In the coming days, the Obama administration faces key decisions on how to respond to a Palestinian government “backed by Hamas,” whether to condone Hamas participation in Palestinian elections, and what strategy to adopt in response to another effort by Palestinians to enhance their status in the UN.

The Israeli-Palestinian peace process may be at an impasse, but the Obama administration still faces a number of critical decisions on this issue in the coming weeks. While it is no longer a front-burner topic for an administration confronting crises from Syria to Ukraine, how Washington handles these questions will send signals about leadership and principle far beyond the Arab-Israeli arena.

Palestinian Unity Government

The administration’s first challenge is how to respond to the expected announcement of the formation of a new Palestinian government envisioned in last month’s Hamas-Fatah reconciliation accord. On the surface, the administration’s position is clear—as various spokesmen have affirmed, Washington will only work with a government that endorses the “Quartet principles,” i.e., recognition of Israel’s right to exist, renunciation of violence and terror, and endorsement of previous Israeli-Palestinian agreements. In an effort to satisfy these conditions—and thereby maintain an uninterrupted flow of U.S. financial assistance—Palestinian Authority president Mahmoud Abbas has reportedly received Hamas assent for the creation of a technocratic government under current PA prime minister Rami Hamdallah that would affirm those principles as it sets about its main task: preparing for elections before year’s end.

But therein lies the rub: Hamas’s assent. While the legislative language governing U.S. aid to the Palestinians offers the administration wiggle room to argue for providing assistance to a Hamas-backed government that affirms the Quartet principles, the administration evidently gave Israel a specific promise that it would not deal with any Palestinian government “backed by Hamas.” According to authoritative American and Israeli sources, that broader assurance was first made to Israel by Secretary of State Hillary Clinton following President Obama’s May 2011 addresses on the Middle East, after Israel signaled its readiness to accept a U.S.-negotiated draft Quartet statement (the statement was never issued because not all Quartet members approved). The assurance was then specifically affirmed by Secretary of State John Kerry prior to the start of his peace initiative last year. (Read a detailed clarification of this issue and its implications for U.S. and Israeli policy.)

So far, Israeli officials have been reluctant to wave this commitment in the administration’s face, principally out of respect for Secretary Kerry, whom they believe acquitted himself with integrity throughout the peace effort even if he and his team share some responsibility for the current impasse. For the same reason, Israeli prime minister Binyamin Netanyahu and his close advisors have not pointed a finger at Kerry for complicating the prisoner-release issue by telling Palestinians that Israel had “committed” to freeing Israeli Arabs—a pledge Israel never made.

Still, the Israelis have signaled their expectation that Washington fulfill its promise not to deal with a Palestinian government “backed by Hamas” by using those words in their April 23 cabinet decision suspending peace talks. So far, however, U.S. spokespeople have sent the opposite signal. On May 19, for example, Israel’s Haaretz newspaper cited a “senior White House official” stating that the administration would only follow the “Quartet principles” policy, without reference to the issue of Hamas backing. Indeed, the quoted official even said the administration would not look too closely at the bona fides of ministers within the Palestinian government as long as the government as a whole accepted the principles. It is not yet clear whether the Obama team’s approach will mirror the one adopted by the Bush administration, which was to have no dealings with Hamas ministers—a position that at least had the salutary effect of keeping Hamas members from significant posts. The real test, then, will come when the new Palestinian government is actually formed.

It is also unclear how exactly Israel would like Washington to fulfill its promise in practice. While it would be easy enough for U.S. officials to boycott political-level talks with ministers of a Hamas-backed government, it would be much more complicated—and potentially destructive—to suspend all financial assistance to the PA given that a substantial part of this funding facilitates Israel-Palestinian security cooperation, which remains in place even amid the current diplomatic impasse. Indeed, while Israel has ruled out diplomatic engagement with a Hamas-backed PA, it is still working through the complexity of this issue in terms of how much deference to give the PA in loosening restrictions on Hamas activity in the West Bank in the social, political, and security realms.

Palestinian Elections

A related question is whether the United States will condone Hamas participation in the next Palestinian elections. After all, scheduling and holding elections will be the unity government’s main goal.

This is well-trod terrain for U.S. policymakers. In 2006, the Bush administration faced a similar decision. Some counseled opposition to Hamas participation, noting the Oslo Accords’ explicit electoral ban on groups that “commit or advocate racism” or use “unlawful or antidemocratic means” to achieve their political goals; advocates of this view also pointed out that armed terrorist groups cannot, by definition, be legitimate political actors without renouncing violence and giving up their weapons. Others, however, argued for acceding to Hamas participation so that the Palestinian people could choose their own leaders as they saw fit, confident in the theory that governance itself would be a moderating experience in the unexpected circumstance that Hamas won.

The Bush team accepted the second argument and urged Israel to do the same, despite Hamas’s continued commitment to Israel’s destruction. The unintended result was Hamas’s surprise victory and eventual takeover of the Gaza Strip. Even Condoleezza Rice, a vocal advocate of Hamas inclusion in the elections when she served as secretary of state, came close to a mea culpa when she wrote in her memoirs, “In retrospect, we should have insisted that every party disarm as a condition for participating in the vote.”

Eight years later, the Obama administration faces a similar choice. Today, of course, there is even less evidence for the “Hamas will moderate in power” theory than there was in 2006—the experience of managing the daily life of the territory’s roughly two million residents has hardly softened the organization’s ideological fervor. At the same time, Abbas’s decision to “shut down” during the most recent peace talks with Washington—to use U.S. envoy Martin Indyk’s phrase—has turned the peace process into a cul-de-sac from which choosing new leadership may be the only exit. Still, that does not lessen the enormity of the question facing U.S. officials: is legitimizing a U.S.-designated terrorist group by validating its participation in elections an acceptable price to pay for that uncertain achievement?

For its part, the Israeli government has taken no formal decision on the issue. Some officials reportedly believe that the Fatah-Hamas reconciliation deal will collapse like previous accords forged in Cairo and Mecca, so there is no need for Israel to intervene. Time will tell whether that wait-and-see approach is an error; after all, Washington may view Israel’s silence as assent, which could tilt skeptical U.S. policymakers toward approving Hamas participation, contributing to an outcome Israel may not wish to see.

UN Waiver

By pursuing both reconciliation with Hamas and the “internationalization” strategy of enhancing the status of the “State of Palestine” in the United Nations system, Abbas has complicated U.S. policy on two fronts. Yet while the Hamas complication concerns a private commitment to Israel (albeit one with wider implications), the UN complication concerns a law approved by a large majority of Congress mandating a cut-off of U.S. funding to any UN-affiliated agency that votes to admit Palestine as a full member-state—a law that is unusual for its lack of any presidential authority to issue a national security waiver. Palestine’s successful 2011 bid for membership in the UN Educational, Scientific, and Cultural Organization triggered the law and forced the Obama administration to end funding for that agency; earlier this year, the United States lost its UNESCO voting rights as a result of failing to pay its past dues.

The idea that enhanced Palestinian status in the UN system has translated to a loss of U.S. status has rankled some senior administration officials. In theory, there are three ways for them to address this problem: convince Palestinians that the costs of pursuing a UN strategy are greater than the benefits; convince member-states of various UN agencies to vote against Palestinian membership, lest they lose the substantial budgetary assistance that the United States provides to those agencies; or convince Israel to ask its friends on Capitol Hill to allow a national security waiver in the relevant legislation.

On the first option, while the United States has publicly opposed Palestinian accession to UN agencies, it has evidently not gone to the mat with member-states to urge their disapproval or even twisted the arms of key influential allies to get them to oppose these Palestinian efforts. On the second option, while Abbas did accede to a U.S. request to suspend the UN strategy during the peace talks, Washington has never effectively used its leverage with the Palestinians to win a blanket, open-ended commitment not to proceed down that path.

On the third option, while the administration has frequently repeated its public opposition to any enhanced role for Palestine in the UN system, an underreported story of late is the quiet but intensive lobbying by high-level U.S. officials to convince Israel to change its position on a legislative waiver. Indeed, the abortive trilateral deal in April—in which Israel was to release the fourth tranche of Palestinian prisoners, the United States was to release Israeli spy Jonathan Pollard, and the Palestinians were to agree on extending the peace talks—reportedly also included an Israeli commitment to drop its opposition on the waiver issue.

The collapse of that deal, combined with the shots-across-the-bow fired by Abbas when he signed 15 UN and international conventions in April, has raised concern inside the administration that it may again be compelled to wage a UN fight against the Palestinians and, possibly, cut off funding to certain agencies if that fight is lost. While Abbas has not gone further down that path yet, numerous Palestinian political figures are urging him to challenge Israel—and America—on the international stage, especially before and during the upcoming UN General Assembly session in autumn. If he follows that strategy to its conclusion, many specialized agencies—from the Universal Postal Union to the International Civil Aviation Organization to the World Health Organization—would suffer huge damage from the consequent loss of U.S. funding, and U.S. interests in those agencies would suffer from the absence of American participation in their operations.

But rather than read Abbas the riot act to prevent him from pursuing this dangerous path the administration may still ask Israelis to accept the inclusion of a waiver in the UN-aid-cutoff legislation even without securing the other benefits they were to have gained in the April prisoner deal. Along the way, Washington would sacrifice any leverage it has to convince other countries to oppose enhanced Palestinian status in the UN system. The perverse result would be Abbas having his cake (by “shutting down” on the peace process and not responding to specific questions from President Obama) and eating it too (by scoring important political points at the UN at Israel’s expense). Whether to come down hard on Abbas or on Israel is another key decision the administration will make in the coming days.

Implications

As the Obama administration grapples with crises of strategic importance around the world, questions surrounding the Palestinians—the composition of their government, participation in their elections, and their gambits at the UN—should be viewed as second-tier issues. Nevertheless, how the administration answers these questions will still have far-reaching implications—for Israel’s confidence in Washington as it girds itself for an Iranian nuclear deal that it will likely view as unsatisfactory, for preserving a diplomatic option in resolving the Israeli-Palestinian conflict, for democracies around the world confronting resurgent terrorist threats, for future challengers to U.S. interests at the UN and in other international forums, and for an administration concerned about maintaining international norms. As a result, these second-tier issues deserve high-level attention.

The Update:

On May 30, in PolicyWatch 2260 (“With the Peace Process on Hold, Washington Still Faces Key Israeli-Palestinian Tests”), I wrote: “The administration evidently gave Israel a specific promise that it would not deal with any Palestinian government ‘backed by Hamas.’ According to authoritative American and Israeli sources, that broader assurance was first made to Israel by Secretary of State Hillary Clinton following President Obama’s May 2011 addresses on the Middle East, after Israel signaled its readiness to accept a U.S.-negotiated draft Quartet statement (the statement was never issued because not all Quartet members approved). The assurance was then specifically affirmed by Secretary of State John Kerry prior to the start of his peace initiative last year.”

This paragraph triggered considerable reaction, and I have since had a series of conversations with senior American and Israeli officials to clarify the assurance made by Secretary Clinton and affirmed by Secretary Kerry. While both governments are in accord on some aspects of this, the bottom line is that there is disagreement on precisely what the Obama administration promised Israel. Here is my reading of the situation: First, the United States and Israel agree that the assurance was not—as described incorrectly above—about the American position toward an unacceptable Palestinian government, but rather about U.S. support for Israel’s position toward such a government; i.e., if Israel chooses not to negotiate with an unacceptable government, the United States supports that position. At no time did the United States commit itself to adopt a certain policy toward that unacceptable Palestinian government.

Second, the two sides also agree that the original assurance and its affirmation applied to the period of Israeli-Palestinian negotiations. Neither side, however, has suggested that the assurance has somehow lapsed because negotiations have been suspended. Where Israel and the United States disagree is on what constitutes an unacceptable Palestinian government. Senior U.S. officials say that, according to the transcript of the relevant Clinton-Netanyahu conversation, the original assurance was that Washington supports Israel’s decision not to negotiate with a government that “consists of Hamas,” i.e., a government that includes Hamas members as ministers or senior officials. These U.S. officials add that this is the commitment Secretary Kerry affirmed. In this circumstance, if a new Palestinian government includes no Hamas ministers, then the U.S. decision on whether to work with that government would be guided by U.S. legislation, which sets out a series of additional tests, including whether the Palestinian government accepts the Quartet principles (recognition of Israel, renunciation of terror and violence, acceptance of previous Israel-PLO agreements) and whether it is “a power-sharing government of which Hamas is a member or that results from an agreement with Hamas and over which Hamas exercises undue influence.”

Israeli officials say the United States made a broader assurance to Israel, i.e., that Washington promised support for an Israeli decision not to negotiate with a Palestinian government “backed by Hamas.” Israeli officials, along with a former U.S. negotiator, question the accuracy of the U.S. account of the Clinton-Netanyahu conversation and whether it captured the full thrust and content of the exchange; moreover, they cite the fact that the agreed language drafted by the two sides for that key phone call included reference to a “government backed by Hamas.” Also, Israeli officials add that it is even more important that Kerry and Netanyahu themselves had a detailed conversation focusing specifically on the possibility of a “technocratic government” that includes only nonpolitical ministers but whose composition is shaped and approved by Hamas, and that Kerry affirmed that the Clinton assurance applied in this circumstance.

Three Comments

1. It is sadly disconcerting that Washington and Israel do not seem to share identical views on the details of this important U.S. assurance. There is a real, if subtle, difference in the two positions—on one hand, that Israel automatically merits U.S. support should it decide not to negotiate with a Palestinian government “backed by Hamas,” and on the other hand, that Israel only merits such support should it decide not to negotiate with a government that “consists of Hamas.” While the two countries have so far done their best to bury the disagreement, the fact that it comes just weeks before a possible deal in the Iran nuclear negotiations can only add to Israeli insecurity on that issue, too.

2. In practical terms, the question of whether the United States deals with the new Palestinian government may be moot because it appears that a technocratic government whose existence relies on Hamas’s assent would fail U.S. legislative tests. But if the administration argues that a technocratic government that accepts the Quartet principles actually passes those tests, then the disagreement could become an issue. That policy decision has apparently not yet been made.

3. There is a larger political reality to consider regarding the U.S. assurance. Legally and technically, there is a difference between Washington promising support for Israel’s decision not to negotiate with an unacceptable government and Washington making its own promise not to negotiate with such a government. In theory, the administration could acknowledge Israel’s sovereign right to pursue this path but still maintain its own relationship with such a government, depending on the circumstances.

In the real world, however, this is a distinction without much difference. It is difficult to see what “support” means if the practical result is U.S. acquiescence to Israel’s political isolation, which is the expected result of the considerable daylight that would open between the two countries on this critical issue if they chose different paths. Operationally, U.S. officials must know that Israel’s response to a Hamas-backed government would likely be directly proportional to its sense of isolation on the issue. That is, the more support Israel finds in Washington and elsewhere for its position toward an unacceptable Palestinian government, the less need it will feel to impose harsh economic and other costs on that government to prove its point.

Robert Satloff is executive director of The Washington Institute.

By Robert Satloff  ©2014 The Washington Institute for Near East Policy. Reprinted with permission.