Palestinians wait in line to cross the Rafah border between the Gaza Strip and Egypt after it was briefly re-opened. (Maan Images)

The Bush administration is once again in the process of committing a major policy blunder in the Middle East, one that is liable to have disastrous consequences and is not receiving the attention it should. This time it concerns the Israeli-Palestinian relationship. The Bush administration is actively supporting the Israeli government in its refusal to recognize a Palestinian unity government that includes Hamas, which the US State Department considers a terrorist organization. This precludes any progress toward a peace settlement at a time when progress on the Palestinian problem could help avert a conflagration in the greater Middle East.

The United States and Israel seek to deal only with the president of the Palestinian Authority, Mahmoud Abbas, in the hope that new elections would deny Hamas the majority it now has in the Palestinian Legislative Council. This is a hopeless strategy because Hamas has said it would boycott early elections, and even if their outcome would result in Hamas's exclusion from the government, no peace agreement would hold without Hamas's support.

In the meantime Saudi Arabia is pursuing a different path. In a February summit in Mecca between Mahmoud Abbas and Hamas leader Khaled Mashaal, the Saudi government worked out an agreement between Hamas and Fatah, which have been clashing violently, to form a national unity government. According to the Mecca accord, Hamas has agreed "to respect international resolutions and the agreements [with Israel] signed by the Palestinian Liberation Organization," including the Oslo Accords. According to press reports on March 15, the new government, like the present one, will be headed by Ismail Haniya, the Hamas prime minister, but Hamas will get nine of the government's twenty-four ministries, as well as an additional minister without portfolio; President Abbas and his Fatah party will control six ministries, and independent representatives—some said to be under the control of Hamas or Fatah—and other political factions will fill the nine remaining ministries.

The Saudi government views this accord as the prelude to the offer of a peace settlement with Israel, along the lines of the 2002 Arab Peace Initiative, a settlement to be guaranteed by Saudi Arabia and other Arab countries, based on the 1967 borders and full recognition of Israel. The offer was meant to be elaborated by Saudi King Abdullah at the Arab League meeting to be hosted by Saudi Arabia at the end of March. But no progress is possible as long as the Bush administration and the Ehud Olmert government persist in their current position of refusing to recognize a unity government that includes Hamas. The recent meeting between Condoleezza Rice, Abbas, and Olmert turned into an empty formality.

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Many of the causes of the current impasse go back to Israeli Prime Minister Ariel Sharon's decision to withdraw from the Gaza Strip unilaterally, without negotiating with the then-Fatah-controlled Palestinian Authority. This strengthened the position of Hamas. In the run-up to the January 2006 Palestinian legislative elections, Sharon refused to lift a finger to help Fatah's prospects. At the behest of the Quartet—the European Union, the United States, Russia, and the United Nations—James Wolfensohn worked out a six-point plan to assist the inhabitants of the Gaza Strip; among other things, it called for facilitating traffic between the West Bank and the Gaza Strip and opening a port and an airport in the Gaza Strip. But not one of the six points was implemented. The Bush administration's official in charge, Elliot Abrams, sabotaged the six-point plan from its inception. Partly as a consequence, Hamas won the elections in an upset victory.

Then came the blunder I am talking about. Israel, with the strong backing of the United States, refused to recognize the democratically elected Hamas government and withheld payment of the millions in taxes collected by the Israelis on its behalf. This caused great economic hardship and undermined the ability of the government to function. But it did not reduce popular support for Hamas among Palestinians, and it reinforced the position of Islamic and other extremists who oppose negotiations with Israel. The situation deteriorated to the point where Palestine no longer had an authority with whom it would have been possible for Israel to negotiate.

This was a blunder because Hamas is not monolithic. Its inner structure is little known to outsiders but according to some reports it has a military wing, largely directed from Damascus, which is beholden to its Syrian and Iranian sponsors and a political wing which is more responsive to the needs of the Palestinian population that elected it to power. If Israel had accepted the results of the election, that might have strengthened the more moderate political wing. Unfortunately the ideology of the "war on terror" does not permit such subtle distinctions. Nevertheless, subsequent events provide some ground for believing that Hamas has been divided between different tendencies. It was not willing to go so far as to recognize the existence of Israel but it was prepared to enter into a government of national unity which would have abided by the existing agreements with Israel. No sooner was agreement reached than the military wing engineered the kidnapping of an Israeli soldier, Corporal Gilad Shalit, which had the effect of preventing such a government from being formed by provoking a heavy-handed military response from Israel. Hezbollah then used the opportunity to stage an incursion from Lebanon across the internationally recognized border, kidnapping several more Israeli soldiers. Despite a disproportionate response by Israel, Hezbollah was able to stand its ground, thereby gaining the admiration of the Arab masses, whether Sunni or Shia.

It was this dangerous state of affairs — including the breakdown of government in Palestine and fighting between Fatah and Hamas — that prompted the Saudi initiative, which holds out the prospect of a peace settlement. Such a settlement would be very much in the interests of Israel and the United States.

Defenders of the current policy would argue that Israel cannot afford to negotiate from a position of weakness. But Israel's position is unlikely to improve as long as it pursues its present course of military escalation. Fortunately Saudi Arabia, whose position is also precarious, has a genuine interest in promoting a settlement based on two states. It would be tragic to miss out on that prospect, which would mean both withdrawal from large parts of the West Bank by the Israelis, so that a workable Palestinian state can take power, and acceptance of Israel's existence by Hamas. The outlines of such a settlement are quite well defined. The underlying concepts are not materially different from what they were during President Clinton's time.

The most potent threat comes from Iran. Movement toward a settlement in Palestine would be helpful in confronting that threat. But both Israel and the United States seem to be frozen in their unwillingness to negotiate with a Palestinian Authority that includes Hamas. The sticking point is Hamas's unwillingness to recognize the existence of Israel; but that could be made a condition for an eventual settlement rather than a precondition for negotiations.

The current policy is not even questioned in the United States. While other problem areas of the Middle East are freely discussed, criticism of our policies toward Israel is very muted indeed. The debate in Israel about Israeli policy is much more open and vigorous than in the United States. This is all the more remarkable because Palestine is the issue that more than any other currently divides the United States from Europe. Some European governments, according to reports, would like to end the economic boycott of Hamas once a unity government is successfully established. But the US has said it would not.

One explanation is to be found in the pervasive influence of the American Israel Public Affairs Committee (AIPAC), which strongly affects both the Democratic and the Republican parties. AIPAC's mission is to ensure American support for Israel but in recent years it has overreached itself. It became closely allied with the neocons and was an enthusiastic supporter of the invasion of Iraq. It actively lobbied for the confirmation of John Bolton as US ambassador to the United Nations. It continues to oppose any dialogue with a Palestinian government that includes Hamas. More recently, it was among the pressure groups that prevailed upon the Democratic House leadership to drop the requirement that the President obtain congressional approval before taking military action against Iran. AIPAC under its current leadership has clearly exceeded its mission, and far from guaranteeing Israel's existence, has endangered it.

The Palestine problem does not have a purely military solution. Military superiority is necessary for Israel's national security, but it is not sufficient. The solution has to be political, as President Clinton recognized. He exerted enormous energy to bring about a peace settlement and his efforts were so successful that it took the murder of Prime Minister Yitzhak Rabin in 1995 by an Israeli extremist to prevent an Israeli peace initiative with Arafat from being implemented. Even after Ariel Sharon's walk on the Temple Mount in September 2000 set off new violence, Clinton offered a peace deal several months later that was rejected by Arafat but probably suggests the shape of a future settlement.

President Bush has never tried. He has adopted the misleading metaphor of the war on terror and allowed Ariel Sharon to have his way. Sharon did not want a negotiated settlement. He came to realize that the military occupation could not be maintained forever and withdrew from Gaza, in part, it has been argued, to strengthen the Israeli position on the West Bank. But unilateral withdrawal led to the current chain of events. The Bush administration did not just passively acquiesce in the Sharon/ Olmert government's policies; it actively encouraged them. AIPAC must bear its share of responsibility for aiding and abetting policies such as Israel's heavy-handed response to Hezbollah last summer and its insistence on treating Hamas only as a terrorist organization.

The current policy of not seeking a political solution but pursuing military escalation—not just an eye for an eye but roughly speaking ten Palestinian lives for every Israeli one—has reached a particularly dangerous point. After the Israel Defense Forces' retaliation against Lebanon's road system, airport, and other infrastructure one must wonder what could be the next step for the Israeli forces. Iran poses a more potent danger to Israel than either Hamas or Hezbollah, which are Iran's clients. There is the growing danger of a regional conflagration in which Israel and the US could well be on the losing side. With the ability of Hezbollah to withstand the Israeli onslaught and the rise of Iran as a prospective nuclear power, Israel's existence is more endangered than at any time since its birth.

Supporters of Israel have good reason to question AIPAC's advocacy and they have begun to do so. But instead of engaging in critical self-examination, AIPAC remains intransigent. Recently, the pro-Israel lobby has gone on the offensive, accusing the so-called progressive critics of Israel's policies of fomenting anti-Semitism and endangering the very existence of the Jewish state.

To read the full article please visit The New York Review of Books.