The Trump administration continues to speak of its Middle East peace plan. In a pre-Rosh Hashanah phone call with rabbis and Jewish leaders last Thursday, President Trump Donald John TrumpBiden on Trump's refusal to commit to peaceful transfer of power: 'What country are we in?' Romney: 'Unthinkable and unacceptable' to not commit to peaceful transition of power Two Louisville police officers shot amid Breonna Taylor grand jury protests MORE said: "I stopped massive amounts of money that we were paying to the Palestinians and the Palestinian leaders. If we don’t make a deal, we’re not paying. I said to some of the past negotiators. ‘Did you ever do that before? Did you ever use the money angle?’ They said, ‘No, sir. We thought it would be disrespectful.’ I said, ‘I don’t think it’s disrespectful at all’ ... And I really do believe we’re going to make a deal."

Yet, the context for the “ultimate deal” could not be worse.

A fragile truce between Israel and Hamas in Gaza may or may not hold; the last conflict, in 2014, lasted more than 50 days. Palestinian Authority leader Mahmoud Abbas continues to withhold monies from Gaza despite terrible conditions there, to pressure Hamas even as he rejects direct talks with Israel. He also rejects dealing directly with the Trump administration because it recognized Jerusalem as Israel’s capital and relocated the U.S. embassy there.

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While President Trump has said his decision on Jerusalem meant the Israelis “won a very big thing” and it is time for Palestinians to “get something very good, because it’s their turn next,” Palestinians doubt the administration’s intentions. Fairly or not, Palestinians see the U.S. decision to cut contributions to the United Nations Relief and Works Agency (UNRWA) by 5/6ths as being directed against them. There is good reason to challenge, if not do away with, UNRWA — but it provides 13,000 jobs in Gaza and basically pays for the schools and children’s food programs. With Gaza already reeling from four hours a day of electricity, 49.1 percent unemployment, 95 percent of the water undrinkable and insufficient fuel to power sewage treatment plants, the UNRWA cut makes a bad situation worse.

With 60 percent of those between ages 15 and 29 unemployed in Gaza and the economy nearing a collapse, one might think this would be the moment to transfer funds cut from UNRWA into a new World Bank Fund to stabilize Gaza. Instead, the administration, as part of a wider effort to reduce foreign assistance, cut $200 million in bilateral assistance to the Palestinians. This aid was to go neither to the Palestinian Authority nor Hamas, but to humanitarian programs.

Leaving aside how all this feeds Palestinian perceptions of U.S. hostility, it is probably the last thing Israelis want to see. Israeli Prime Minister Benjamin Netanyahu and his security establishment understand that if Palestinians have nothing to lose, the prospects of another explosion will be very high and produce a no-win situation. After all, Israel can defeat Hamas militarily, but then what? It has no desire to re-occupy Gaza.

With prospects for diplomacy dim, with the need to change reality on the ground to restore a sense of possibility, and with past lessons showing that assistance should be used to promote development and reduce Israeli-Palestinian friction, we propose three recommendations for Congress to reprogram the $200 million fiscal 2018 monies to create a more stable economic, political and security environment in Gaza and the West Bank:

First, use that assistance to take water off the negotiating table. In the not too distant past, water negotiations were zero-sum, given the limited supply of water between the Mediterranean and Jordan River. Now, due to technological gains in water desalination, water use and reuse, water negotiations are no longer binary trade-offs. Instead, they can focus on the much simpler challenges of distribution and pricing.

What could this mean in practice? U.S. assistance in Gaza can fund a small solar field to power the existing Gaza Wastewater Treatment Plant, build up the community-based solar desalination units piloted by MIT, expand the UNICEF solar-fuel facility in Gaza’s Khan Younis neighborhood, initiate additional phases of the World Bank-funded North Gaza Emergency Sanitation Treatment plant, and repair water infrastructure degraded by three wars. Water also is directly linked to electricity; progress in water and sanitation will yield a better, more predictable power supply. There is real potential for small-scale, renewable power throughout Gaza, supplying energy at the community level while minimizing the risk of disruption historically associated with Gaza’s power plant.

Second, U.S. assistance should be used to substantially expand trade between Palestinians and Israelis. Consider the northern West Bank city of Jenin: Israel decided 15 years ago that if it opened a crossing point so Israeli Arabs could shop in the West Bank, it would be a stabilizer, even though the Second Intifada rebellion was ongoing. That calculation was successful; increased Palestinian trade has reduced unemployment in the northern West Bank from reportedly 50 percent in 2003 to below 20 percent now. These robust trading channels have opened sustainable opportunities for small and medium-sized businesses, improved local governance and fostered broad-based security for Palestinians and Israelis alike. In 2003, Jenin was the center for suicide bombers during the peak of the Second Intifada but now is one of the more successful Palestinian cities.

The Jenin model is replicable. American aid can help establish similar trading zones in the West Bank city of Qalqilya where Palestinian traders, shopkeepers and small businesses can sell directly to the large Israeli Arab community a few miles away. The Jenin model also can work in Gaza: Palestinian textile manufacturers have relationships with Israeli designers and European markets; Gaza historically supplied much of the fresh fruits and vegetables in Israel. These relationships could restart in months with the sustained, predictable opening of the Karem Shalom crossing and additional trading corridors from Erez or elsewhere.

Perhaps most interesting is the nascent but growing Gaza tech sector, where Gaza Sky Geeks is incubating Palestinian start-ups and more established firms are initiating software development with tech firms in Israel and beyond. Israel’s tech industry has more than 10,000 unfilled jobs which could be filled from the surplus of high-tech graduates in the West Bank and Gaza.

Third, education is a key foundation for a better future. Israelis and Americans have long criticized the Palestinian Authority for not educating its people for peace. Why not engage American universities and NGOs to elevate the Palestinian education system and prepare Palestinians for a 21st century economy? Bard College has provided long-term teacher training at Al Quds University in which teachers and principals earn an American master’s degree in education and serve as leaders in their schools. Imagine if education programming and people-to-people funding allowed the best cohort of Palestinian youth to study in Israeli universities, intern at Israeli high-tech firms, and do residencies at Israeli hospitals.

The U.S. has reason to be skeptical of the Palestinian Authority in the West Bank and to be firm in rejecting long-term Hamas rule in Gaza, but this should not mean abandoning the Palestinians. That was not the Trump administration’s intent but, unfortunately, it is the impression left with most Palestinians. There are enough good actors on both sides of the Green Line who envision a more prosperous, peaceful region. By partnering with these players, the U.S. can build upon what has worked since Oslo and discard what has failed.

Dennis Ross Dennis Alan RossRep. Ross Spano loses Florida GOP primary amid campaign finance scrutiny Israelis and Palestinians must realize that each needs to give, not just take Court opens door to annexing the West Bank — and the consequences could be disastrous MORE is counselor and the William Davidson Distinguished Fellow at the Washington Institute for Near East Policy. He served as special assistant to President Obama, as Special Middle East Coordinator under President Clinton, and as director of the State Department's Policy Planning Staff in the first Bush administration. Follow him on Twitter @AmbDennisRoss.

Dave Harden is managing director of the Georgetown Strategy Group and was one of the longest-serving American diplomats in Israel, leading the assistance mission to the West Bank and Gaza for more than a decade. Follow him on Twitter @Dave_Harden

David Makovsky is director of the Project on the Middle East Peace Process at the Washington Institute for Near East Policy. Between 2013-2014 he served as a senior adviser to the Special Envoy for Israeli-Palestinian Negotiations.