Sue you, E.U.

As President Katzav's reaction to the FDP controversy demonstrates, Israel favors an aggressive stance against what it sees as a biased and perhaps bigoted Europe. In that context, the lawsuit against the E.U. represents an ideal weapon for beating the Europeans over the head.

In May, government minister Danny Naveh presented an official file, allegedly detailing the way in which E.U. money was used for attacks. (The E.U. gives the P.A. some $9 million a month for salaries and other regular expenses; Arab countries contribute $40 million.) At the time, Naveh said: "I'm sure that the intention of the E.U. was good -- to help the P.A. to build their economy. Unfortunately what is wrong here ... is the way the Palestinians decided to use the E.U. money for terror." Nitzana Darshan-Leitner, the Blumbergs' lawyer, says that the lawsuit has nothing to do with the government's crusade and that she was examining the possibilities of such a case even before the presentation of the file.

The fact that the tragic Blumberg case involves a shooting allegedly carried out by P.A. police officers may make it easier to tie the authority financially to it than to most attacks, including suicide attacks inside Israel. The E.U. office in Tel Aviv, however, says that it has not yet received any conclusive evidence establishing a link between the E.U. money and the attacks. That means the Europeans are not convinced by the Israeli evidence, since Naveh's office says it has been given to them. The U.S. State Department earlier this month also said it was unconvinced by documents that Israel claimed proved Arafat knew about terrorist attacks, and that it needed more information to determine the role of the upper echelons of the P.A., including financial officers.

The E.U., for its part, has accused Israel of destroying millions of dollars in E.U.-funded projects in the occupied territories during its invasion. International donors estimated the total physical damages at $361 million, with the total cost much higher.

A spokesman for the E.U. office acknowledged that there is "absolutely an anti-European feeling in Israel at the moment, partly because of the allegations over the funding." On the other hand, regular ties seem not to have been affected. The E.U. is Israel's largest trading partner and has a free-trade agreement with the country. Trade figures declined somewhat in the first quarter, but this is not thought to have any relation to diplomatic tensions. Science and cultural links continue more or less as before. Shlomo Gur, who heads the E.U.-Israel Forum, a group dedicated to fostering ties between Israel and Europe, says he is convinced that Europe and Israel have so much in common -- trade, democracy, values, culture, history -- that in the long run both sides will realize that "convergence" is inevitable. Unspoken behind these sentiments lies the hope that when it comes down to it, Europe will not abandon Israel totally.

On the Palestinian side, the question of P.A. responsibility for terrorist attacks is a key factor in calls for a top-to-bottom reform of the authority, including a reorganization of its security services. This week Palestinian leader Yasser Arafat, under huge domestic and international pressure, finally signed the so-called basic law that is intended to lay the groundwork for a full-fledged Palestinian constitution, after having let it gather dust for five years. The law will, among other things, encourage the creation of an independent judiciary, provide more safeguards for media freedoms and make the president more accountable. Palestinian political analyst Ghassan Khatib called it a positive step, but sounded the usual warnings. "We have to wait and see how these things are implemented in practice," he said.

It may be no coincidence that Arafat signed the law on the eve of a veritable deluge of foreign visitors, all of whom will be assessing how much political and diplomatic progress will be possible in the near future. Assistant Secretary of State William Burns and CIA Director George Tenet will both spend the weekend in Israel and the Palestinian territories -- Burns to assess the political climate, Tenet to gauge the ability and willingness of the Palestinian security services to reorganize. E.U. official Solana and Germany's foreign minister Joschka Fischer will also be traveling to the region this weekend.

On the eve of the visits, but after Arafat had already signed the basic law, President Bush saw fit yet again to exhort the Palestinian leader to fulfill what the United States sees as his task in leading his people to statehood. "Mr. Arafat needs to be responsible," Bush said. "And part of that responsibility is to reform a security force so that it will actually keep security in the region." Bush also addressed bookkeeping and money-flow concerns stemming from widespread P.A. corruption. It was important to "keep good books," he said, so that aid money does not "end up in somebody's pocket."

The Bush administration has hinted that the Burns and Tenet visits will be used to delay plans for a regional summit that was supposed to have taken place by early summer. Secretary of State Colin Powell is said to be advocating a timeline for negotiations, but the White House is apparently resisting this. In addition to Powell, Bush is under pressure from moderate Arab states to lay out a clear U.S. plan for Palestinian statehood, but he is not expected to do so until at least after he meets with Egyptian President Hosni Mubarak at the end of next week, if then. Saying that Powell was still trying to find the right place and time for a conference, Bush said, "We are making progress on a strategy that will put the underpinnings of a Palestinian state in place and it's going to take a while. We recognize that. But we're going to continue to work the issue very hard." Powell, for his part, said that everything would become clearer after the return of Burns and Tenet.

Beyond the P.A. reforms, there are two other reasons the Bush administration is dragging its feet on the Middle East conflict. The administration sees U.S. intervention as politically risky: The U.S. public has voiced strong if nuanced support for Israel, and the Jewish vote could play a key role in several states in the November elections. Any significant U.S. movement toward Palestinian statehood is likely to place it at odds with Israeli Prime Minister Ariel Sharon -- the last thing Bush wants. Backpedaling by the U.S. on military action against Iraq -- an issue much more important to it than the Israeli-Palestinian conflict -- is also a factor in the delay.

Many analysts on both sides worry that with so many crucial issues in flux, the U.S.'s lack of urgency about the crisis may have dire consequences. Khatib points out that the issues being debated now by Palestinians involve far more than reforming the P.A. In a recent issue of the online Israeli-Palestinian discussion forum bitterlemons.org, Khatib noted that "sometimes [the internal Palestinian debate] is about reform and corruption, sometimes it is over the use of various forms of resistance, and other times it is about whether to continue the intifada. In all cases, these internal fights are drawing on the energy usually invested by Palestinians in the fight and their confrontations with the Israeli side."

More ominously, Khatib argues that the internal political struggles in both Israel and the Palestinian camp could actually pose a danger to a peaceful resolution rather than providing an opportunity. "These power struggles appeal to extremist fad politics and do not address the vital interests of both sides in returning the Palestinian-Israeli relationship to one of negotiations, rather than confrontation," he wrote. "Indeed, they seem to multiply the tension between Palestinians and Israelis by nurturing the arguments for and encouragement of extremist politics on the opposing side. In the final analysis, this will only feed the deepening hatred and consequent gulf of violence between the two. Peace advocates among both Palestinians and Israelis must buck this trend with a central strategy of addressing the internal politics of their own people."

One concern -- which points out the shortcomings of viewing P.A. reforms simply as a synonym for cracking down on terrorism -- is that many Palestinian opposition groups that are exerting pressure to reform the P.A. are actually demanding a more militant policy toward Israel.

At the same time, Palestinians are now openly debating whether to restrict attacks only to soldiers and settlers, making the Palestinian struggle more defensible in the eyes of world opinion, both in Europe and to a lesser degree in the United States.

For many Israelis, this debate is meaningless: They make no distinction between attacks inside Israel and those on soldiers and settlers, calling both of them acts of terrorism. Most do make a political distinction, though. In a recent Dahaf Institute poll, which was commissioned by the Peace Coalition in Israel, 59 percent of those questioned said they believe a unilateral withdrawal of Israeli troops and settlers from the West Bank and Gaza Strip would lead to the renewal of the peace process, and 72 percent felt it would improve the country's international standing.

There is also a significant reservoir of resentment against the settlers for complicating both the security of the country and a future peace deal. Akiva Eldar wrote this week in Ha'aretz that at least Yasser Arafat's Fatah movement and its militant offshoots may be willing to consider a cease-fire inside Israel. But the continuing expansion of settlements, he wrote, makes it certain that "the option of ceasing the intifada inside the occupied territories is considered by Palestinians to be about as realistic as the possibility the Sharon government will cease expropriating land for the purpose of building bypass roads."

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