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Bibi’s endgame? A castrated Palestinian state

The other day Ira Glunts did a fine post here saying that Israel has little interest in the peace process, and that Netanyahu is just playing intransigent foot-dragging tricks with Obama over a semi-fake issue, freezing settlements. I asked Glunts: "What's Israel's endgame, to have the status quo forever? No real Palestinian state?" Glunts:
 
I come up with these strategies:

1. Sticking with the status-quo, keep building settlements and pass the problems to the next guy. This is a lot more appealing than it was in the 90s for the Israelis.

2. Unilateral action. (They would call it unilateral withdrawal.) This plan would set up an "autonomy" in the Palestinian populated areas. Sharon, supposedly, planned on doing this. His plan is said to have annexed 45% of the West Bank. I think Olmert had this in mind when he proposed the hitkansoot. Bibi may have been thinking along these lines when he talked about Palestinian economic independence.

3. Negotiate a settlement which gives the Palestinians a state in name, but is really an autonomy. No control over borders, or airspace, demilitarized, limited foreign treaties, limited rights to water resources, etc. My guess is that, at this point, the Israelis who might have wanted to do this do not trust Mitchell to go along.
But if the negotiations do go forward, I think a castrated state will be the Israeli goal.

One thing that makes the status quo option so appealing is that the government would not have to relocate many if any settlers, which I think will be a bigger problem than many assume.

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