Last month's Israeli pullout from Gaza and its aftermath underscored the difficulties of a two-state settlement in Israel/Palestine. None of the incidental obstructions thrown up in the path of "disengagement" can change an unalterable truth, however- Zionist principles require a two-state solution if Israel is to survive and remain true to itself. The "Jewishness" of the Jewish state is not enshrined in iron-clad draconian laws. Israel is, as the Zionist founders intended it to be, a liberal democracy- its Jewishness is purely a function of demography. The moment that Jews are no longer a majority in Israel it ceases to be a Jewish state. Were Israel to simply annex the Occupied Territories and declare all residents citizens Israel would no longer be a demographically Jewish State (this new Greater Israel would have roughly 4.8 million Jews and 5 million Muslims, Christians, and Druze). Current demographic trends would quickly make Arab Muslims the plurality among Israeli voters. These hard facts leave Israel only two options- pursue a two-state solution or perpetuate a limbo state that subverts all the democratic principles upon which Israel is founded, in which the 4 million+ residents of the Occupied Territories are denied the rights of citizenship.
The closest Israelis and Palestinians have come to a two-state solution was the Camp David Summit of 2000. The basic framework for a Palestinian State conceeded by Ehud Barak at that summit was the most practicable and fair- a Palestine situated within the West Bank, Gaza, and East Jerusalem with Israel's borders returned to the so-called "Green Line" of occupation. Though other issues stirred controversy, the 2000 Summit foundered over departures of Barak's proposal from the basic Green Line framework.
Barak's proposed Palestine could not claim sovereignty over all of the West Bank and East Jerusalem because 350,000+ Israeli have settled in parts of those territories in the last twenty+ years. Unlike the settler movement in Gaza, which was always a limited affair, many of the Israeli settelments in the West Bank and East Jerusalem are profoundly substantial. Billions of dollars of real estate development and infrastructural investment have created communities with a climate of solidity and permanency, their deep economic and institutional roots would make any attempt at "Gaza-style" disengagement a grotesquely violent affair.
The 2000 Summit proposal suggested that 92% of the West Bank and East Jerusalem could come under Palestinian authority while the 8% of territory that contained untransplantable Israeli settlements would be annexed to Israel. Palestine would be compensated for these concessions with "land swaps" of Israeli territory from inside the Green Line. Palestinian negotiators rejected this proposal on the grounds that it would result in a geographically irrational and ungovernable Palestinian state. Long "islands" of Israeli territory would divide critical sections of Palestinian sovereignty from one-another, creating insurmountable difficulties in communication and resource management. The peace process is thus at an impasse. Disengagement is impossible on the Israeli side, extreme concessions on the geographic parameters of sovereignty are impossible on the Palestinian side.
Given the urgency of the peace process for both Israelis and Palestinians, it is surely worth considering one albeit radical solution. Palestinian nationhood will only come about in tandem with a basic treaty securing Israeli recognition of Palestinian sovereignty and establishing definite protections for the security and welfare of both parties. Thus rather than contorting the map to accomodate intractable pragmatic concerns, the Green Line should be affirmed as the rightful boundary between Israeli and Palestinian sovereignty. Included in the basic treaty securing Israeli recognition of Palestine should be a clause guaranteeing Israeli settlers in the West Bank and East Jerusalem bestowal of Resident Alien status and rights from the new Palestinian government. These settlers could choose to remain in their homes and retain Israeli citizenship, in return they would only have to apply for a Resident Alien permit, submit to Palestinian law, and pay Palestinian taxes.
While seemingly simple on the surface, this type of solution would in fact be excruciatingly complex and contingent on a comprehensive and detailed set of safeguards and protocols hammered out in advance and committed to in writing. For example, a ban on all transfers of real property owned by Resident Aliens for an interim "stabilizing period" (20-30 years) would likely be required, to assure Israeli settlers that they could not be coerced to sell their homes or stripped of property through the exercise of "eminent domain." Practical political conditions would also make this policy extremely dangerous. Radicals on both sides of the Israeli/Palestinian divide would seize upon the situation to incite violence and subvert the peace. Relatively small provocations could quite easily snowball into open war- the utmost diligence, forbearance and diplomacy would be required of both governments to make the peace win through.
Given all these legal and practical difficulties, however, I would still venture that a "Resident Alien" compromise holds out the best hope for peace. The abstract possibility of peace hinges on the hope that Israel and Palestine could be good neighbors in a common region. What better way to embody and nurture that hope than to require Israelis and Palestinians be good neighbors in a common country?