The Palestinian Authority has thumbed its nose at both Israel and the peace talks sponsored by Secretary of State John Kerry. By making it clear that it won’t back a U.S. framework for continued negotiations or to agree to any of the mainly symbolic measures that would indicate they are willing to end the conflict with Israel, it’s clear PA leader Mahmoud Abbas seized on the first flimsy pretext for walking out on the talks that came along. The fact that he has been rewarded for this intransigence with a mendacious statement from Kerry to the Senate Foreign Relations Committee that turned the truth on its head and placed the blame for the collapse of his initiative on Israel will only make it even less likely that Abbas will be more amenable in the future. That leaves both the U.S. and the parties with the dilemma of what to do next.

Abbas is happily returning to the Palestinians’ pointless campaign for more recognition from the United Nations and its constituent organizations. That won’t do a thing for the Palestinian people either in terms of their desire for independence or their crying need for a better government both in the Fatah-run West Bank and in Hamas-ruled Gaza.

Kerry is pondering how to find an excuse for a continuation of his fool’s errand in the Middle East.  Common sense as well as the interests of the Obama administration would indicate that putting the entire enterprise on hold is both the better part of valor and an opportunity to devote his department to more important foreign policy problems.

But it is Israel that is in the most delicate position of the three parts to this love/hate triangle. They would like to put pressure on the Palestinians to get back to the table and to do something to make it clear to Kerry that he won’t get away with scapegoating the Jewish state. But options for doing either of those things are neither palatable nor in the country’s best interests.

Prime Minister Netanyahu and his government are rightly outraged by Kerry’s offhand swipe at them yesterday when he claimed that the announcement of a housing project in a 40-year-old Jewish neighborhood of Jerusalem was the reason the talks collapsed. Not only did that have nothing to do with the Palestinian decision to bug out of the process, it was also false to claim that Israel had ever promised not to build in its capital, let alone in established areas that no one questions would stay in the Jewish state even in the event of a peace treaty. But there is little the Israelis can do to make their displeasure with the Americans felt that would not harm an alliance that is essential to its security. While Netanyahu has proved in the past that attacks on his policy of defending the unity of the capital only serve to strengthen him, venting anger at Kerry won’t accomplish anything. As with past insults delivered by President Obama, Netanyahu knows all too well that keeping his powder dry is the best, indeed, only option.

But Israel does have substantial leverage over the Palestinians. The PA depends on Israel for all sorts of revenue as well as on cooperation to keep their ramshackle government and the shoddy services it provides its people from collapse. Even more important, cooperation between the Israeli military and intelligence apparatus does more than deter terrorism against the Jewish state. It also ensures the personal survival of Abbas and his Fatah faction against potential trouble from Hamas and Islamic Jihad. If Israel really pulled the plug on the PA — rather than just taking symbolic steps such as Netanyahu’s order to end meetings between Israeli officials and their Palestinian counterparts, the Fatah apparatus would collapse.

While that sounds good to Israelis who dream of formal annexation of the West Bank in a one state solution that would exclude any Palestinian self-government, that is the last thing Netanyahu wants. The PA foments terrorism and incites hatred of Jews and Israel in its official media. People who have made it clear they won’t make peace with Israel under virtually any circumstances — as Abbas proved in 2008 when he fled talks with Ehud Olmert rather than accept independence — run it. But at this point it is also a necessary evil that Netanyahu understands that he must tolerate.

Without the PA, the task of maintaining Israel’s security would be even tougher. Nor is anyone in Jerusalem seriously interested in returning to the pre-Oslo status quo where the Israelis directly administered the West Bank. Netanyahu can make his displeasure with the PA felt for its UN gambit. But there are limits to how far he can go in punishing them that have nothing to do with American pressure.

Netanyahu would be foolish to go on releasing terrorist murderers to bribe Abbas to come back to the negotiations. Nor should he be asked to make any other unilateral concessions merely for the sake of talks that Abbas does not wish to advance no matter what he was offered. But this is perhaps the moment for him to return to a theme he has sounded in the past about helping make the West Bank more livable via economic development. Now that he has rid himself of the reform-minded Salam Fayyad as his prime minister, Abbas no longer has to pretend he cares much about good government. But it is on this point that he is most vulnerable. Managing the conflict rather than solving it remains the only short-term solution to either side. If Kerry wanted to do something constructive rather than promote a process that is fueled more by his ego than any reasonable prospects of success, that’s what he’d be emphasizing. But in the absence of such a change of heart, Israel has little choice but to sit tight and await the next move by both Kerry and Abbas.

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