Bush Peace Plan Jude Wanniski June 25, 2002

 It is only because I am an optimist that I think the Bush "peace plan" for the Middle East advances the prospects for peace. There is another rosy picture of what he would like to see at the end of the road, but as the NYTimes says in its lead editorial this morning, there is no road map to get there. The only concrete step in the plan would have the Israeli government forthwith halt the expansion of the settlements. Said Bush: "Israeli settlement activity in the occupied territories must stop." Of course, this has been the United States position for some time, but it has not stopped Israeli President Ariel Sharon from nurturing new settlements. This will be the first test of President Bush, when Sharon ignores this one element that would actually give some measure of hope to the Palestinians. The Times already judges that because there is no timetable, "the settler leaders and military hard-liners, including those in the government, may take this waiting period to grab all they can and establish `facts on the ground.`" 

It is not surprising that even though Bush called for new Palestinian leadership to replace Yasir Arafat (who was not mentioned by name), that Arafat himself praised the Bush speech (while reserving the right to run for re-election). Unless the small step Bush has taken in committing his prestige to a Palestinian state within three years can lead to second and third small steps, the process will break down and the President will find a way to blame the Palestinians and walk away from further involvement. Arafat, who has been the chief chessplayer for the Palestinians all this while, knows he has to be upbeat, encouraging the Palestinian people to think they are finally within sight of the Promised Land. 

The first reaction to the plan in the financial markets was positive, during the rally late yesterday and this morning. If there is hope for a peace track in the Middle East, the terrorist tax declines, and we saw the equity indices rising as the gold price fell off. Only now is the Islamic world waking up on the other side of the world, having had its first chance to make an assessment of the situation. They see Arafat making nice noises, but it is far more evident that the Likudnik opponents of a Palestinian state are celebrating in Tel Aviv, Jerusalem, New York and Washington. It will seem to them that Bush placed very high demands on them and almost none on this Israeli government. What will Egypt say about it? What will Jordan say about it? What will the Saudis say about it? Each in turn have to assess public opinion at home before deciding which way to go. We can only hope Colin Powell will somehow be able to present this sow`s ear as a silk purse, to keep things in motion until the first new "crisis" appears -- and we can then see how the President plays it. If he fumbles, we will be back again to square one, with more suicide bombings over there, and over here.