A Reward for Reform

President Bush's recent address on the Middle East was a seminal moment for that region. It strengthened the idea that resolution of the long-running conflict between Israel and the Palestinians is not likely any time soon under the current Palestinian leadership -- and that successful peacemaking will thus depend on new leadership and better security.

And the fact is that the cause of Palestinian reform has great resonance among Palestinians. Now it is important for Israel to encourage this interest by sending an unmistakable political signal that it will not try to exploit the situation as Palestinians sort out their internal matters. The appropriate signal would be this: Halt settlement expansion in the West Bank and Gaza.

The general approach to peacemaking since the Oslo accords in 1993 has been that Palestinian internal affairs were irrelevant to diplomacy. Since Yasser Arafat was considered the source of Palestinian legitimacy, his authoritarianism was not only inherent in the deal but even welcomed, in the belief that an unrestricted Arafat would do the most for Israeli security.

This division between foreign and domestic issues did not work. As a leading Palestinian political analyst and pollster, Khalil Shikaki, makes clear in a recent essay in Foreign Affairs, the Palestinian violence since September 2000 has been linked to dissatisfaction with Arafat's domestic performance no less than to dissatisfaction over peacemaking. Ultimately, Arafat sought to deflect attention from his domestic nonperformance by blaming Israel for all Palestinian woes.

That is why Bush is correct in focusing on Palestinian reform. To do so is not an imposition of American values: Reform is driven from within. In Shikaki's latest poll in May, no less than 91 percent want reform.

Reform is above all a Palestinian interest, of course, but Israel has much to gain from it. Unlike the peace with Egypt, separated from Israel by a desert buffer, this one must be between people living cheek by jowl with one another. The sheer proximity between Israelis and Palestinians makes it imperative that there not be an economically thriving democracy existing alongside a poverty-ridden autocracy.

There will undoubtedly be an Israeli reluctance to "pay" for reforms with land concessions, especially because of the justified skepticism about whether Arafat will ever allow the needed reforms. But Bush's policy sharply changes the terms of the debate, because he now requires benchmarks for performance. This performance-based -- rather than deadline-based -- approach is more arduous, but it is also far more likely to be enduring in providing stability.

It would be disastrous, in these circumstances, if Palestinians and other Arabs were to see reform as too time-consuming and difficult or, worse, as a ruse for Israel to use this indeterminate period to expand settlements. It is therefore imperative to give political cover to the reformers and ensure that they are not vulnerable to such allegations. It is also important to give political cover to Bush in the Arab world. It must be made clear that only the prospects of reform -- not suicide bombers -- succeeded in prompting Israel to halt settlement activity.

Israeli Defense Minister Binyamin Ben-Eliezer has started taking down a few outposts -- including trailer homes abandoned since the start of the Sharon government. But more is needed. For the initiative to be meaningful, it should come from Jerusalem, not Washington. Last Friday's Maariv poll showed that 59 percent of Israelis support halting expansion. Developments can be monitored to ensure that no offsetting Palestinian expansion occurs in areas near the old 1967 border, where almost 80 percent of settlers live -- areas that Israel could swap with a future Palestine. The guiding principle should be that no outward settlement expansion be done in a way that complicates final partition of the West Bank.

Arafat's leadership makes statehood dangerous for Israel now, but if the ultimate goal is not partition, Israel's very identity is at stake. Jews now make up about 53 percent of the population in the lands between the Mediterranean Sea and the Jordan River; Arabs -- including Israeli Arab citizens -- are about 47 percent. These figures come even after Israel has added about a million Jews from the former Soviet Union in the past decade and the ultra-Orthodox birthrate has skyrocketed. A leading Israeli demographer, Sergio Della Pergola, says the Jews will be a minority within a decade.

Ironically, many of the settlers cite biblical patrimony as the reason for settlement, though control over these areas makes Israel less Jewish as it becomes a de facto binational state. For Israel to remain Jewish and democratic, it needs partition.

It was not the settlements that led to the torpedoing of Camp David at the end of the Clinton presidency. Ehud Barak made clear that Israel was willing to take down close to 100, mostly remote, settlements, and the Israeli public continues to support dismantling of most settlements in return for real peace. But their role cannot be ignored. While the settlements are on only a fraction of the land, the number of settlers virtually doubled during the Oslo period, creating a sense among Palestinians that Israel wanted to prejudge the outcome of final negotiations.

Reform places new obligations on the Palestinians. Halting settlement expansion should be Israel's contribution. As we stand on the threshold of the post-Oslo period, it is important to get it right this time.