Abir Dandis, the mother of the two girls who were murdered in the Negev town of Al-Fura’a last week, couldn't find a police officer to listen to her warnings, neither in Arad nor in Ma’ale Adumim. Both police stations operate in areas where Israel wants to gather the Bedouin into permanent communities, against their will, in order to clear more land for Jewish communities. The dismissive treatment Dandis received shows how the Bedouin are considered simply to be lawbreakers by their very nature. But as a resident of the West Bank asking for help for her daughters, whose father was Israeli, Dandis faced the legal-bureaucratic maze created by the Oslo Accords.

The Palestinian police is not allowed to arrest Israeli civilians. It must hand suspects over to the Israel Police. The Palestinian police complain that in cases of Israelis suspected of committing crimes against Palestinian residents, the Israel Police tend not to investigate or prosecute them.

In addition, the town of Al-Azaria, where Dandis lives, is in Area B, under Palestinian civilian authority and Israeli security authority. According to the testimony of Palestinian residents, neither the IDF nor the Israel Police has any interest in internal Palestinian crime even though they have both the authority and the obligation to act in Area B.

The Palestinian police are limited in what it can do in Area B. Bringing in reinforcements or carrying weapons in emergency situations requires coordination with, and obtaining permission from, the IDF. If Dandis fears that the man who murdered her daughters is going to attack her as well, she has plenty of reason to fear that she will not receive appropriate, immediate police protection from either the Israelis or the Palestinians.

Dandis told Jack Khoury of Haaretz that the Ma’ale Adumim police referred her to the Palestinian Civil Affairs Coordination and Liaison Committee. Theoretically, this committee (which is subordinate to the Civil Affairs Ministry) is the logical place to go for such matters. Its parallel agency in Israel is the Civilian Liaison Committee (which is part of the Coordination and Liaison Administration - a part of the Civil Administration under the Coordinator of Government Activities in the Territories).

In their meetings, they are supposed to discuss matters such as settlers’ complaints about the high volume of the loudspeakers at mosques or Palestinians’ complaints about attacks by settlers. But the Palestinians see the Liaison Committee as a place to submit requests for permission to travel to Israel, and get the impression that its clerks do not have much power when faced with their Israeli counterparts. In any case, the coordination process is cumbersome and long.

The Palestinian police has a family welfare unit, and activists in Palestinian women’s organizations say that in recent years, its performance has improved. But, as stated, it has no authority over Israeli civilians and residents. Several non-governmental women’s groups also operate in the West Bank and in East Jerusalem, and women in similar situations approach them for help. The manager of one such organization told Haaretz that Dandis also fell victim to this confusing duplication of procedures and laws. Had Dandis approached her, she said, she would have referred her to Adalah, the Legal Center for Arab Minority Rights in Israel, which has expertise in navigating Israel’s laws and authorities.

John Kerry revealed his long-awaited plan for peace in the Middle East on Sunday, hinging on a $4bn (£2.6bn) investment in the Palestinian private sector.

The US secretary of state, speaking at the World Economic Forum on the Jordanian shores of the Dead Sea, told an audience including Israeli president Shimon Peres and Palestinian leader Mahmoud Abbas that an independent Palestinian economy is essential to achieving a sustainable peace.

Speaking under the conference banner "Breaking the Impasse", Kerry announced a plan that he promised would be "bigger, bolder and more ambitious" than anything since the Oslo accords, more than 20 years ago.

Tony Blair is to lead a group of private sector leaders in devising a plan to release the Palestinian economy from its dependence on international donors. The initial findings of Blair's taskforce, Kerry boasted, were "stunning", predicting a 50% increase in Palestinian GDP over three years, a cut of two-thirds in unemployment rates and almost double the Palestinian median wage. Currently, 40% of the Palestinian economy is supplied by donor aid.

Kerry assured Abbas that the economic plan was not a substitute for a political solution, which remains the US's "top priority".

Peres, who had taken the stage just minutes before, also issued a personal plea to his Palestinian counterpart to return to the negotiations.

"Let me say to my dear friend President Abbas," Peres said, "Should we really dance around the table? Lets sit together. You'll be surprised how much can be achieved in open, direct and organised meetings."

Thick locks hug the front gates of shuttered shops, now covered in graffiti and dust from lack of use. Only a handful of customers pass along the dimly lit road, sometimes stopping to check the ripeness of fruits and vegetables, or ordering meat in near-empty butcher shops.

“All the shops are closed. I’m the only one open. This used to be the best place,” said 64-year-old Mustafa Sunocret, selling vegetables out of a small storefront in the marketplace near his family’s home in the Muslim quarter of Jerusalem’s Old City.

Amidst the brightly coloured scarves, clothes and carpets, ceramic pottery and religious souvenirs filling the shops of Jerusalem’s historic Old City, Palestinian merchants are struggling to keep their businesses alive.

Faced with worsening health problems, Sunocret told IPS that he cannot work outside of the Old City, even as the cost of maintaining his shop, with high electricity, water and municipal tax bills to pay, weighs on him.

“I only have this shop,” he said. “There is no other work. I’m tired.”

Abed Ajloni, the owner of an antiques shop in the Old City, owes the Jerusalem municipality 250,000 Israeli shekels (68,300 U.S. dollars) in taxes. He told IPS that almost every day, the city’s tax collectors come into the Old City, accompanied by Israeli police and soldiers, to pressure people there to pay.

“It feels like they’re coming again to occupy the city, with the soldiers and police,” Ajloni, who has owned the same shop for 35 years, told IPS. “But where can I go? What can I do? All my life I was in this place.”

He added, “Does Jerusalem belong to us, or to someone else? Who’s responsible for Jerusalem? Who?”

Illegal annexation

Israel occupied East Jerusalem, including the Old City, in 1967. In July 1980, it passed a law stating that “Jerusalem, complete and united, is the capital of Israel”. But Israel’s annexation of East Jerusalem and subsequent application of Israeli laws over the entire city remain unrecognised by the international community.

Under international law, East Jerusalem is considered occupied territory – along with the West Bank, Gaza Strip and Syrian Golan Heights – and Palestinian residents of the city are protected under the Fourth Geneva Convention.

Jerusalem has historically been the economic, political and cultural centre of life for the entire Palestinian population. But after decades languishing under destructive Israeli policies meant to isolate the city from the rest of the Occupied Territories and a lack of municipal services and investment, East Jerusalem has slipped into a state of poverty and neglect.

“After some 45 years of occupation, Arab Jerusalemites suffer from political and cultural schizophrenia, simultaneously connected with and isolated from their two hinterlands: Ramallah and the West Bank to their east, West Jerusalem and Israel to the west,” the International Crisis Group recently wrote.

Israeli restrictions on planning and building, home demolitions, lack of investment in education and jobs, construction of an eight-foot-high separation barrier between and around Palestinian neighbourhoods and the creation of a permit system to enter Jerusalem have all contributed to the city’s isolation.

Formal Palestinian political groups have also been banned from the city, and between 2001-2009, Israel closed an estimated 26 organisations, including the former Palestinian Liberation Organisation headquarters in Jerusalem, the Orient House and the Jerusalem Chamber of Commerce.

Extreme poverty

Israel’s policies have also led to higher prices for basic goods and services and forced many Palestinian business owners to close shop and move to Ramallah or other Palestinian neighbourhoods on the other side of the wall. Many Palestinian Jerusalemites also prefer to do their shopping in the West Bank, or in West Jerusalem, where prices are lower.

While Palestinians constitute 39 percent of the city’s population today, almost 80 percent of East Jerusalem residents, including 85 percent of children, live below the poverty line.

“How could you develop [an] economy if you don’t control your resources? How could you develop [an] economy if you don’t have any control of your borders?” said Zakaria Odeh, director of the Civic Coalition for Palestinian Rights in Jerusalem, of “this kind of fragmentation, checkpoints, closure”.

“Without freedom of movement of goods and human beings, how could you develop an economy?” he asked.

“You can’t talk about independent economy in Jerusalem or the West Bank or in all of Palestine without a political solution. We don’t have a Palestinian economy; we have economic activities. That’s all we have,” Odeh told IPS.

Israel’s separation barrier alone, according to a new report by the United Nations Conference on Trade and Development (UNCTD), has caused a direct loss of over one billion dollars to Palestinians in Jerusalem, and continues to incur 200 million dollars per year in lost opportunities.

Israel’s severing and control over the Jerusalem-Jericho road – the historical trade route that connected Jerusalem to the rest of the West Bank and Middle East – has also contributed to the city’s economic downturn.

Separation of Jerusalem from West Bank

Before the First Intifada (Arabic for “uprising”) began in the late 1980s, East Jerusalem contributed approximately 14 to 15 percent of the gross domestic product (GDP) in the Occupied Palestinian territories (OPT). By 2000, that number had dropped to less than eight percent; in 2010, the East Jerusalem economy, compared to the rest of the OPT, was estimated at only seven percent.

“Economic separation resulted in the contraction in the relative size of the East Jerusalem economy, its detachment from the remaining OPT and the gradual redirection of East Jerusalem employment towards the Israeli labour market,” the U.N. report found.

Decades ago, Israel adopted a policy to maintain a so-called “demographic balance” in Jerusalem and attempt to limit Palestinian residents of the city to 26.5 percent or less of the total population.

To maintain this composition, Israel built numerous Jewish-Israeli settlements inside and in a ring around Jerusalem and changed the municipal boundaries to encompass Jewish neighbourhoods while excluding Palestinian ones.

It is now estimated that 90,000 Palestinians holding Jerusalem residency rights live on the other side of the separation barrier and must cross through Israeli checkpoints in order to reach Jerusalem for school, medical treatment, work, and other services.

“Israel is using all kinds of tools to push the Palestinians to leave; sometimes they are visible, and sometimes invisible tools,” explained Ziad al-Hammouri, director of the Jerusalem Centre for Social and Economic Rights (JCSER).

Al-Hammouri told IPS that at least 25 percent of the 1,000 Palestinian shops in the Old City were closed in recent years as a result of high municipal taxes and a lack of customers. “Taxation is an invisible tool…as dangerous as revoking ID cards and demolishing houses,” he said. “Israel will use this as pressure and as a tool in the future to confiscate these shops and properties.”

The images most Americans have of the recent war in Lebanon are of shattered cities, dead civilians, and terrified people bunkered down in basements or picking their way through blasted streets. The carnage of modern war draws the media as ancient battles called forth the Valkyries.

But there are other images—and voices—that most of us do not see or hear on the 6 o'clock news or read in our newspapers.

Yonatan Shapiro, for instance, is a former Blackhawk pilot and co-founder of Combatants for Peace. From his conversations with Israeli Air Force F-16 pilots, he relates, “Some told me they have shot at the side of targets because they are afraid people will be there, and they don't trust any more those who give them the coordinates and the targets.” He has urged the pilots to refuse to fly “in order to save our country from self-destruction.”

Uri Avnery is the founder of Gush Shalom (Peace Bloc). On August 5, he addressed 5,000 people packed into Magen David Square in Tel Aviv: “We are the few facing the masses that thirst for war, but next month, or next year, every one of us will proudly proclaim: I was here! I called for a stop to this accursed war. And thousands who are cursing us now, next month, next year, will claim that they, too, were here.”

At an August 11 rally in Tel Aviv, Ukrainian immigrant Yana Knopova and Israeli Arab Khulood Badawi led anti-war chants in Arabic, Russian, and Hebrew: “Salaam Na'ami! Kharb La! (Peace yes, war no) Voine Nyet! (No war)”

The 34-day war did more than smash up infrastructure. It blew up a lot of assumptions and accepted truths as well, such as the invincibility of the Israeli Army. Also dispelled was the illusion that wars can be controlled. Hezbollah leader Sheik Hassan Nasrallah now admits he would never have captured the two Israeli soldiers if he had known how Israel would respond.

Face of the New Movement

The war has also reinvigorated the Israeli peace movement with some very new elements. The names “Knopova” and “Badawi” are a case in point.

Yana Knopova, age 25, left the Ukraine in 1995 as a young Zionist. She is currently a psychology major at Haifa University and the coordinator of the Coalition of Women for Peace. Khulood Badawi, age 30, is the former chair of the Association of Arab University Students in Israel and now works for a civil rights group.

In an interview with Lily Galili in the Israeli newspaper Ha'aretz, the two talked about what motivates them to try to stop the war and how feminism influences their views. “The police see Khulood as a natural enemy,” says Knopova, “while in the exact same situation, the police refuse to see me as an enemy. They also live with the stereotype that there are no Russians in the left. Khulood is always dangerous, I am never dangerous; Khulood is a demographic time bomb, I am a demographic hope. This is an approach that regards the wombs of us both in the service of the state, and we will not give them this pleasure.” According to journalist Galili, Ashkenazi men (Central and Eastern European Jews) traditionally dominated the Israeli peace movement, but women are now largely leading the current anti-war protests. “All the elements of this war bring the issues together,” says Knopova, “feminism, social justice, class distinctions, the environment and the occupation. Women make this connection.” And as the chants suggest, more and more Russian immigrants—normally associated with the hard right—are involved in the peace movement.

What is also different is that Arab citizens of Israel have shown up in Tel Aviv in large numbers. Khulood Badawi sees this participation as a way of healing the deep wound of October 2000, when Israeli police opened fire on peaceful Arab demonstrators and killed 13 of them. After the massacre, Arab-Israelis stayed away from peace protests in Tel Aviv. “The age is over when we would accept Jewish partnership at any price,” Badawi says. “Today the connection is genuine, with Jewish activists paying the price of their participation by demonstrations against the wall in Bil'in, refusal to serve in the military, and activism at checkpoints. We have a common fate, but it is different than in the past. These demonstrations can help us out of the severed relations of October 2000. Now the Arab-Jewish partnership is egalitarian.” Badawi told Ha'aretz , “When we speak from the stage—Yana in Russian, I in Arabic—that in itself is a political message. It also conveys to the Arab world that the claims by Israel and the U.S. that Jews and Arabs cannot live together is a false message.” Dissension within the Ranks There is also a growing movement among soldiers—particularly reservists—who refuse to serve in the occupied territories or take part in the invasion of Lebanon.

The oldest of these organizations is Yesh Gvul, formed in 1982 during the first Lebanon invasion. It has now been joined by a number of new organizations, like Combatants for Peace, all tied together by the Refuser Solidarity Network. Their slogan: “You can't have a war if the soldiers stay home.”

Yesh Gvul organizers say they have been contacted by dozens of officers and soldiers who say they will refuse service in Lebanon. Among them is Reserve Captain Amir Paster, sentenced to 28 days for refusing to serve in Lebanon, and Staff Sargent Itzik Shabbat, who refused to serve in the occupied territories because it would free up regular solders to fight in Lebanon.

While new groups are springing up, Gush Shalom is still the activist backbone of the Israeli peace movement. Formed in 1993, it calls for returning all the occupied territories (including East Jerusalem), a right of return for Palestinians “without undermining the foundations of Israel,” and mutual security between Israel and Palestine.

The organization has no paid staff and no funding to speak of, and an in-your-face street-theater edge to it. It rebuilds houses destroyed by Israeli occupation forces, fills in trenches dug by the army to isolate Arab villages, breaks through closure barriers, and harvests olives for Palestinians barred from their land by the army or settlers.

Gush Shalom was the principle organizer of the Magen David Square rally that also drew the Coalition of Women for Peace, Ta'ayush (an organization that fights to release the more than 10,000 Palestinian detainees), Yesh Gvul, the Israeli-Palestinian Forum of Bereaved Families, Anarchists Against Walls, plus political parties like Hadash, Balad, and the United Arab List.

Conspicuously missing was any formal representation from the leftist Meretz Party, which splintered over support for the war. However, many Meretz members marched, including former Knesset members Naomi Hazen and Ya'el Dayan. And while 5,000 might seem small, a comparable demonstration in the United States would number 200,000. (There are also vibrant anti-war groups within the Jewish community in the United States, including Jewish Voice for Peace and Americans for Peace Now.)

In his closing remarks at the August 5 rally, Gush Shalom founder Avnery talked about the bright potential that smashing “accepted truths” can create: “When this madness is finally over, we shall struggle together—Israelis and Palestinians, Syrians and Lebanese, Jewish and Arab citizens of Israel—so that we can live a normal life, each in his free state, side by side, in peace.”

The Middle East has always been a place where illusion paves the road to disaster. In 1095, Pope Urban's religious mania launched the Crusades, the reverberations of which still echo through the region. In 1915, Winston Churchill's arrogance led to the World War I bloodbath at Gallipoli. In 2003, George Bush's hubris ignited a spiral of chaos and civil war in Iraq.

Illusions once again threaten to plunge the Middle East into catastrophe. The central hallucination this time is that the war in Lebanon was a “proxy war” with the mullahs in Tehran, what one senior Israeli commander has called “Iran's western front.” Behind this hallucination is yet another. According to William O. Beeman, a professor of anthropology and Middle East studies at Brown University, there is “a longstanding U.S. foreign policy myth that believes terrorism cannot exist without state support.” In short, if Hezbollah exists, it is solely because of Iran. This particular illusion, according to a number of journalists, is behind the carte blanche the White House handed the Israelis during the war in Lebanon (see Stephen Zunes, How Washington Goaded Israel).

Israeli Fallout

As a result of the Lebanon debacle, Israeli Prime Minister Ehud Olmert's Kadima Party is almost certainly dead. A Dahaf Institute poll found that 63% of Israelis want the Prime Minister out, and 74% want to oust Defense Minister and Labor Party leader Amir Peretz. The latter is busy trying to shift the blame to Israeli Chief of Staff Lt. General Dan Halutz (54% want him to resign) for claiming that Hezbollah could be destroyed from the air.

The army is whispering that the politicians held them back, and the politicians are grumbling that the army mishandled its budget. Olmert is stonewalling a formal inquiry on the war, which almost 70% of the population is demanding, and the reservists are up in arms. After 34 days of war, Hezbollah is intact, and the two soldiers whose capture kicked the whole thing off are still in its hands. Last but not least, the war knocked 1% off Israel's GNP.

The war's outcome is giving some Israelis pause, and there are some interesting straws in the wind. Amir Peretz, for instance, has called for negotiations with the Palestinians. Foreign Minister Tzipi Livni says she is willing to “explore” the idea of talks with Syria. Public Security Minister Avi Dichter has gone even further and says Israel should give up the Golan Heights.

It is not clear where these discussions are going. If nothing else, however, the war has energized an Israeli peace movement, one rather more inclusive than such movements in the past.

Islamofascists?

For the Bush administration and its neoconservative allies, the ceasefire is just a break between rounds in the president's war on “Islamofascism.” Former House Speaker Newt Gingrich says the United States is “in an emerging third world war.” William Kristol calls the Lebanon war an “act of Iranian aggression” and urges the United States to attack Iranian nuclear sites. Writing in the Los Angeles Times, neocon heavy Max Boot calls for a U.S. attack on Syria.

According to journalist Sidney Blumenthal in Salon, the neocons in the administration, specifically Vice President Dick Cheney and National Security Agency Middle East Director Elliott Abrams, have been funneling U.S. intelligence intercepts to the Israelis as part of a plan to target Syria and Iran (see Tom Barry, Hunting Monsters with Elliott Abrams).

Those intercepts were behind the recent House Intelligence Committee report blasting U.S. spy agencies for their reluctance to say that Hezbollah is nothing more than an extension of Iran, that Tehran is on the verge of acquiring nuclear weapons, and that Iran poses a clear and present danger to the United States.

The author of the House report, Frederick Fleitz, was a former special assistant to current UN Ambassador John Bolton. Bolton was a key figure in gathering the now-discredited intelligence that Iraq had weapons of mass destruction.

According to Blumenthal, Cheney and his Middle East aide David Wurmser have dusted off a 1996 document called “A Clean Break: A New Strategy for Securing the Realm.” The study was authored by Wurmser, ex-Pentagon official Douglas Feith, and Richard Perle, disgraced former head of the Defense Policy Board.

The “Break”—originally written for then-Likud prime minister Benjamin Netanyahu—advocates that the Israelis, with support from the United States, dump the 1992 Oslo Agreement with the Palestinians, target Syria and Iraq, and redesign the Middle East.

A key ingredient in the document, and one central to current administration thinking, is that since terrorism is state-supported, the war on terrorism can be won by changing regimes. Hence, to defeat Hezbollah, you have to overthrow Syria and Iran.

Iran's Non-Role

Brown University's Beeman argues that Iran has no direct control over Hezbollah. While Iran does provide the organization some $200 million a year, that money “makes up a fraction of Hezbollah's operating budget.” The major source of the group's funding is the “sakat,” or the tithe required of all Muslims.

Georgetown University professor Daniel Byman, writing in Foreign Affairs, says that Iran “lacks the means to force significant change in the [Hezbollah] movement and its goals. It [Iran] has no real presence on the ground in Lebanon and a call to disarm or cease resistance would likely cause Hezbollah's leadership, or at least its most militant elements, to simply sever ties with Tehran's leadership.” If a wider war is to be avoided, argues Christopher Layne of the Bush School of Government and Public Service at Texas A&M University, the United States “will have to engage in direct diplomacy with Syria and Iran—both of which have important stakes in the outcome of security issues in the Middle East, including those involving Israel's relations with the Palestinians and with Hezbollah in Lebanon.” Recently a group of 21 former generals, admirals, ambassadors, and high ranking security advisers proposed exactly that, calling on the Bush administration to “engage immediately in direct talks with the government of Iran without preconditions.” The group warned that “an attack on Iran would have disastrous consequences for security in the region and U.S. forces in Iraq. It would inflame hatred and violence in the Middle East and among Muslims everywhere.” Just as Middle East illusions have done for almost a millennium.

There is a moment in Jeffery Goldberg's New Yorker profile of Brent Scowcroft, George Bush Senior's former National Security Advisor, when the current Administration's combination of arrogance and cluelessness crystallize. Over dinner, Secretary of State Condoleeza Rice tells Scowcroft that the 'good news' from the Middle East is that Israeli Prime Minister Ariel Sharon is pulling out of Gaza, the first step toward resolving the issue of a Palestinian state.

According to Scowcroft, he replied, 'That's terrible news. For Sharon this is not the first move, this is the last move ... when he is out, he will have an Israel that he can control and a Palestinian state atomized enough that it can't be a problem.'

Rice bristled and, says Scowcroft, 'We had a terrible fight on that.'

It is difficult to find oneself on common ground with a man like Scowcroft, a protégé of serial killer extraordinaire, Henry Kissinger. He was part of the team that green lighted Indonesia's occupation of East Timor, which, according to the UN, killed over 200,000 people. There is a cold whiff of death about the man.

But he gets Ariel Sharon.

Maybe it is because, like Sharon, he is an ex-general, and understands the centrality of deception in the business of war. And the key to understanding the Israeli Prime Minister, says Knesset member Yossi Sarid, is to remember, 'Sharon is a deceiver.'

A close-and chilling-examination of the Gaza Disengagement Plan by Sara Roy in the London Review of Books makes that abundantly clear. 'Whatever else it claims to be,' writes Roy, 'the Gaza Disengagement plan is, at heart, an instrument of Israel's continued annexation of West Bank land and the physical integration of that land into Israel.'

Roy, a Harvard economist, has worked in Gaza since 1985 and is the author of numerous books and studies. Her current work is funded by the John D. and Catherine T. MacArthur Foundation.

Almost three decades of occupation has turned Gaza into one of the poorest and most desperate regions in the world. Unemployment is upwards of 70 percent, and somewhere between 65 percent and 75 percent of its residents live under the poverty line. Places like the Jabalya refugee camp have three times the density per square mile as Manhattan.

Gaza has long been a poor place, but it has become measurably worse in the last five years. According to the World Bank, the poverty rate has more than doubled since 2000. A Harvard study projects that, by 2010, Gaza will need to create 250,000 jobs a year just to keep pace with its population growth. It is also desperately short of classrooms, teachers and health clinics.

The World Food Program found that 42 percent of Gazins are 'food insecure,' defined as a 'lack [of] access to safe and nutritious food essential for normal growth and development.' An additional 30 percent are 'food vulnerable.' Some 13.2 of Gaza's children suffer from 'body wasting,' and one in five have moderate anemia.

The Disengagement Plan will make all of this worse, because a major goal, according to the plan, is 'to reduce the number of Palestinian workers entering Israel to the point it ceases completely.'

Keep in mind that Israel began integrating Gaza and the West Bank into its economy right after the 1967 war. Both areas-especially Gaza-became pools of low wage, skilled labor for everything from construction to agriculture. Palestinian lands were confiscated for settlements and roads, and the native economy was 'de- developed,' a classic strategy of colonial powers from Ireland to Indonesia.

'Decades of expropriation and deinstitutionalization had long ago robbed Palestine of its potential for development, ensuring that no viable economic (or political) structure could emerge,' says Roy.

Added to that is the destruction waged by the occupation forces in Gaza and the territories. According to the UN Conference on Trade and Development, the Israeli Army has inflicted $3.5 billion worth of damage since 2000. 'The Occupied Palestinian Territory has lost at least one fifth of its economic base over the last four years as a consequence of war and occupation' the UN report concludes.

When Rice told Scowcroft that the Gaza disengagement was the first step in the creation of a Palestinian state, she was either being disingenuous or hadn't bothered to read the Plan. 'It is clear that in the West Bank,' the document reads, 'there are areas which will be part of the state of Israel, including major Israeli population centers, cities, towns and villages, security areas and other places of special interest to Israel.'

That plan is already well underway. The 'security' wall has already isolated 242,000 Palestinians (10 percent of the population) in a closed military zone between Israel's border and the western side of the wall. Another 12 percent are separated from their lands by settlements or settlement roads. When the 425-mile wall is completed, Palestinians will have access to 54 percent of the West Bank.

While the Israelis argue that the wall is only a security measure, Justice Minister Tzipi Livni told a conference in Caesarea that 'One does not have to be a genius to see that the fence will have implications for the future border.'

Within the wall, the network of settler roads and tunnels that give freedom of passage to 400,000 settlers, effectively imprison three million Palestinians. A Palestinian can no longer drive from the West Bank to Jordan. The two roads running through Jericho in the south and Nablus and Tubas in the north have been designated 'settlers only.'

The Sharon government recently announced a plan to double the number of settlers in the Jordan Valley, an act that would effectively split the West Bank down the middle. He also told Reuters that the Valley was a 'security zone' that Israel would not relinquish.

According to former Knesset member and Gush Shalom leader Uri Avnery, 'Sharon does not make a secret of his real intentions: to annex to Israel 58 percent of the West Bank.' Avnery adds that since no Palestinian leader would be a partner to such a 'solution,' Sharon plans to unilaterally implement all this, 'backed by force, without any dialogue with the Palestinians.

Indeed, Sharon's Defense Minister, Shaul Mofaz, claims 'there is no one to talk to' about peace, and that Israel will have to wait 'for the next generation' of Palestinian leaders to conclude a peace agreement. What Mofaz's statement means, chief Palestinian negotiator Saeb Erekat says, is that Israel intends 'to perpetuate its occupation of Palestinian territory indefinitely.'

The roadblocks, land seizures, and daily humiliations Palestinians go through are all part of a design. Its aim is to make life so unbearable for the Palestinians that they will leave, in what Sharon's former Tourism Minister, Benny Elon, calls a 'voluntary transfer.'

'Transfer isn't necessarily a dramatic moment, with buses and trucks loaded with people,' human rights activist Gadi Algazi told the daily Ha'aretz, but a continuing 'strangulation under closures and sieges that prevent people from getting to work or school, receiving medical services, and from allowing the passages of water trucks and ambulances, which send the Palestinians back to the age of the donkey and the cart.'

While Rice and the European Union successfully pressured Israel to open Gaza's border with Egypt, exports from Gaza to Israel have been cut in half.

Israelis pay a heavy price for the settlements as well. According to Peace Now, the occupation costs $1.4 billion a year. 'The settlements,' says Amir Peretz, the new leader of the Labor Party, 'have emptied out the budgets of education and welfare of the social periphery and increased the social gap in Israel.'

Since 1988, child poverty in Israel has increased 50 percent, according to government's National Insurance Institute. One third of Israeli children live below the poverty line, and Israel has the dubious distinction of having the second largest gap between rich and poor in the developed world (the U.S/ is number one). It also has the highest poverty rate among 65 year olds in the Western world.

Henry Siegman, former executive head of the American Jewish Congress, points out that the Israelis have a partner' if they want one. According to a recent survey by the Palestinian Center for Policy and Survey, the majority of Palestinians want a ceasefire, the militias disarmed, and they place 'improving their lives' over 'ending the occupation.'

Yet for the most part, the gates to Gaza remain locked. The Israeli government is planning to add 6500 homes to West Bank settlements, and while it did move 8,500 settlers out of Gaza, it also built accommodations for 30,000 more in the West Bank. The roads and the wall devour Palestinian lands, and targeted assassinations and raids continue. All of this, argues Siegman, invites a terrible retribution.

'Measures that collectively punish the Palestinian public and undermine efforts to revive Gaza, if not reversed, will lead Palestinians to the conclusion that their optimism was misplaced,' he writes. 'If that should happen, no one should be surprised if the intifada returns with unprecedented fury.'

On its face, President George Bush's recent endorsement of Israeli Prime Minister Ariel Sharon's land grab in the occupied territories makes little sense. The plan, under which Israel would abandon Gaza while permanently annexing most of the West Bank, has met with almost universal condemnation.

* It has stirred rage in the Arab world, where, according to U.S. ally Egyptian President Honsi Mubarak, "there exists a hatred of Americans never equaled in the region."

* European Union (EU) foreign policy spokesperson, Brian Cowen, said that the "EU will not recognize any change to the pre-1967 borders other than those arrived at by agreement of the parties."

* A letter by 52 former senior British diplomats called Prime Minister Tony Blair's support for Washington on this issue, "one-sided and illegal," and predicted it "will cost yet more Israeli and Palestinian blood." A Financial Times editorial called the letter "the most stinging rebuke ever to a British government by its foreign policy establishment."

At a time when the U.S. is desperate for an international bailout in Iraq, why would the White House go out of its way to alienate allies?

The most popular explanations are:

* The influence of pro-Israeli lobbies, and a Republican strategy to woo Jewish voters and money away from the Democrats;

* A bow to the Bush Administration's Christian Evangelical wing, which is rabidly pro-Israel because it is convinced the Second Coming is upon us.

There is no question that pleasing evangelicals is an Administration priority, and certainly Republicans would like to cut into traditional Jewish support for the Democrats. But this explanation assumes foreign policy is all about partisan politics and God.

Bush certainly has the inside track with evangelicals. However, there is virtually no difference between Republican and Democrats on Israel. If anything, the latter are slightly more hawkish.

There is a simpler explanation for the White House's posture, one the Administration laid out four months after taking office. In May, 2001, Vice-President Dick Cheney's National Energy Policy Development Group recommended that the President "make energy security a priority of our trade and foreign policy."

The recommendation was hardly a bolt from the blue, and the Republicans didn't invent the idea. The recent move of oil companies and the U.S. military into Central Asia is a case in point. It was President Bill Clinton, not George W. Bush, who crafted that strategy. It was not the Republicans who brought Halliburton and Cheney into the Caspian region, but Clinton advisor Richard Morningstar, now a John Kerry point man.

A flood of future Bush Administration heavies followed in Cheney's wake. Condolezza Rice helped ChevronTexaco nail down drilling rights for Kazakhstan's Tenez oil fields. James Baker, who pulled off Bush's Great Florida Election steal, helped British Petroleum get into the area.

When it comes to oil, partisan politics stop at the U.S. coastline. And if it is about oil, it's about the Middle East.

Oil production in the US, Mexico and the North Sea is declining, and a recent study by the University of Uppsala in Sweden suggests reserves may be far smaller than the 18 trillion barrels the industry presently projects. If the new figure of 3.5 trillion barrels is correct, sometime between 2010 and 2020, worldwide production will begin to decline.

Given that most oil geologists think there are few, if any, undiscovered resources left, that decline is likely to be permanent.

So the price of oil---now $41.65 a barrel, a jump of $32 since 1997---may not be a temporary spike. World pumping capacity is going full throttle, but a combination of economic growth, coupled with cash shortages for investment, have kept supplies tight. Only during the Iranian revolution and the Iran-Iraq War did oil cost more.

With U.S. consumption projected to increase 1/3 over the next 20 years--- two thirds of which will be imported by 2020---the name of the game is reserves. The bulk of those lie in the Middle East. Between Saudi Arabia, Iraq, the United Arab Emirates and Kuwait, the Gulf states control 65 percent of the world's reserves, or close to 600 billion barrels. In comparison, the U.S. reserves are a little under 23 billion.

Whoever controls these reserves essentially controls the world's economy. Consider for a moment if the U.S. were to use its power in the Middle East and its growing influence in Central Asia to tighten oil supplies to the exploding Chinese economy.

China presently uses only 8 percent of the world's oil, accounts for 37 percent of consumption growth.

Lest anyone think this scenario is paranoid, try re- reading President Bush's June, 2002 West Point speech that clearly states the U.S. will not allow the development of any "peer competitors" in the world.

That is what Cheney's Energy Policy Group meant by making "energy security" a corner stone of US "trade and foreign policy."

So, what does this have to do with Israel and the occupied territories?

Israel may not have any oil, but it is the most powerful player in the Middle East. In the great chess game that constitutes oil politics, there are only two pieces left on the board that might check U.S. plans to control the Middle East's oil reserves: Syria and Iran.

And that is where Ariel Sharon comes in.

Sharon's ruling coalition has been spoiling for a fight with Syria and Iran. The Israelis bombed Syria late last year and leading members of the Sharon government have routinely taken to threatening Iran.

Cabinet Minister Gideon Ezra threatened to assassinate Damascus -based Hamas leader Khaled Meshaal, and Sharon did the same to Hezbollah leader, Hassan Nasrallah. On May 11, the Bush Administration levied economic sanctions on Syria.

The Sharon government is just as belligerent about Iran. Israeli Chief of Staff, Lt. Gen. Moshe Ya'alon says that he hopes international pressure on Iran will halt its development of nuclear weapons, but adds ominously, "if that is not the case we would consider our options."

Neoconservatives in the Bush Administration have long targeted Iran. Richard Perle, former Defense Policy Board member, and David Frum, of the neo-com Weekly Standard, co-authored "An End to Evil," which calls for the overthrow of the "terrorist mullahs of Iran." Michael Ladeen of the influential American Enterprise Institute argues that "Tehran is a city just waiting for us."

According to Irish journalist, Gordon Thomas, the U.S. has already targeted missiles on Iranian power plants at Natanz and Arak, and one Israeli intelligence officer told the Financial Times, "It could be a race who pushes the button first---us or the Americans."

If Syria and/or Iran are removed from the board, the game is checkmate.

The Americans can ill afford another war in the Middle East, but the Israelis might be persuaded to take the field. Is giving Sharon a free hand in the West Bank a quid pro quo for an eventual American-supported Israeli attack on the last two countries in the region with any semblance of independence?

The world, of course, is not a chess game, and the pieces don't always do what they are told.

Sharon might indeed start a war with Syria or Iran, but not because the Israelis are spear-carriers for the Bush Administration. The "Greater Israel" bloc has its own strategic interests, which for the time being, happen to coincide with American interests.

Sharon, however, is hardly a trusty ally. During the first Gulf War, he did his best to sabotage the coalition against Iraq, because he felt such a victory would eventually be used to pressure Israel for concessions in the Occupied Territories.

Nor are all Israelis on board. The recent round of assassinations has helped revitalize the peace movement, which put 120,000 people into the streets of Tel Aviv May 17.

Some Israelis are unhappy about what they see the West Bank becoming. "Sharon has pushed Washington into embracing an accelerated process of forming the state of Israel as a bilateral state based on apartheid," Meron Benvenisti, former deputy mayor of Jerusalem told the British Guardian.

Others are uncomfortable with the support of Christian evangelicals. According to Rabbi David Rosen, international director of the Inter-Religious Affairs of the American Jewish Committee's Jerusalem office, the evangelicals support "some of the most extreme political positions in Israeli society."

One of those "extreme positions" is a plan to raze the Dome of the Rock Mosque in Jerusalem and rebuild the Jewish temple destroyed by the Romans-a precondition, Evangelicals believe, to the Second Coming.

For the time being, the American drive to control the bulk of the world's oil reserves, and the Sharon government's push for a greater Israel and the elimination of regional rivals, finds common ground. On the other hand, if Israel crosses U.S. interests, watch how fast the lobbies and the born-agains find themselves out in the cold.

The crisis in the Middle East is not a clash of civilizations, less so a hijacking of American foreign policy by the so-called "Jewish lobby" and Christian fundamentalists: It's business as usual.

Conn Hallinan is a provost at the University of California at Santa Cruz.