Burg also stated that he found it impossible to decipher Arafat’s conduct.

Applying Game Theory

What gives an economist like myself the temerity to discuss the conflict between Israel and the Palestinians, a topic ostensibly outside my area of expertise, is the fact that for many years now game theory has served as an important analytical tool in economics. It has also served political science. Game theory, together with the economic theory of contracts that draws on it, is used in the study of labor markets (negotiations between employers and employees), the theory of oligopolies, the struggle for political power, organizational behavior, and more.

The Hebrew University of Jerusalem has a research center called The Institute of Rationality, where game theory and its ramifications are the main subjects of research, and most of its members are mathematical economists. The use of concepts and modes of thinking typical of game theory can go a long way toward a systematic analysis of the conflict. Even the language, as such, can help distinguish between pronouncements on the conflict that make sense, and those that do not.

The application of game theory methodology to the current conflict between Israel and the Palestinians begins with the identification of the options that each side to the conflict has, and an attempt to assess, based on the chosen option, what each side is trying to achieve. This may be demonstrated by the Oslo Agreement. Arafat can basically choose between two options: complying with his part of the agreement or not complying with it.

Let us assume that he chooses compliance. Does it follow that he is resolved to make peace with Israel? The answer is negative. Whether or not he wants peace, the clever strategy for him is to comply. If he does want peace, compliance will encourage those Israelis who seek peace to push for far-reaching concessions in order to arrive at a final agreement. They will do so because his compliance will convince them that he is serious, hence no longer constituting a security threat, and so allowing for more concessions. If he does not want peace, he would still be wise to comply. For in this way he can get the maximum obtainable without spilling blood, and the Israeli public would have clearly interpreted compliance as an indication that Arafat is serious about peace.

This simple illustration brings us a long way toward clarifying matters because, in fact, Arafat has chosen not to comply – he has been violating all the major components of the Oslo Agreement. First and foremost, there is no evidence that the young minds of Palestinian school children are being prepared for peace. For even though some newly issued textbooks no longer contain the virulent anti-Israeli and anti-Jewish material contained in older textbooks, Israel is nowhere to be found on maps of Eretz Yisrael (Palestine). On the contrary, Palestine in its entirety is shown as belonging to the Palestinians. Second, he has not disarmed the various armed militias, such as the Hamas and the Islamic Jihad. Even his own Fatah movement runs an armed militia, known as the Tanzim. Third, he does not adhere to the limitation that the agreement imposed on the size of the Palestinian police force. Finally, and surely most importantly, he has been using violence as a negotiating tactic, despite the fact that he had undertaken to resolve all differences through negotiations, and refrain from violence.

The Possibilities

Given the options available to Arafat in the wake of the Oslo Agreement, there are four possible explanations for his conduct:

  1. Arafat is not rational;

  2. Even though Arafat wants peace and desires to comply, he is unable to do so because of internal pressures;

  3. Arafat wants peace but is unwilling to pay the internal political price that compliance entails;

  4. Arafat wants to keep the conflict going, and believes that Israel is so weak that he does not have to bear the internal political price of compliance, and can still achieve his objectives.

This last possibility means that Arafat does not want to sign a peace deal and renounce any further claims. The reason could be that he believes that over the long run the Palestinians will be able to get rid of Israel. Or he may want to keep the conflict going in order to justify a less than democratic regime at home. Syria may serve as an example in this respect: it does not negotiate with Israel, yet it takes no action designed to defeat Israel. It simply keeps the conflict alive.

Given the fact that Arafat has been employing violence for months now, a fifth possibility comes to mind, namely, that Arafat is merely trying to extract a better final agreement than the one achievable without violence. But in the wake of the Camp David Summit, this is not really a distinct possibility. There, Arafat was offered essentially the maximum that could be offered, without Israel either renouncing the very roots of its claim to a right to exist as an independent country in the ancient Land of Israel, or risking a destructive rift in its social fabric. It follows that a demand that Israel make further concessions and desiring Israel’s destruction are essentially indistinguishable alternatives.

This does not mean that Arafat could not have gained more Israeli concessions as far as territory is concerned, but Palestinian demands do not focus on territory. Rather, they stress Palestinian sovereignty over the Temple Mount and the requirement that Israel recognize the right of return of Palestinian refugees to pre-1967 Israel (i.e., to the territory inside the “green line,” which was drawn at the time of the 1949 Armistice Agreements). Arafat must know full well that accession to this demand means the end of Israel as a Jewish state. The Palestinians have long advocated the creation of a bi-national secular state as a means of getting rid of the Jewish state.

Is Arafat Irrational?

Is Arafat truly oblivious to the interests of his own people, as Peres has suggested? If we accept Possibility 1, that Arafat is irrational, then there is certainly no reason to negotiate with him, for irrational behavior is random behavior. Rationality requires consistency in the sense that a person’s actions follow systematically from that person’s objectives. You cannot negotiate with someone whose responses are random.

The second way to interpret Peres’s observation is to assume that Arafat is so cynical that he is trying to achieve some personal objective that is at odds with the aspirations of his people. If this is the case, then, again, there is no point in negotiating with him since he does not represent his people.

Does Peace Depend Only on Israel?

It has become common in Israel to respond to such analysis with the “trump” question: “So what is the alternative – eternal bloodshed?” The people who pose the question seem to believe that if Israel really desires peace, and keeps talking to the Palestinians long enough, peace will come. This has to be so, because it cannot be true that the Palestinians do not want peace. After all, they are human beings just like the Israelis, they also grieve for their dead, and they also seek conditions that will allow them to pursue the means to improve their standard of living.

The problem with this line of argument is that if it were universally applied, no wars would ever happen. So it must be true that in certain circumstances people are willing to pay a very high price in the quest for objectives that cannot be construed as part of the pursuit of everyday individual happiness. It is hence faulty to assume in advance that the Palestinians are after the same things that the Israelis are after.

Deciphering Arafat’s Intentions

Possibility 2, that Arafat is incapable of implementing his side of the bargain, leads also to the conclusion that there is no point in talking to him. Here, too, the implication is that he does not really represent his people and is therefore incapable of delivering on his promises. In this context, the demand that he disarm the various militias is motivated precisely by the fear that otherwise he will not be capable of executing his part of the bargain.

This leaves us with the last two possibilities: either Arafat does not want to implement his part of the bargain, or he wants to keep the conflict alive. It is extremely difficult to decide which of the two applies, but it behooves Israel to make every effort to decipher the game it is engaged in, since the country’s very survival may depend on the ability of its leaders to read the moves of its adversaries.

There are adversary situations in which the objectives of the adversaries are mutually known at the start of the conflict. For example, once Churchill became prime minister, there was no mystery about the German objective concerning Britain, nor could the Germans have any doubts about what Britain would try to achieve. But there are many instances in which information is not so readily available.

Consider, for example, the negotiating process toward a new wage agreement. Employers do not normally know in advance what the union considers a wage offer below which it will be unwilling to sign a deal. Equally, the union does not normally know in advance what employers will deem to be a wage demand above which they will be unwilling to sign a deal. Had employers been aware of the union’s red line at the outset, they would have made right away an offer slightly above that line. A symmetric argument applies to the employees. This is why each of the sides to a negotiation has an interest in hiding from the other what we may refer to as “basic intelligence.” This is also why the tactics of each side in the negotiation are designed in part to extract more information about the other’s intent. And because information is incomplete, mistakes will happen, as evidenced by the fact that in some cases a strike breaks out. A strike constitutes a signal that tells the employer that his offers are really not acceptable.

Let us now contemplate the state of information in the Israeli-Palestinian conflict. There can be no doubt of Israel’s objective: Israel strives to achieve peace with insurance; that is, Israel seeks a peace agreement that will allow it to survive in case the other side elects to violate the agreement. As a means to this end, Israel is prepared to let the Palestinians create an independent state of their own, for which purpose it is willing to give up much of the territory occupied in the Six-Day War. Israel is also prepared to help the Palestinian state economically, for example, by creating industrial parks that are chiefly designed to employ Palestinians, afford it access to Israel’s ports, and facilitate all sorts of other arrangements that will make Palestinians’ lives tolerable. All this is clear to Arafat, which means that he has a huge advantage over Israel in terms of basic intelligence.

Arafat’s Internal Political Price

There are several facets to Possibility 3, that Arafat is unwilling to pay the internal political price engendered in enforcing a peace agreement. On the one hand, it may be that Arafat is unwilling to pay the internal political price that he will have to bear if, say, he attempts to disarm the Hamas. But it is also possible that Arafat is afraid of having to pass the test of leadership under conditions of peace. For it is already clear that the Palestinian Authority is a total failure in terms of its ability to govern properly. It suffers already from all the maladies that bedevil the worst among the African countries. There is rampant corruption, the legal system is a farce, and human rights are routinely violated. In all serious public opinion polls conducted within the Palestinian Authority, a majority of Palestinians say they have no confidence in the ability of their government to manage internal affairs properly. It could be fairly inferred that Arafat understands from these polls that his political survival depends on continued confrontation with Israel – violent or non-violent. In this arena he enjoys tremendous support among his citizens. Why, then, should he risk trying to lead the Palestinians in peaceful circumstances?

There is a fundamental difference between the possibility that Arafat is unwilling to pay the internal political price for peace (Possibility 3) and the possibility that Arafat wants to keep the conflict going (Possibility 4). Possibility 3 may result in a peace agreement in the foreseeable future, provided that the political price system faced by Arafat will facilitate moving toward such an agreement. In contrast, Possibility 4 leads only to confrontation. Do we have a way to distinguish between the two?

Given the existing information at Israel’s disposal, it is impossible to tell the two possibilities apart since both yield the same behavior. Whether or not Arafat wants peace in his heart is immaterial. In both cases, he will act in order to postpone a final agreement. He would also try, in both cases, to gain further concessions from Israel.

One reason for not being able to tell where Arafat is headed may be the Israeli drive, together with the U.S., to push Arafat into a final agreement at Camp David. Recall that Arafat went there under duress. It is quite likely that he tried to avoid Camp David precisely because he did not want to sign a final agreement under any circumstances other than a complete capitulation by Israel, and there was no reason for him to think that such a capitulation was forthcoming. This interpretation renders the demand that Israel recognize the right of return of the Palestinian refugees quite feasible. Should Israel accept the demand, Arafat will become a hero to his people. If Israel does not, then this is the surest way to keep the conflict alive for as long as Arafat wishes. Although many of Israel’s politicians dismiss the demand as a bargaining chip, this does not make sense. There is no way to advance a negotiation by making demands that are so extreme that it is clear at the outset that the other side cannot even contemplate them seriously. For instance, an offer by employers for workers to take a wage cut over the term of the new contract cannot serve as a basis for negotiations.

Choosing the Correct Strategy

In the absence of an ability to tell which of the two possibilities applies, what remains is to decide whether the strategy chosen by Israel is the right one, based on the outcome of the interaction between the Israeli and the Palestinian strategies. The basic question here is whether or not the strategy chosen by Israel gets it any closer to realizing its objective, i.e., peace. Equally, Israel should figure out how the Palestinians view their choice of strategy based on the outcome so far. These are questions in the area of feedback. Each side to the conflict, while trying to read the adversary’s objective, tries also to decide whether the strategy chosen is the correct one, even if no progress is made in deciphering the opponent. As for Israel, there is no problem in assessing the choice: the current process certainly does not get Israel closer to its objective, implying that the strategy may be the wrong one.

How does Arafat view his choice? In my estimation, regardless of which of the two possibilities applies, what Arafat observes should encourage him greatly. Israel knows that he is violating all the main agreements, but refrains from applying any sanctions. Israel is even willing to sign more agreements, ignoring the violation of the earlier ones. It looks, then, as though Israel is willing to settle for pieces of paper that do not mean anything.

At this point another argument should be put to rest, namely, that Arafat’s non-compliance is just a quid-pro-quo for Israel’s non-compliance. The truth is that we are dealing here with a very asymmetric situation. The major undertaking by Israel is the withdrawal from Gaza and from parts of the West Bank. This has been done. Nor has Israel erected new settlements – the activity has been confined to populating existing ones. New undertakings occurred only on land privately owned by Israelis, such as in Har Homa near Jerusalem. No new Arab land has been confiscated except for public purposes, mainly road construction.

Israel’s response to the violence has been low key. At the same time, Arafat’s international position has strengthened considerably since the violence began, while, in contrast, Israel’s position has seriously worsened. Arafat’s rejection of Israel’s proposals at Camp David had earned him the wrath of President Clinton, yet he succeeded in causing Clinton to make new offers that went well beyond those of Camp David. Not only that, but the Barak government actually accepted Clinton’s proposals in principle, having said earlier that it could not go beyond the Camp David proposals. Israel also has refrained from using the one tool in which it has overwhelming superiority – its military might. This is because the Israelis are unwilling to pay the price in human life that will result from a reoccupation of the territory vacated by Israel in the wake of Oslo, and because Israel fears the international reaction to such a move.

Amidst all of this, Arafat keeps sending signals designed to increase the uncertainty among Israel’s leaders. In this, he exploits the fact that his strategy does not reveal his true intentions, in order to jam Israel’s basic intelligence. Whenever Israel’s blood pressure increases, he signals that despite what is happening he is ready to talk, whether at Sharm-A-Sheikh, in Gaza, or in Taba. These signals always work their magic: they create in Israel the impression that the door to an agreement is not completely shut, and they bring about self-restraint.

Arafat must also be interpreting some of the pronouncements made by Israel’s leaders as signs of deep fear. Prime Minister Barak said on numerous occasions, while defending his willingness to make far-reaching concessions, that the alternative to a peace agreement is a conflict that could spread to neighboring Arab countries. He has warned that lack of an agreement will destroy the peace treaties with Egypt and with Jordan. He also raised the specter of the use of unconventional weapons by Israel’s adversaries in the future if no deal is made.

Note the fundamental difference between Israel’s leaders and Arafat: he acts on the ground in ways that he perceives as pushing Israel away from its goal of peace (a perception shared by Israelis), while broadcasting that there is still hope that Israel will achieve that goal after all. In contrast, Israel acts in a way that causes Arafat to perceive that he is getting closer to his goal, while trying to signal to him through words (i.e., Arafat will not get anywhere with violence) that he is distancing himself from his goal.

The danger here is huge, and it is impossible to avoid comparing what is happening to what took place between Neville Chamberlain and Adolph Hitler 62 years ago. While the story of the Munich Agreement is well-known, what is sometimes overlooked is the fact that Hitler derived from Chamberlain’s behavior the conclusion that he could go on with his schemes with impunity. That is, the weakness broadcast by Chamberlain caused Hitler to make a mistake. The same danger exists here; that is, the danger of overall war in the region may be enhanced by Barak’s behavior, not mitigated by it.

The Right Response

Given this analysis, what should Israel do? If Possibility 3 is the correct one, that Arafat is unwilling to pay the political price involved in complying with his part of the bargain, then Israel needs to impose on him a price so high that the internal political price will seem to him low in comparison. And if he is not interested in peace at all, then Israel has to convince the Palestinians – something that may take a very long time – that a permanent state of confrontation is not in their national interest. Either way, this means a much tougher stance by Israel. In other words, self-restraint is exactly the opposite of what is needed.

As is evident from this analysis, regardless of which of the four enumerated possibilities applies, it is certainly unproductive, and in some cases even destructive, to continue negotiating. If Arafat is irrational, or if he is incapable of delivering the goods, then all Israel can do is defend itself as best it can, and wait either for rationality to set in or for a stronger Palestinian leader to emerge. And if either of the last two possibilities apply, then Israel must get a lot tougher and exact a heavy price. These are the conclusions based on rational analysis, and not on wishful thinking.