Peace in the Middle East Would Be Expensive—but Worth It | Opinion

The latest Middle East crisis is the kind of catastrophe that can leave you in despair. But the shocks of Oct. 7 and the Gaza War are huge enough to create opportunity—that is one of history's tricks. To grasp it would require a true reboot in which all sides ditch some stupid ideas and habits. Never easy—but tens of thousands of victims have a way of focusing the mind.

There are many moving parts and parties, and some of them may need to be bribed. So, it's helpful that President Biden is desperate to end the war, as it is splitting the coalition he needs in November—with Jews backing Israel and progressives and minorities not so much. From the Europeans to the Saudis, there are others who are so helpfully terrified that they might prove themselves useful.

I'd like to offer a vision of how things might play out, as we head into the fifth months of the war. Some elements I have written of before, others have recently entered the mainstream discourse, and a few ideas are still just my own, based on decades of covering the region.

The central issue, without which nothing big will happen, is that Israel will be required to accept, at least in principle, that it must work toward a Palestinian state. You will hear plenty of huffing and puffing from Israel supporters about how this is a reward to Hamas and a security risk. It must indeed be engineered to become neither, and this is possible.

But Israelis will need to understand that it is in their interest. Their future is either to keep the disputed territories and become become, together with the Palestinians, one state with citizenship for all and no Jewish majority—or save Zionism through a partition. This reality should be easy to understand, but it is difficult to address.

Israel was just savagely attacked by the Gaza version of an independent Palestine. So, it will need some serious guarantees, and a major incentive in the form of peace with Saudi Arabia and perhaps other Arab states.

On the security side: Palestine will be too physically close to Israel's big cities, and it will retain many violent, suicidal, rejectionists. So it will have to be a weak country, without an army for a long time, and without the right to sign alliances with Iran. It will be, for a while, essentially a protectorate of Israel, or of the world community. But it will also, within guardrails, be independent. Creativity is needed.

The new border should be the existing Security Barrier line built in the 2000s. The Palestinians should be compensated fully, as the barrier takes bites out of the West Bank, with equal and contiguous territory; this is possible, in the Negev.

The barrier border is useful, because the areas on the Israeli side of it contain about 80 percent of the half million settlers. Removing all of them would have been difficult, but removing the 80,000 or so settlers living deep inside the West Bank should be possible. Of course, one could argue that they should have the right to stay where they are as loyal citizens of Palestine. In any case, from the second this process begins, Israel should be banned from adding more settlers.

Israel will also have to—and this is painful—drop its demand for a formal, final, "end of claims" settlement with the Palestinians. That's because it cannot satisfy all the demands the Palestinians are wedded to, on the division of Jerusalem and a return of "refugees," and this has created a needless roadblock. The Palestinians will get their quasi-state without paying this full price, and without gaining full satisfaction.

The Palestinians will also have to fully dismantle their militias—chiefly Hamas and Islamic Jihad. Armed militias only exist in failed states and they must go, not just in Palestine but in the rest of the region. Until this is achieved some version of military occupation, by Israel or by an overpowering foreign force, will be needed.

This disarmament will only be achievable with Palestinian popular support. Therefore, it will need to be made abundantly clear to the Palestinians that the militias are blocking the path to independence. One quid pro quo Israel can offer is a blanket amnesty to the Palestinian prisoners it holds, no matter what they did—possibly with a few exceptions. It's dangerous, but there is no other way.

The world community should further simplify this choice for the Palestinians by ending recognition of the "political wings" of such groups, as well as putting money where mouths have previously been, by preparing a massive assistance fund in the range of 50 billion dollars. That is a third of today's value of the post-World War II Marshall Plan for Europe.

This should be phased in over just a few years but not more—to make it feel real—and should come with strings attached. The main one will be to normalize the Palestinian school curricula which currently feature demonization of Israel and incitement to violence. Also, the payments to the families of Hamas members who murdered civilians are problematic.

The Jerusalem issue will need to be defanged. It is impractical to divide the city because Israel and Palestine will need a strong border. But a special regime can be established in the Old City overseen by Israel but with the participation of Palestine and others—a little like the Vatican, which is also surrounded by Rome.

As for the refugees—who are in almost all cases the descendants of refugees, rather than refugees themselves—Israel should offer compensation in lieu of the so-called "right of return." A reasonable price tag might be $80,000 per person who left in 1948-9—which translates into a subsidy of $50 billion to be distributed by the Palestine government to the descendants. Together with the assistance fund, it's a nice head start for Palestine, which would also undertake to receive any of the refugees and their descendants who want to move to the new state.

All of this will be hard for Israel to swallow. So, in return, it should gain normalization not only with Saudi Arabia but with Qatar, Kuwait, Tunisia and Algeria—in other words, with the currently functioning Arab countries. Saudi Arabia will need to be paid off as well, in this case by a formal military alliance with the United States.

But it really should go further still. The big question is Lebanon, which borders Israel to the north. The world community—beginning with Lebanon's historical patron, France—should insist on a reshuffle of everything in Lebanon:

• UN Security Council Resolution 1701 from 2006 must be implemented, removing Hezbollah from the border with Israel but also disarming it.
• Lebanon will need to grant citizenship to the 200,000-odd descendants of Palestinian refugees. The continuing oppression of people who are by any objective measure Lebanese Sunnis is a howling outrage. The same would apply to Syria, if Syria were still a country.
• In exchange for this and for peaceful relations with Israel, Lebanon should receive the aid it needs to stabilize its economy, possibly absorb up to two million Syrian refugees and build state capacity—tens of billions of dollars. Middle East peace will be expensive.

Which brings us to Iraq. Because it's under the sway of neighboring Iran, normalization with Iraq can only come after the fall of the Islamic Republic. The odious theocracy that has hijacked this excellent country is a colossal problem not just for Iraq itself, and not just for Israel, but for the world. We have seen as much as the Iran-backed Houthi militia in Yemen disrupt almost a third of global container traffic headed toward the Suez Canal.

It is insane that Iran continues to make mischief all over the region—sponsoring militias that destabilize Iraq; messing with the disaster areas that are Syria, Lebanon, and Gaza; attacking US troops in Jordan through proxies; oppressing its own people and marching toward nuclear weapons' capability. But the good news is that the regional mega-deal described above will go a long way toward isolating Iran and relieving it of the advantages it has today. Half a loaf is better than none.

Dan Perry is managing partner of the New York-based communications firm Thunder11. He is the former Cairo-based Middle East editor and London-based Europe/Africa editor of the Associated Press. Follow him at danperry.substack.com.

The views expressed in this article are the writer's own.