Washington – Behind the Rift, Signs of U.S.-Israel Agreement

Washington – Never mind whether Israelis and Palestinians can make peace; the question in the Middle East these days is can Prime Minister Netanyahu and President Barack Obama find common ground. On the surface, it looks as if they can’t: Netanyahu declared on Israeli TV Thursday that he would not comply with a U.S. demand to freeze Israeli settlement construction in occupied East Jerusalem. Behind the scenes, however, the U.S. and Israeli governments have made progress toward resolving their differences in recent days — they just don’t want it to look that way.

The latest fight over building in Jerusalem broke out in early March after the municipal authorities approved 1,600 new housing units in a sprawling hilltop Jewish neighborhood in East Jerusalem just as Vice President Joe Biden arrived in the city to celebrate the start of Israeli-Palestinian talks. The Obama Administration had previously demanded that the Israelis freeze all construction on land conquered in 1967, in order to get the Palestinians back to the negotiating table. But Netanyahu had committed only to a partial 10-month freeze that exempted Jerusalem. When news of the new housing approval broke during Biden’s visit, the Palestinians immediately backed out of the U.S.-planned “proximity” talks. And in the ensuing spat over the humiliation of the Vice President, the Administration issued a series of new demands on Netanyahu through Secretary of State Hillary Clinton, including the freeze on settlement activity in East Jerusalem.

But Netanyahu will not publicly agree to halt all construction in East Jerusalem — no mainstream Israeli politician would. “There will be no freeze in Jerusalem,” the Prime Minister said in an interview with Channel 2 television Thursday. But Netanyahu remains eager to repair the damaged relationship with Washington. Over the last week, Israeli officials have held behind the scenes talks with American negotiators, and Netanyahu has chaired closed-door sessions with his seven closest aides. The result has been a proposal sufficiently acceptable to the U.S. that the Administration sent top National Security Council and State Department officials to verify its terms Wednesday, then dispatched George Mitchell, the President’s Mideast Special Envoy, to try to close the deal Thursday.

While refusing to accept the blanket freeze on building in East Jerusalem, Netanyahu has indicated a willingness to make other concessions, including moves towards interim statehood for Palestinians in the West Bank and Jerusalem. He has offered to allow the Palestinian Authority to open institutions in East Jerusalem, officials familiar with the negotiations tell TIME. (The Israelis have previously acted to stop those from operating, reluctant to accept an official Palestinian foothold in a city they claim as the capital of their future state.) Netanyahu is also inclined toward giving the PA security control over additional West Bank territory, the officials say. Palestinians have opposed interim statehood in the past, fearing the limited sovereignty would become permanent. Netanyahu appears to have tried to address this concern in his recent proposal by agreeing to discuss all the hardest issues that need to be resolved if there is to be a final peace deal when U.S.-mediated talks with the Palestinians do get underway. (He had previously insisted that the agenda initially focus on Israeli security concerns.)

What’s more, there may be some fancy rhetorical footwork at play in Netanyahu’s assertion that he has rejected the freeze on settlement activity in East Jerusalem. On Monday, he told George Stephanopoulos on ABC’s Good Morning America that stopping “Jewish construction in Jewish neighborhoods in Jerusalem, is totally, totally a nonstarter.” The most controversial settlement activity, however, is in areas inhabited by Palestinians. The U.S. views new construction, demolition or eviction in those areas as more serious than building in existing Jewish neighborhoods. And officials familiar with the talks say Netanyahu has offered to temporarily suspend activity in Ramat Shlomo, the neighborhood that started the spat back in March.

So why the public defiance when, in fact, Netanyahu and Obama may actually be moving closer to agreement? The reason may be that Netanyahu has domestic concerns, including a coalition government that is largely to his right and a domestic population that is skittish about peace deals with Palestinians after several failed attempts in the past. For its part, the Obama administration wants to retain credibility with the Palestinians and the Arabs, so they have reason to set their demands high, even if that means constant U.S.-Israeli tension.

None of which makes the prospect for talks look particularly rosy even if Netanyahu and Obama can come to agreement. But in the Middle East, agreeing to disagree is sometimes better than no agreement at all.