The Third Way for Mideast Peace

The Palestinian government doesn't intend to declare statehood until September, but the ramifications of the move are already clear. Jordan's King Abdullah predicts a “third intifada,” Israel is bracing for renewed violence and France has convened a conference to try to reach a compromise. Luckily, there may still be a way out of this mess that preserves calm but also acknowledges Palestinian aspirations.

At present, a United Nations General Assembly resolution falls short of a Security Council vote granting Palestinian membership. But it theoretically provides the Palestinians the legal basis to sue Israel for land and rights in the international court system.

Israel, the U.S., Canada, Mexico and other nations are seeking to stymie this effort. They rightly fear that a declaration would endorse the dangerous Palestinian decision to cease negotiations with Israel. They also worry that statehood could spawn an irredentist Palestinian polity, prompt needless violence over disputed territories and weaken Israel in ways that could tempt other neighboring states into a regional conflict.

These states are opposed by around 130 U.N. members that support the Palestinian initiative. This camp includes a core group of Latin American states, some European nations (including Britain and France) and presumably every Muslim country. Most of these capitals embrace a Palestinian state unconditionally.

In view of the large number of supporters, opponents of a universal declaration likely lack the votes to defeat the initiative. But they can amend the U.N. resolution to ensure it preserves incentives to maintain peace. Specifically, it should acknowledge Israel's three main concerns: defensible borders, an end to Palestinian refugee claims and recognition of Israel as a Jewish state. An amended resolution should also require the Palestinians to take additional steps toward state-building. And a framework already exists.

The World Bank in April published a report backing a Palestinian state, but only if “the Palestinian Authority maintains its performance in institution-building and delivery of public services.” The report also noted that “aid is what keeps many Palestinians above the poverty line, particularly in Gaza, where unemployment is still 37.4% and a staggering 71% of the population benefited from some form of social assistance in 2009.”

An amended U.N. resolution should include similar language, declaring that the international community would consider endorsing a state at the successful end of the political process that the Palestinians launched in May. The conditions would be a complete lack of violence against Israel, the continued flow of international aid at current levels, additional strides in state-building, a successful election and transfer of power and the end of internecine violence.

It won't be easy. On May 3, the Palestinian Authority's ruling Fatah faction signed an unlikely unity deal with its arch-rival, Hamas, which is a terrorist organization. The agreement remains incomplete, but has caused some Western governments to reconsider aid to the Palestinians. The U.S. Congress now seeks overwhelmingly to halt roughly $600 million in payments this year.

To satisfy international donors, the Palestinians have indicated that its forthcoming government will exclude both Hamas and Fatah members. If Hamas does not officially join the unity coalition that it just helped form, the new Palestinian government could conceivably satisfy existing donors.

But the Palestinians aren't out of the woods yet. The inclusion of Hamas in the unity deal will almost certainly ensure that current Palestinian Authority Prime Minister Salam Fayyad, perhaps the most respected Palestinian figure in the West, will not remain at the helm. Hamas has indicated that it will refuse to let him linger in this capacity, despite pleas from Palestinian leader Mahmoud Abbas. This is bad news for Palestinian state-building, as Mr. Fayyad has been single-handedly responsible for attracting donor funds and building institutions for the Palestinian national project.

And complications do not end there. After four years of civil war, can Hamas and Fatah refrain from warring though the next legislative elections, which according to their new marriage contract must take place by spring 2012? The two factions are still squabbling over the terms of their unification.

Amending the U.N. resolution would not reject the premise of a Palestinian state but would place realistic conditions on its recognition. It would provide a much-needed alternative to countries that do not wish to risk another war between Israel and the Palestinians. It could also provide a third way foward for the international community, which has become needlessly polarized.

Mr. Schanzer is vice president of research for the Foundation for Defense of Democracies.