After failed peace talks, Israeli government deeply divided on where to go

The collapse of Israeli-Palestinian peace talks has laid bare deep divisions in Prime Minister Benjamin Netanyahu's coalition that John Kerry's determined but ill-fated diplomacy had allowed to be papered over.

Key coalition allies are demanding a government initiative to extract Israel from the West Bank, while others say now is the moment for enhanced Jewish settlement and even annexation of some areas. The likely short-term outcome is a period of protracted gridlock in which hopes for peace will remain in deep freeze, and some are sensing that a government collapse and even early elections may follow suit.

"This coalition is definitely problematic," Tzipi Livni, leader of the "Movement" party and until recently Israel's chief peace negotiator, told Israel Radio on Monday.

In many ways, the coalition has been problematic since taking office in March 2013. Its members include a dovish party committed to peace with the Palestinians, a centrist party focused on domestic affairs and nationalistic elements who oppose any concessions to the Palestinians.

The resumption of peace talks last July enabled this assemblage to put its differences on hold — and forge a coalition that was convenient and, for the nine months of Kerry's labors, politically defensible. But the talks collapsed in April, as many observers had expected, and now the fissures are re-emerging with rival factions proposing wildly different ideas on how to proceed.

Last week's formation of a Palestinian unity government, backed by both President Mahmoud Abbas Fatah and the Hamas militant group, has only added to those divisions.

Economics Minister Naftali Bennett, leader of the pro-settler "Jewish Home" party, told a prestigious security conference on Sunday that Israel should annex large parts of the West Bank, occupied territory that is almost universally seen as the heartland of a future Palestinian state. Such a move would trigger an international uproar against Israel. The 2 million-odd Palestinians in non-annexed areas would be given enhanced autonomy, he offered.

"The time has come to think differently in a creative way on how to make a better future for Israeli citizens and the Arabs of Judea and Samaria," Bennett said, using the biblical term for the West Bank.

Speaking to the same conference, Finance Minister Yair Lapid, leader of the centrist Yesh Atid (There Is a Future) party, said Israel should halt settlement construction deep inside the West Bank and in any case withdraw from areas that it does not expect to keep under a peace agreement. He said such moves would clear the way for a final agreement and negotiated borders with the Palestinians.

In his toughest comments, Lapid vowed to bring down the coalition if Israel attempts to annex "even a single settlement" unilaterally. "Yesh Atid will not only leave the government — it will also topple it," he said.

Foreign Minister Avigdor Lieberman lamented Monday that it "doesn't look good" for top officials to be sending such different messages. "We need to adopt one clear political plan that will bind all the government components," he said. "I propose that it be done as soon as possible."

Doing so won't be easy, since the disagreements cut at the very character of Israel and the essence of a longstanding internal debate.

The Palestinians claim all of the West Bank, Gaza Strip and east Jerusalem — areas captured by Israel in 1967 — for a future state. The Israelis, rather than presenting a counter-claim, are deeply torn among themselves.

Netanyahu and his rightist allies suggested Monday that offering "concessions" without the promise of a return is foolish, and evidence of inexperience. But they confront a conceptual disagreement: for his coalition allies Livni and Lapid, handing over most of the Palestinian areas is not, in fact, a concession. That's because most Israeli demographers agree that without the establishment of a Palestinian state in the West Bank and Gaza, the Palestinian population, combined with Israel's own Arab minority, will soon equal and even outnumber Jews. In time partition would become impossible, undermining Israel's character as a democracy with a Jewish majority and yielding a "binational" state, they say.

"There are only two options, and nobody should mislead you about this," Livni said Sunday. "My choice, as it has always been, is a Jewish democratic state."

Hard-liners support settlements and a continued presence in the West Bank on security and religious grounds.

Throughout his current tenure as prime minister, which began in 2009 and continued with a razor-thin re-election in 2013, Netanyahu has sent mixed signals. On one hand, he has endorsed the idea of a Palestinian state, saying a binational state must be avoided. Yet he has presided over the construction of thousands of Jewish settlement homes built in areas claimed by the Palestinians, confusing even close allies about his true intentions.

Even since peace talks collapsed, Netanyahu has given no indication about where he wants to lead the country. He has dropped hints of taking some sort of unilateral action. But he has also said he would never duplicate Israel's 2005 unilateral pullout from Gaza, which cleared the way for Hamas militants to seize control of the territory and turn it into a base for rocket attacks on Israel.

Ironically, Netanyahu may have gained some time thanks to the formation of the new Palestinian government. The international community has rebuffed Netanyahu's calls to shun the new government — but he also seems to face little pressure to revive peace talks. Instead, the U.S. and European Union have decided to give the government a chance while they examine whether it remains committed to peace with Israel, as Abbas has promised.

Dov Lipman, a Yesh Atid lawmaker, said Lapid also wants to study the new Palestinian government's program and is in no rush to bring down the Israeli coalition. But he said if the situation reaches a point where the party feels peace talks can be restarted, Yesh Atid would consider pulling out.

Reuven Hazan, of the political science department at Hebrew University, said that with the Israeli parliament entering a summer recess, followed by Jewish holidays in the fall and then U.S. midterm elections, quick movement was unlikely, and might depend on the Americans.

"The decision has to be made by Obama and Kerry if they want to take their last two years and try to tackle a problem that nobody else has been able to solve in several decades," he said.

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Josef Federman is the Associated Press News Editor for Israel and the Palestinian territories. Follow him at twitter.com/joseffederman.

Dan Perry has covered the Middle East since the 1990s and currently leads AP's text coverage in the region. Follow him at twitter.com/perry_dan