What Happened

With just a single line, U.S. Secretary of State Mike Pompeo managed to upend decades of U.S. policy on Israeli settlements. Announcing on Nov. 18 that Washington would no longer join the international community in declaring Israeli settlements illegal, the top U.S. diplomat said, "The establishment of Israeli civilian settlements in the West Bank is not per se inconsistent with international law." 

Unsurprisingly, international condemnation was swift. The European Union and Russia rejected the policy change, while the Palestinian Authority went further, saying Washington had "lost all credibility." Arab states like Jordan, Egypt and Syria rebuked the United States for the decision, as did Turkey and Iran. But Gulf Arab states, many of which are exploring new relations with Israel, were more muted in their reaction, with state media holding off on immediate comment. 

In the United States, the response was largely partisan. Leading Democratic presidential candidates rejected the move, while Republicans showed more support. Naturally, there was more excitement in Israel itself, as the Likud-led caretaker government took the opportunity to move its Jordan River Valley annexation bill out of committee, bringing the country closer to assuming formal control of the border with Jordan.

Why It Matters

The U.S. decision removes a diplomatic obstacle to further Israeli annexations of Palestinian territory. Israel's main political parties, including Likud and its main opponent, Blue and White, now have a green light from the United States to carry out long-desired territorial annexations to secure Israel's settlements.  

The annexation of the Jordan River Valley and most of Israel's West Bank settlements would slash Palestinian control to just a series of towns and cities, seriously damaging the Palestinian Authority's legitimacy. That could subsequently lead to serious security problems, especially if the authority decides to cease its cooperation with Israel's military. And in such a case, Jordan, too, might feel compelled to reduce its collaboration with Israel in a bid to stave off rising nationalist, anti-Israeli pressure. 

Such Israeli moves would also incite international anger, testing Israel's relationships with the Gulf Arabs, Europe and, likely at some point in the future, the United States. In some places, like the Arab Gulf, governments would attempt to maintain productive elements of their relationship with Israel while continuing to portray themselves as advocates of the Palestinian cause. That is easier said than done for some; the United Arab Emirates, for example, would be able to strike a better balance than Saudi Arabia, a larger country with more diverse interests to manage.

In the event of annexation, Israel's relationship with its great power ally, the United States, would likely be subject to America's partisan politics. While Republicans would rally to Israel's defense amid stalwart support from the Trump administration, Democrats would face internal pressure to reduce the party's longtime support for Israel. In the long term, that means that a Democratic-led United States could back some aspects of a diplomatic or economic isolation campaign against an annexationist Israel or reverse U.S. President Donald Trump's pro-Israeli policies. As the grassroots Boycott, Divestment, and Sanctions movement inevitably gains strength as Israel takes more land, this becomes more likely.

More Context

Israel has long wanted to expand into the West Bank for security, religious and economic reasons. But in its quest for regional acceptance and security, Israel has often traded away settlements and occupied territory. 

However, the most recent trade — its evacuation from Gaza in 2005 — did not go as planned; not only did the evacuation not foster more peace treaties between Israel and the Muslim world, Israel's hard-line foe, Hamas, also seized Gaza from the Palestinian Authority in 2007. This, in turn, strengthened nationalist and right-wing elements inside Israel who have argued against further withdrawals.

On top of that, changing Israeli demographics have made it difficult for any viable government to maintain power and trade away land and settlements, as a surge in nationalist and ultra-Orthodox voters has tilted the country rightward. Underlying this sentiment, Blue and White leader Benny Gantz promptly backed the U.S. decision, demonstrating that support for any withdrawal would be politically dangerous — even for a centrist candidate like Gantz.

Finally, the rise of Iran as a regional power and the uncertainty of the United States' long-term role in the Middle East has given Israel a chance to build relations with some Gulf Arab allies looking for a reliable partner against Tehran. This has created a new incentive for some Gulf Arab states to accept Israel, bypassing the issue of land. The outright annexation of occupied land, however, might strain Israel's nascent ties with such countries — and with many others.