The Jordanian and Egyptian Options:

It seems as though the present Israeli government has given up on any hope that the Palestinians will create a government capable of negotiating a stable peace agreement so long as Yassir Arafat is alive. Instead, Israel is activating the Jordanian and Egyptian options: encouraging these countries to be active in the West Bank and Gaza, respectively, and making them guarantors of the peace. With Israelis having given up on the “New Middle East” vision of harmonious relations between them and the Palestinians, or even on the economic integration that existed pre-Oslo, the obvious strategic political goal for Israel would be to have two Palestinian states: one, ruled in Gaza by someone like Mohammed Dahlan, a city-state, blocked from Israel by a fence, with no airport or port of its own, integrated economically with Egypt. The other in West Bank, demilitarized, economically integrated with Jordan, with the Jordanian army at border crossings and cooperating with Israel on security. There is no law that both Gaza and the West Bank have to be ruled by the same people, it makes much more sense from Israel’s and the world’s perspective to split them up and subject to the calming influences of countries with peace treaties with Israel, rather than have a pathological state ruled by Yasser Arafat and his henchmen. Professor Efraim Inbar of Bar-Ilan University has been suggesting something along these lines for some time.

The main questions are whether Jordan, Egypt, and the U.S. are on board (the EU still seems to support Arafat). Jordan and Egypt were previously extremely reluctant to get involved in anything that could be seen as impairing Palestinian statehood, but the continuing Israeli-Palestinian conflict is a medium-term risk to the stability of both regimes. The Jordanian Hashemites have always hated Arafat, with whom they fought a brutal civil war in 1971, and King Abdullah recently made it clear that he wants Arafat to relinquish control of Palestinian military forces. The Egyptians, though their intelligence service “invented” Arafat and the PLO, have clearly lost interest in him.