By Federico Lavopa
BUENOS AIRES, Aug 12 2015 (IPS)

The investor-state dispute settlement (ISDS) system has come under increasing criticism in recent years.

Inconsistent decisions, poorly reasoned awards, lack of transparency, parallel proceedings, serious doubts about arbitrator’s impartiality and the sheer size of the compensations sought by investors and awarded by arbitration tribunals are just some examples of the flaws that have been pointed out by detractors of the system.

Federico Lavopa

The dozens of cases that were initiated against Argentina as a result of the outburst of one of its worst economic and financial crises in late 2001 became an often-quoted sad illustration of many of these shortcomings of the ISDS system.

Apart from the tragic consequences entailed by the economic and political crisis which was faced by Argentina, in particular in 2001/2002, which included a fall in gross domestic product (GDP) per capita of 50 percent, an unemployment rate of over 20 percent, a poverty rate of 50 percent, strikes, demonstrations, violent clashes with the police, dozens of civil casualties and a succession of five presidents in 10 days, Argentina received a flood of claims from foreign investors that were filed under different ISDS mechanisms and, in particular, before the International Centre for Settlement of Investment Disputes (ICSID).

Indeed, in the period 2003-2007, claims against Argentina represented one-quarter of all the cases initiated within the framework of the ICSID Convention. These claims before international arbitral tribunals challenged the changes to the economic rules that Argentina had implemented to contain the effects of perhaps the worst economic cycle of its history.

After 1991, Argentina had embarked on an economic deregulation and liberalisation programme. Among others, this programme included the convertibility of the Argentine peso and the creation of a currency board to maintain parity between the peso and the U.S. dollar by limiting the local money supply to the amount of Argentina’s foreign exchange reserves. “If all investors that sued Argentina had obtained 100 percent of their claims, the total amount that the country should have had to bear would have been at around 80 billion dollars”

This economic and pro-market programme was accompanied by a strong emphasis on the attraction of foreign investment which, among other aspects, resulted in the conclusion of 58 bilateral investment treaties (BITs) – 55 of which came into effect.

It also included a mass privatisation process of public companies which, at that time, represented an important part of the domestic economy.

This market-oriented model reached its limits in the late 1990s, and in May 2003 a new president took office, whose government reformed the regulatory framework for the economy – particularly that for the public services privatised over the 1990s – and introduced a package of emergency laws which implied a considerable change in the conditions under which foreign investors and, in particular, public services providers had to run their business in Argentina.

As a consequence, many of them decided to resort to the investor-state dispute settlement mechanisms embodied in the dozens of bilateral investment treaties that Argentina had signed in the 1990s. In total, in the period 2001-2012, exactly 50 cases were filed against Argentina.

A striking characteristic of the Argentinian experience is the amount of requests for compensations made by the companies that sued Argentina. According to estimates made when the peak of cases following the crisis was reached, if all investors that sued Argentina had obtained 100 percent of their claims, the total amount that the country should have had to bear would have been at around 80 billion dollars.

This sum would have been practically impossible to pay, even if Argentina had not been undergoing a period of acute economic crisis, because it represented approximately 13 percent of Argentina’s GDP for 2013.

Although Argentina’s response to this flood of cases was varied and it is still early to offer definite figures, it is already possible to conclude that, in general, arbitration tribunals were prone to render awards in favour of investors.

Almost 45 percent of the cases have received a condemnatory award, although most of these cases could still be reversed by annulment proceedings, whereas only 15 percent of the arbitration proceedings ended up with a final decision completely in favour of Argentina. The remaining 30 percent are mostly cases which resulted in an agreement between the parties or which were altogether suspended.

All in all, of the 80 billion dollars of the possible amount of compensations calculated when the peak of cases against Argentina was reached following the crisis, Argentina has so far received final rulings involving the payment of 900 million dollars.

The first salient conclusion is that the ISDS system has a very low capacity to adapt to totally exceptional circumstances for which it does not seem to have been designed. Despite the efforts of Argentinian attorneys to show that the measures implemented in the post-crisis period were adopted in an emergency context, being so exceptional as to justify any breach of the substantial clauses of the BITs, few tribunals were prepared to sustain this defence.

This notwithstanding, and with most of these cases having already been dealt with, the upcoming scenario for Argentina seems much less drastic than that forecast when the peak of cases was reached.

While they represent a heavy burden for a developing country like Argentina, so far the compensations actually paid amount to a small portion of the sum initially estimated.

The Argentinian case also represents a worrisome example of the failure of the ISDS system to ensure coherence and soundness in its decisions.

Although the dozens of cases submitted against Argentina addressed exactly the same package of measures (the post-crisis emergency laws) and  had to assess very similar arguments of the different claimants and a practically identical series of defences put forward by the Argentinian government, the conclusions at which they arrived have shown striking differences.

Additionally, some of the decisions have been subject to strong criticism and/or declared null and void by annulment committees.

Finally, the experience of Argentina shows the difficulties that arbitration tribunals might encounter when trying to scrutinise the economic policy choices made by governments. On top of the sensitiveness of examining sovereign decisions of States, arbitrators might find themselves in the awkward situation of deciding on highly technical matters which they are clearly ill-equipped to assess.

The case of Argentina thus represents a sad example of the urgent need to reconsider and reform the ISDS system. Yet, the lessons to be drawn from this experience do not seem to lead to clear conclusions about which direction to take.

On the one hand, the system has proved to be extremely inflexible, which prevented it from addressing the exceptional peculiarities of the Argentinian case. On the other hand, however, the wide margin of discretion available for the arbitral tribunals resulted in the adoption of inherently poor decisions, and with high levels of incoherence among them. (END/COLUMNIST SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

*  This column is based on a paper with the same title published as South Centre Investment Policy Brief No 2, July 2015, available here.

Excerpt:

Participants in the march for recognition of Israel’s Bedouin villages, which began in the unrecognised village of Wadi Al Nam in the Negev desert in southern Israel and ended with delivery of ‘The Alternative Master Plan for Unrecognised Bedouin Villages’ to the Head of State’s office in Jerusalem, March 2015. Credit: Silvia Boarini/IPS

By Silvia Boarini
JERUSALEM, Apr 4 2015 (IPS)

There was a symbolic dimension to a recent four-day march from the periphery of Israel to the corridors of power in Jerusalem to seek recognition for Bedouin villages.

The march, which began in the unrecognised Bedouin village of Wadi Al Nam in the Negev desert in southern Israel, ended on Mar. 29 with delivery of ‘The Alternative Master Plan for Unrecognised Bedouin Villages’ to the Head of State’s office in Jerusalem.

On this occasion, Negev Bedouin community leaders and hundreds of representatives of civil society organisations (CSOs) were joined by Arab and Israeli members of the Knesset from a political society actor, the Joint List, a political alliance of four Arab-dominated parties in Israel – Hadash, the United Arab List, Balad and Ta’al.

The Joint List, headed by Knesset member Ayman Odeh, was born out of Arab civil society’s need for unity and is now very much a player able and willing to gain power and mediate between its constituency and the state.“We are trying to present a different narrative [of Bedouin villages] to the people based on history, on facts, on legal rights and international human rights” – Professor Oren Yiftachel, Ben-Gurion University of the Negev

A recent European Commission report mapping CSOs in Israel describes their space for dealing with human and civil rights as shrinking and their contribution to governance often misunderstood or perceived as a threat by state authorities.

In this context, although it may not change the state’s perception of CSOs, a strong partnership with a recognised political society actor such as the Joint List might at least mean that the mobilisation achieved by these organizations at the grassroots level can translate into change at legislative level.

“Because the Joint List is stronger now and we have a common goal, we think we can put more efficient pressure on the parliament and on the government to find a just solution for the people in the unrecognised villages,” Fadi Masamra of the Regional Council of Unrecognised Villages (RCUV) told IPS.

RCUV is an elected civil society body that seeks to advance the rights of Bedouins in unrecognised villages,.

The common goal is gaining recognition for some 46 unrecognised Bedouin villages in the Negev which do not exist on any map and do not receive any basic services such as running water or electricity.

In 2011, the Israeli government approved a unilateral plan, known as the Prawer Plan, to “regularise Bedouin settlement” within five years by demolishing these unrecognised villages and forcibly relocating Bedouins to new localities. The plan sparked mass outcry and was eventually shelved in 2013.

Activists take pride in recalling that the Prawer Plan was stopped by people in the streets who demonstrated against it and not by representatives in the Knesset. They say that it this disconnect that both CSOs and the Joint List hope to be able to bridge by working together.

“I am very proud that the Joint List called for this march,” Hanan al Sanah of womens’ empowerment NGO Sidre told IPS as she walked with the marchers. “It shows that their commitment is real and they haven’t forgotten their electoral promise. They are making the issue of recognition more visible and they can build on the mobilisation that has gone on for years within the community.”

CSOs have worked tirelessly in the Negev not only to mobilise Bedouins against the Prawer Plan but also to produce alternative literature, reports and campaigns that challenge the government’s classification of Bedouin presence in the Negev as “illegal”.

By re-framing the issue of recognition around land rights, human rights and equality, they have been able to reach Jewish and international audiences and further shape the public debate.

CSOs have also been using a powerful state tool, that of mapping, to propose a tangible and viable solution in the form of the ‘The Alternative Master Plan for Unrecognised Bedouin Villages’.

The plan was drawn up by a team led by Professor Oren Yiftachel, who teaches political geography, urban planning and public policy at Ben-Gurion University of the Negev, in collaboration with the RCUV and Bimkom, an NGO promoting equality in planning practices.

“We are trying to present a different narrative to the people based on history, on facts, on legal rights and international human rights,” Yiftachel told IPS. “We worked for three years on the Alternative Plan and we have created a different scenario for the future.”

The Alternative Plan draws a different map of the Negev in which unrecognised villages are “legalised” and can access the same development opportunities as their Jewish neighbours.

“This is a very scientific and detailed solution that fits within state planning and comes from the community, it is not imposed on them. It can make the process easier,” explained RCUV’s Masamra.

Although Yiftachel admits that since it was first presented in 2012 the Alternative Plan has largely been ignored by Knesset commissions, he believes attitudes have shifted and CSOs must continue to push for change.

“After all, a solution is overdue since the future of the unrecognised villages, and of the 100,000 Bedouins living in them, remains uncertain,” he said, adding that “it is important to remember that the state is not a homogeneous body. There are people willing to consider recognition.”

For the CSOs and activists working day in day out in the field, mobilisation remains key. “I would say that the real challenge remains mobilising both the Jewish and the Bedouin community,” Michal Rotem of the Negev Coexistence Forum, a Jewish Arab NGO working in unrecognised villages, told IPS.

“Politicians come and go but it is the NGOs’ role to bring more communities and groups into the struggle and to maintain engagement.”

For Aziz Abu Madegham Al Turi, from the unrecognised village of Al Araqib, working closely with CSOs is important to bring new people to the Negev and come together in actions that reverberate beyond the Negev. “The worse it get gets the more united we become,” he told IPS.

“The state tries to break us up but we connect through different organisations and committees and we find new strength. We come together to support each other.”

Amir Abu Kweider, a prominent activist in the campaign against the Prawer Plan, sees the arrival of the Joint List as an occasion to form new alliances. “We need to intensify efforts to safeguard our rights against racist legislation and reach out to new Israeli audiences,” he told IPS.

In this sense, the march can certainly be judged a success. Tamam Nasra, for example, travelled from the north of Israel to join the march. “Arabs in the South are no different from me, their problems are my problems. Their oppression is my oppression. This is why I heeded (Knesset member) Ayman Odeh’s call,” she told IPS.

Omri Evron, a Joint List voter from Tel Aviv, also joined out of a sense of collective responsibility. “It is not possible that in 2015 in Israel there are people who are effectively not recognised by the state,” he told IPS. “This has to change.”

The positive atmosphere was not dampened even by the knowledge that a new Benjamin Netanyahu government will be sworn in shortly.

“It doesn’t matter if the right wing gets stronger,” stressed Masamra. “If you think that it is not worth struggling then nothing will be changed. We have a responsibility towards our people and this is about human rights, not about who is more powerful.”

Edited by Phil Harris    

By Judith Niehues
COLOGNE, Sep 20 2014 (IPS)

Thomas Piketty, a French economist who works on wealth and income inequality, has triggered a debate on the distribution of income and wealth in many countries. This is no small issue because views on income inequality and concomitant redistributive preferences are crucial to the design of tax and transfer systems.

Particularly in many European countries, society is concerned about distributional issues, reflected in recurring debates on redistributive policies. However, a study presenting international survey data on subjective perceptions of inequality and redistributive preferences reveals that perceived and actual inequality diverge quite substantially in many of these countries.

Dr Judith Niehues

According to the 2009 Social Inequality Module of the International Social Survey Programme (ISSP), more than 50 percent of Germans strongly agree that differences in income are too large.

Correspondingly, a similar portion of Germans thinks that it is “the responsibility of the government to reduce the differences in income between people with high incomes and those with low incomes” – a questionnaire item which is commonly used to capture subjective preferences for redistribution.

Regarding this majority of critical views on inequality, social justice and redistribution are topics for debate that continually feature on the political agenda in Germany – reflected in the current introduction of redistributive policies, such as a minimum wage and additional pension benefits for mothers.

On the other hand, in the United States – which is characterised by a far higher degree of actual income inequality – people are less concerned about income differences, and they do not see any reason for redistributive state intervention. There is virtually no empirical relationship between the actual size of inequality within a country and how critical people view these income differences to be.

The missing link between inequality and its assessment is not specific to these two countries. In a sample of 23 European countries and the United States, there is virtually no empirical relationship between the actual size of inequality within a country and how critical people view these income differences to be.

Obviously, there might be a range of individual and national factors which may explain cross-country differences in critical views on income differences and related redistributive preferences.

For example, in line with the argument of the “American exceptionalism”, people in the United States might just accept certain inequalities as incentives because they believe in the chance of upward mobility.

On the other hand, Germans may be more convinced that income positions arise from luck or other exogenous circumstances, thus regarding inequality as more unfair, and therefore they might demand more state redistribution.

However, current research on mobility reveals that there is a tendency for countries with higher inequality to also be associated with less income mobility.

Looking instead at how types of societies are perceived – a questionnaire item also included by the ISSP – gives some clues: 54.2 percent of Germans believe that the bulk of the German population lives rather at the bottom of society.

To what extent does this perceived type of society match with actual income distribution in Germany? Although there are different ways of demarcating society into a “bottom”, a “middle” and a “top”, studies generally reveal that the middle class represents by far the largest group in German society.

In particular, independently from the chosen definition of income groups, people on middle incomes are far more numerous than those at the bottom of the income distribution scale. This rather pessimistic view on income equality is typical of the European countries studied.

In most countries, the population significantly overestimates the degree of inequality. This is particularly true for former socialist countries such as Hungary, Slovenia as well as the Czech and Slovak republics.

In Hungary, for example, 56.6 percent of the population views Hungarian society as “a small elite at the top, very few people in the middle and the great mass of people at the bottom”, although the country is characterised by one of the lowest income inequalities in the European Union.

Thus, it is not that former socialist countries view already small income differences as much more critical, but that the population is just not aware of the small level of income inequality.

The situation is different in the Scandinavian countries. Here the various populations are much more realistic about the low levels of inequality and truly identify their societies as “typical middle class models”.

In contrast to the European countries, the United States reveals a completely different picture: U.S. citizens substantially underestimate the extent of inequality in their country. The lower income group in the United States is considerably larger than Americans suppose

This varnished view on inequality in the United States is not new – but it is rather new that in European countries it tends to be the other way round.

These results provide an explanation of why redistributive policies find more support in some countries than in others.

Although results from previous ISSP surveys suggest that cross-country differences in views on inequalities and redistributive preferences tend to change slowly, it would nevertheless be interesting to see if critical views on income differences and redistributive preferences would change if citizens were aware of the actual degree of inequality in their countries.

Interestingly, the overestimation of inequality is adversely related to the absolute level of living standards in corresponding countries. Thus, it might also be the case that the perceived structuring of the society is more associated with absolute levels of living standards than commonly suggested.

(Edited by Phil Harris)

Excerpt:

By Roberto Savio
ROME, Jul 11 2014 (IPS)

While the Third World War has not been formally declared, conflicts throughout the world are reaching levels unseen since 1944.

Of course, for the large majority of people throughout the world, news about these conflicts is just part of our daily news, but another share of our daily news is about the mess in our countries.

This is so complex and confusing that many people have given up the effort to attempt any form of deep understanding, so I thought it would be useful to offer ten explanations of how we succeeded in creating this mess.

Roberto Savio. Credit: IPS

1)   The world, as it now exists, was largely shaped by the colonial powers, which divided the world among themselves, carving out states without any consideration for existing ethnic, religious or cultural realities. This was especially true of Africa and the Arab world, where the concept of state was imposed on systems of tribes and clans.

Just to give a few examples, none of the present-day Arab countries existed prior to colonialism. Syria, Lebanon, Iraq, the Gulf Countries (including Saudi Arabia) were all parts of the Ottoman Empire. When this disappeared with the First World War (like the Russian, German and Austro-Hungarian empires), the winners – Britain and France – sat down at a table and drafted the boundaries of countries to be run by them, as they had done before with Africa. So, never look at those countries as equivalent to countries with a history of national identity.“Do not go with the tide ... search for the other face of the moon. And if they tell you that they know, well, just look at the results” – Roberto Savio

2)   After the end of the colonial era, it was inevitable that to keep these artificial countries alive, and avoid their disintegration, strongmen would be needed to cover the void left by the colonial powers. The rules of democracy were used only to reach power, with very few exceptions. The Arab Spring did indeed get rid of dictators and autocrats, just to replace them with chaos and warring factions (as in Libya) or with a new autocrat, as in Egypt.

The case of Yugoslavia is instructive. After the Second World War, Marshal Tito dismantled the Kingdom of Yugoslavia and created the Socialist Federal Republic of Yugoslavia. But we all know that Yugoslavia did not survive the death of its strongman.

The lesson is that without creating a really participatory and unifying process of citizens, with a strong civil society, local identities will always play the most decisive role. So it will take some before many of the new countries will be considered real countries devoid of internal conflicts.

3)   Since the Second World War, the meddling of the colonial and super powers in the process of consolidation of new countries has been a very good example of man-made disaster.

Take the case of Iraq. When the United States took over administration of the country in 2003 after its invasion, General Jay Garner was appointed and lasted just a month, because he was considered too open to local views.

Garner was replaced by a diplomat, Jan Bremmer, who took up his post after a two-hour briefing by the then Secretary of State, Condolezza Rice. Bremmer immediately proceeded to dissolve the army (creating 250,000 unemployed) and firing anyone in the administration who was a member of the Ba’ath party, the party of Saddam Hussein. This destabilised the country, and today’s mess is a direct result of this decision.

The current Iraqi Prime Minister, Nouri al-Maliki, whom Washington is trying to remove as the cause of polarisation between Shiites and Sunnis, was the preferred American candidate. So was the President of Afghanistan, Hamid Karzai, who is now virulently anti-American. This is a tradition that goes back to the first U.S. intervention in Vietnam, where Washington put in place Ngo Dihn Dien, who turned against its views, until he was assassinated.

There is no space here to give example of similar mistakes (albeit less important) by other Western powers. The point is that all leaders installed from outside do not last long and bring instability.

4)   We are all witnessing religious fighting and Islam extremism as a growing and disturbing threat. Few make any effort to understand why thousands of young people are willing to blow themselves up. There is a striking correlation between lack of development/employment and religious unrest. In the Muslim countries of Asia (Arab Muslims account for less than 20 percent of the world’s Muslim populations), extremism hardly exists.

And few realise that the fight between Shiites and Sunnis is funded by countries like Saudi Arabia, Qatar and Iran. Those religions have been living side by side for centuries, and now they are fighting a proxy war, for example in Syria. Saudi Arabia has been funding Salafists (the puritan form of Islam) everywhere, and it has provided nearly two billion dollars to the new Egyptian autocrat, Abdel Fattah el-Sisi, because he is fighting the Muslim Brotherhood, which predicates the end of kings and sheiks and power for the people. Iraq is also becoming a proxy war between Saudi Arabia, defender of the Sunnis, and Iran, defender of the Shiites.

So, when looking at these wars of religion, always look at who is behind them. Religions usually become belligerent only if they are used. Just look at European history, where wars of religion were invented by kings and fought by people. Of course, once the genie is out of the bottle, it will take a long time to put it back. So this issue will be with us for quite some time.

5)   The end of the Cold War unfroze the world, which had been kept in stability by the balance between the two superpowers. Attempts to create regional or international alliances to bring stability have always been stymied by national interests. The best example is Europe. While everybody was talking about Crimea, Ukraine and Vladimir Putin (who had been made paranoiac about Western encirclement, from the George Bush Jr. administration onwards) and how to bring him to listen to the United States and Europe, European companies continued trade in spite of a much talked about embargo. And now, Austria has quietly signed an agreement with Russia to join the South Stream, a pipeline that will bring Russian gas to Europe – so much for the unity of a Europe which has been clamouring about the need to reduce its energy dependence on Russia.

A multipolar world is in the making, but it has to be seen how stable it will be. In Asia, China and Japan are increasing their military investments, as are surrounding countries. And while local conflicts, like Syria, Iraq and Sudan, are not going to escalate into a larger conflict, this would certainly be the case in Asia.

6)   In a world more and more divided by a resurgence of national interests, the very idea of shared governance is losing its strength, and not only in Europe. The United Nations has lost its significance as the arena in which to reach consensus and legitimacy. The two engines of globalisation – trade and finance – are not part of the United Nations, which is stuck with the themes of development, peace, human rights, environment, education and so on. While these issues are crucial for a viable world, they are not seen as such by those in power. Conclusion: the United Nations is sliding into irrelevance.

7)   At the same time, values and ideas which were considered universal, such as cooperation, mutual aid, international social justice and peace as an encompassing paradigm are also becoming irrelevant. French President Francois Hollande meets U.S. President Barack Obama, not to discuss how to stop the genocide in Sudan, or the kidnapping of children in Nigeria, but to ask him to intervene with his Minister of Justice to reduce a giant fine on a French bank, the BNP-Parisbas, for fraudulent activities. The outstanding problem of climate control was largely absent in the last  G7 meeting, not to talk of nuclear disarmament … and yet these are the two main threats to the planet!

8)   After colonialism and totalitarian regimes, the key phrase after the Second World War was “implementation of democracy”. But after the end of the Cold War, democracy was taken for granted. In fact, in the last twenty years, the formula of representative democracy has been losing its glamour. Pragmatism has led to the loss of long-term vision, and politics have become more and more mere administration.

Citizens feel less and less related to parties, which have basically become self-centred and self-reliant.  International affairs are not considered tools of power by parties, and decisions are taken without participation. This leads to choices which often do not represent the feelings and priorities of citizens.

The way in which the bailout of Cyprus from its financial crisis a few years ago was treated in the European Commission was widely recognised as a blatant example of lack of transparency. Few people certainly make more mistakes than many …

9)   A very important element of the mess has been the growth of what its proponents, especially in the financial world, call the “new economy” – an economy that contemplates permanent unemployment, lack of social investments, reduced taxation for large capital, the marginalisation of trade unions, and a reduction of the role of the State as the regulator and guarantor of social justice. Inequalities are reaching unprecedented levels. The world’s 85 richest individuals possess the same wealth as 2.5 billion people.

10)   All this brings its corollary. It is not by chance that all mainstream media worldwide have the same reading of the world. Information today has basically eliminated analysis and process, to concentrate on events. Their ability to follow the world mess is minimal, and they just repeat what those in power say. It is very instructive to see media which are very analytical about national affairs and very superficial about international issues. The media depend largely on three international news agencies, which represent the Western world and its interests. Have you read anywhere about the gas agreement between Austria and Russia?

So, a final point: never be satisfied with what you read in the newspapers, always try to get additional and opposite viewpoints through the net. This will help you to look at the world with your eyes, and not with the eyes of somebody else who is probably part of the system which has created this mess. Do not go with the tide … search for the other face of the moon. And if they tell you that they know, well, just look at the results. So, be yourself and, if you make a mistake, at least it will be your mistake. (END/IPS COLUMNIST SERVICE)

Excerpt:

When it voted to upgrade Palestinian statehood status from “observer entity” to “non-member observer state”, the United Nations General Assembly (UNGA) wanted the enduring Middle East conflict to come full circle. But it failed to take into account the Israeli Prime Minister’s opposition to a state of Palestine that isn’t on his terms.

Sixty-five years back, on Nov. 29, 1947, the UNGA voted in favour of the division of the British Mandate of Palestine into two states – one Jewish; one Arab. Jewish leader David Ben-Gurion accepted the Partition Plan which, six months later, led to the birth of Israel. But the Arab ‘No’ at the UN resulted in the stillbirth of Palestine.

Last week, it was Israel’s turn to say ‘No’ to President Mahmoud Abbas’s plea that the world’s forum grants Palestine its “birth certificate”. In effect, Israel said ‘No’, not only to Palestine, but to the world’s idea of Middle East peace based on a two-state solution. Israel was never so isolated.

Yet, so long as Israel refuses to end its occupation of the “State of Palestine” (and not merely of “Palestinian territories”, as the UNGA vote now seems to infer), not just real independence for Palestine but the end of the conflict will remain a forlorn vision.

The second plank of the Palestinian UN application for non-member status did refer to “the urgent need for the resumption and acceleration of negotiations within the Middle East peace process.”

And it went on “Reaffirming its commitment (…) to the two-state solution of an independent, sovereign, democratic, viable and contiguous State of Palestine living side by side with Israel in peace and security on the basis of the pre-1967 borders.”

And yet, no one really expects a full-fledged Palestine or a resumption of peace negotiations any time soon.

At the beginning of his term, Netanyahu seemed to come to terms, albeit reluctantly under U.S. pressure, with a future Palestinian state. There was no explicit ‘No’ in Netanyahu’s vision of Palestine, but there was a big ‘If’.

“If the Palestinians recognise Israel as the Jewish state,” he declared in June 2009 during his only meaningful peace policy speech, “we’re ready to agree to a real peace agreement, a demilitarised Palestinian state side by side with the Jewish state.”

Apart from a ten-month moratorium on settlement construction, Netanyahu’s verbal “readiness” never translated into tangible policy. Rather, he insisted on negotiations without pre-conditions – synonym for ‘Let’s start it all over again’ without acknowledging progress made by his predecessor Ehud Olmert.

Two onslaughts on Hamas in Gaza – one in 2008-9 by Olmert; the other by Netanyahu last month – have framed four years of diplomatic paralysis, and almost unabated settlement activity.

The peace front briefly revived in 2010 when, three weeks before the end of the settlement freeze, Abbas agreed to renew negotiations with Israel. In spite of joint U.S.-Palestinian insistence that Netanyahu maintain the suspension, expansion resumed. Talks collapsed.

Although meant to censure Netanyahu’s settlement policy, the UNGA upgrade of statehood status is primarily intended as recognition of the need to bolster Abbas’s status in Palestinian eyes, especially in the wake of Israel’s military operation against Hamas.

In a sense, the rival nationalist and Islamist camps are now even. While Hamas is locked in its refusal to recognise Israel’s right to exist and argues that only armed resistance can force it to wrap up its occupation, Abbas comes back to Ramallah with a message to his people – non-violence and diplomacy pay.

Like Hamas, Israel likes to point out that post-statehood bid Abbas still rules a state without territory and borders; rules neither the Gaza Strip (under Hamas rule) nor the West Bank and East Jerusalem (under Israeli occupation).

Israel is oblivious to the new diplomatic order created by the historic vote. In a reaction reminiscent of the refusal by Arab leaders to admit Israel’s victory during the 1967 war, deputy foreign minister Danny Ayalon called the vote “a historic defeat for the Palestinians.”

“Abbas called for peace – but not with us,” was minister of strategic affairs Moshe Ya’alon’s response to Abbas’s “unilateral manoeuvring”.

Other ministers accused the Palestinian leader of violating signed accords. They threatened to take punitive measures “at the proper time” were the Palestinians to decide for instance to use their newly-acquired right to pursue Israel in the International Criminal Court for its own infringements of past agreements, like settlement expansion and suspected war crimes.

That could happen sooner than expected.

Less than 24 hours after the UNGA vote, a senior official confirmed that the Israeli government’s inner cabinet of senior ministers responded by approving the construction of 3,000 housing units in existing settlements.

It also vowed to further planning procedures for thousands of additional units in and around East Jerusalem, especially in an area designated as “Project E1”.

If implemented, “Project E1” would sever East Jerusalem from the West Bank and thus would make the establishment of the capital of the Palestinian state in the holy city virtually impossible.

“This is a meaningless decision that won’t change anything on the ground,” declared Netanyahu about the UNGA vote. He knew what he was talking about.

Less than two months to go before they go to the polls, most Israelis seem in harmony with Netanyahu.

Barely 300 left-wing Israelis demonstrated in support of Palestinian statehood in front of Tel Aviv’s Hall of Independence where Ben-Gurion declared their state’s independence.

After having stood so strongly beside Israel at the UN, the U.S. might feel betrayed by Netanyahu’s settlement decision.

But Netanyahu has no intention of letting the smallest margin of error disprove polls which steadily suggest that he is ensured to succeed himself at the head of an ever more right-wing coalition. And, he has no intention of letting the Palestinians spoil his own vision of a state of Palestine.