Last month, US President Donald Trump’s son-in-law and senior adviser, Jared Kushner, unveiled an ambitious plan to strengthen the Palestinian economy, in the hopes that billions of dollars in investment will open the way for an Israeli–Palestinian peace settlement. But, far from being the ‘deal of the century’ that Trump has called it, the so-called Peace to Prosperity plan is divorced from reality—and doomed to fail.

The notion that economic carrots can convince Palestinians to accept Israeli supremacy has a long pedigree. British Prime Minister Winston Churchill, some early Zionists and even local Arabs argued decades before 1948 that the Zionist enterprise was in the economic interest of the indigenous population.

More recently, Israel’s right-wing prime minister, Benjamin Netanyahu, took up the mantle of ‘economic peace’. In 1988, he argued that rapid economic growth would give ordinary Palestinians a ‘stake’ in peace and would ‘support and bolster the achievement of political settlements down the line’. There is, of course, nothing wrong with the promise of economic prosperity; but, coming from Netanyahu, who has never offered a convincing political deal, such a plan could never be credible to the Palestinians.

Now, the Trump administration is attempting to realise this vision. Essentially a Marshall Plan for the Middle East, the Peace to Prosperity proposal aims to facilitate up to $50 billion in new regional and international investment in the Palestinian economy over the next decade. The Trump administration contends that this should also boost the economies of Egypt, Lebanon and Jordan, all of which are directly affected by the Israeli–Palestinian conflict.

Yet Kushner’s plan fails to mention, let alone address, some of the highest barriers to economic development, such as Israel’s arbitrary use of Palestinian natural resources and its security checkpoints, which stymie free movement and raise the cost of transportation. For Peace to Prosperity to deliver the results the Trump administration promises, such barriers would have to be dismantled.

But that still wouldn’t be enough to convince the Palestinians to accept the plan, for a simple reason: the Palestinian national movement remains in its revolutionary phase, when economic considerations always come second to political aspirations. This has been the case even for wealthy Catalonia, where the flight of over 3,000 companies has failed to weaken public support for the separatist cause. The offices of Palestinian Authority President Mahmoud Abbas and his predecessor, Yasser Arafat, were adorned, when I visited, with images of Jerusalem’s Al-Aqsa Mosque (Islam’s third-holiest site) and maps of occupied Palestine, not with photos of John Maynard Keynes or Jean Monnet.

These priorities have been reflected in policy. In February, for example, Abbas chose to risk economic collapse, rather than accept the tax revenues that Israel collects on its behalf, which comprise 63% of the Palestinian government’s budget. Abbas was protesting Israel’s unilateral decision to deduct about 5% of the total against the amount the PA pays in stipends to the families of Palestinians convicted of terrorism and serving time in Israeli prisons.

Through 52 years of military occupation, two society-shattering intifadas and the devastating collapse of two peace plans that seemed set to offer redemption, the Palestinians’ fundamental demands have never changed. They want a two-state solution based on the pre-1967 borders, which includes the right of return for sizeable numbers of Palestinian refugees. And, in fact, an independent Palestine, free to trade with the Arab world and Europe, would secure revenues and GDP growth that far exceed what Kushner’s plan would bring.

For the Palestinians, accepting an economic deal that is not an annex to a convincing political solution would be tantamount to betraying Palestinian refugees—and, indeed, the dream of statehood—for a fistful of dollars. But that doesn’t mean that they should reject it outright.

The Palestinians have rejected many peace plans, most of them far more reasonable than Kushner’s. What they haven’t done is engage the international community with a comprehensive counterproposal. Their offer—which would have to go much further than the 2002 Arab peace initiative or a portfolio of relevant United Nations resolutions—could even incorporate the Kushner plan as part of the transition to a final settlement.

In the past, transitional agreements have amounted to what George Orwell called ‘catastrophic gradualism’. But, with the inclusion of a robust economic strategy, this could be transformed into ‘auspicious gradualism’. After all, economic development would go a long way towards stabilising Palestinian society in preparation for statehood, drastically boosting the peace settlement’s chances of long-term success.

In 1923, none other than the founder of the Zionist right, Ze’ev Jabotinsky, called it a ‘childish fantasy’ to believe that the Palestinians would ‘sell out their homeland for a railroad network’. That has not changed. But, rather than rejecting such payoffs outright, the Palestinians should make an offer of their own, thereby recovering the diplomatic initiative in a world that has largely lost interest in their cause.

After nine months of squabbling, Lebanon finally got a new unity government on 31 January with the reappointment of Sunni politician Saad Hariri as prime minister. It’s clear that the balance of power in the new cabinet has shifted further in favour of Shia Hezbollah, which with its Christian and Sunni allies has more seats in the cabinet than Hariri and his allies do.

Washington has been visibly upset about Hezbollah’s accretion of power. The US has listed Hezbollah as a terrorist organisation since 1995 and recently strengthened sanctions against the group. Saudi Arabia, which sees Hezbollah as a front organisation for Iran, has also warned that an increase in Hezbollah’s power would lead it to curtail its financial aid to Lebanon.

The Saudi regime is particularly dismayed at Hezbollah’s having been given charge of the health ministry, which has a large budget and a countrywide network. Iran on the one hand, and Saudi Arabia and Israel on the other, are engaged in a proxy war in Lebanon. Hezbollah’s expanding role in the government can be seen as a major gain for Iran.

External powers have traditionally used Lebanon as a battleground for proxy wars. This has been facilitated by the deep-seated internal fissures that are the product of France’s policy of patching together a multi-confessional and multi-ethnic state ripped out of the League of Nations mandate of Syria at the end of World War I. The French doctored the 1932 census to show an artificial Christian majority upon which the confessional balance of five Christians to four Muslims in the Lebanese parliament was based until the 1989 Taif agreement. However, the Maronite elite and their French patrons didn’t anticipate the rapidity of demographic change that quickly led to a clear Muslim majority soon after Lebanon’s independence in 1943.

The refusal of the Maronite leadership to adjust to the new demographic reality and their dependence on external allies, principally the US and Israel, to preserve their privileged position led first to an indecisive civil conflict in 1958 and then to the devastating civil war that lasted from 1975 to 1990. It ended with all parties accepting the principle of parity between Christian and Muslim representation in parliament as formalised in the Taif agreement.

However, the Lebanese political scene had changed dramatically during the civil war. The Shia, the traditionally downtrodden segment of the population, who now form a plurality of over 40% in Lebanon’s population, had become politically and militarily active and demanded their share in the Lebanese political structure. The Shia assertion was in part the result of the Iranian revolution that galvanized the Shia around the world. It was also in part the consequence of Israel’s 18-year-long occupation of southern Lebanon from 1982 to 2000 populated mostly by the Shia which radicalised the population.

Hezbollah emerged as a result of the confluence of these two factors. Its reputation soared among both the Shia and non-Shia populations of the country because of its successful resistance to Israeli occupation that forced Israel to withdraw from Lebanon in 2000. By clever manoeuvring and considerable political sagacity, Hezbollah was also able to acquire Christian allies, including Michel Aoun, who is currently the president of Lebanon, thus consolidating its position in the Lebanese polity.

At the same time, its ideological affinity with the Iranian regime and Tehran’s hostility towards Israel made Hezbollah Iran’s most reliable ally in the Middle East. This brought it much-needed Iranian financial support as well as Iranian arms.

The former helped it provide essential social services to its constituency in southern Lebanon, the Bekaa Valley and southern Beirut. The latter assisted it in becoming the most effective military force in the country, far surpassing the Lebanese army and even capable of giving Israel a bloody nose in 2006.

In return, Hezbollah acted as Iran’s proxy force, particularly in Syria, where it played a crucial role in saving the Assad regime. It is also Tehran’s force in reserve in case of an Israeli attack on Iran using the latter’s nuclear program as an excuse. In that case, Hezbollah can be expected to open a second front against Israel in order to divert the latter’s military attention and create mayhem in northern Israel.

Saudi Arabia’s and Israel’s allies in Lebanon—Hariri’s Sunni faction and the Maronites, respectively—are clearly losing ground. The Hariri faction has been discredited by, among other things, Saudi Crown Prince Mohammed bin Salman’s shabby treatment of the Lebanese prime minister, who last year was kept in detention in Riyadh for several weeks. The Maronites have lost their political heft because of the changing demographics in Lebanon and are also divided between pro- and anti-Hezbollah factions.

Hezbollah’s gradual but visible ascent is a function of both demographics and the political acumen of its leadership that has been able to build alliances across confessional lines, especially with a substantial segment of the Christian leadership, giving them non-reciprocal benefits in terms of cabinet positions and other avenues of access to power.

With headlines dominated by Canberra’s policy ‘step-up’ in the Pacific in response to China’s rapidly expanding influence in the region, it seems puzzling that the Morrison government would risk disrupting relations with two of its strategically like-minded neighbours—Indonesia and Malaysia—over the potential relocation of Australia’s embassy in Israel from Tel Aviv to Jerusalem.

The government’s willingness to follow US President Donald Trump’s lead on Jerusalem and complicate its relationship with Indonesia and Malaysia—two strategic partners committed to preserving a rules-based order and peaceful dispute resolution in the Indo-Pacific—suggests that domestic politics may have trumped serious foreign-policy considerations in Canberra.

Although formally non-aligned, both Indonesia and Malaysia share Australia’s concerns about Beijing’s assertiveness in the South China Sea and its financing of regional infrastructure projects with their debt-laden risks. Following Malaysian opposition bloc Pakatan Harapan’s remarkable election victory against the scandal-tainted ruling Barisan National coalition, the country’s prime minister, Mahathir Mohamad, was quick to halt a Chinese-funded US$20 billion rail link, saying: ‘I believe China itself does not want to see Malaysia become a bankrupt country.’

Indonesian ministers, who are generally more guarded in their criticisms of China, publicly rebuked Beijing in 2016 following a series of clashes between Indonesian and Chinese authorities over Chinese vessels that were fishing illegally in Indonesia’s exclusive economic zone in the South China Sea. In July 2017, the Indonesian government officially renamed the seas around the Natuna Island chain as the ‘North Natuna Sea’. Meanwhile, public resentment against a perceived increase in the numbers of Chinese workers and concerns about the level of debt held by Indonesian state-owned enterprises have accompanied Indonesia’s infrastructure boom.

As founding members of ASEAN, both Malaysia and Indonesia have long been cognisant of the risks posed by China’s increasing strategic and economic weight, arguably much more so than Australia, which has only recently responded decisively to increasing Chinese influence and perceived US retrenchment from Asia.

Maritime Southeast Asian states in particular have sought to tame Beijing’s more hegemonic impulses by enmeshing it within a plethora of regional defence, political and economic mechanisms. In Malaysia’s case, there’s little doubt that lingering uncertainties about China’s longer term strategic intentions in the South China Sea have underpinned its unbroken commitment to the Five Power Defence Arrangements, despite previous spats with Australian prime ministers. And, although Treasurer Josh Frydenberg’s taking offence at Mahathir’s past statements about the Jewish faith was indisputably legitimate, one wonders whether it’s sage for a senior Australian minister to publicly link vital foreign policy interests to their personal religious identity.

Mahathir’s reputation for outspokenness is well understood in Canberra, but the direction he’s taking Malaysia after the outrageous graft and avarice of the 1MDB era aligns with Australia’s national interests in improved governance and pushing back against China. In addition, Mahathir’s remark that a decision from Canberra to relocate its embassy to Jerusalem could escalate the regional terror threat was also reflected in remarks by Indonesian politicians and is, in itself, not particularly contentious.

From the perspective of Australia’s bilateral relationship with Indonesia, Prime Minister Scott Morrison’s initial announcement of a review of the embassy’s location on 16 October could not have been more poorly timed. First, it coincided with Palestinian Foreign Minister Riyad al-Maliki’s visit to Indonesia to celebrate ‘solidarity week for Palestine’. The five-day schedule of special events included the official opening of the ‘Palestine walk: road to freedom’ in West Java and the inauguration of regular bilateral meetings. Second, as the media has extensively reported, Australia and Indonesia were widely expected to sign the Indonesia–Australia Comprehensive Economic Partnership Agreement (IA-CEPA) in November.

Morrison’s initial reassurance that the IA-CEPA was ‘on track’ based on comments from Indonesia’s trade minister appeared naive, given that the trade portfolio isn’t a senior cabinet position—as foreign policy bureaucrats in Canberra well understood. A considered policy response on the implications of Australia’s Jerusalem announcement for the IA-CEPA was always an issue to be determined at the presidential and vice-presidential levels on the advice of the retired general Wiranto, who is coordinating minister for political, legal and security affairs. Wiranto, in turn, takes advice from the foreign minister, Retno Marsudi.

The IA-CEPA was subject to protracted delays because of previous bilateral tensions over espionage allegations and the executions of ‘Bali nine’ drug smugglers Andrew Chan and Myuran Sukumaran in 2015. That made it the obvious instrument for signalling displeasure while Australia’s policy position on Jerusalem remained unclear. Of course, Morrison was right in saying that Australia must determine its own foreign policy, but in considering its policy options for the Middle East, Canberra must also accept the policy consequences closer to home.

The Palestinian issue is visceral for Indonesian Muslims and, indeed, Indonesia’s foreign policy establishment. For more than five decades, Indonesia has been a staunch supporter of Palestinian statehood, a policy driven by the country’s constitutional mandate to support decolonisation and self-determination. Indonesia is the world’s largest Muslim majority state and a key member of the Organisation of Islamic Cooperation, and perceived repression and injustices committed by Israel against the Palestinian people continue to resonate strongly in the Indonesian polity.

With Islamic conservatism on the rise in Indonesia and with critical parliamentary and presidential elections approaching for President Joko Widodo in April next year, Canberra has not only put itself in a difficult position with a strategic partner in the Indo-Pacific, but also potentially wedged Indonesia in terms of its own domestic politics. Rival presidential candidate Prabowo Subianto and running mate Sandiaga Uno have entered the fray, describing the IA-CEPA as ‘ridiculous’ and calling for it to be scrapped. Cadres from their Gerindra party have characterised the Jerusalem policy as ‘insensitive of Indonesia and Asia’.

On the link between the IA-CEPA and a decision on Australia’s embassy in Israel, Canberra should take a salutary lesson from the contentious Indonesia–Singapore defence cooperation agreement. Despite being signed by the executive in 2007, the agreement languished for 11 years in Indonesia’s parliament, which refused to ratify it in a sign of displeasure over an extradition treaty.

Ironically, Canberra could do better to emulate Beijing’s highly sophisticated and coordinated approach to regional grand strategy, which involves mobilising all arms of state power. As it stands, the government’s approach lacks coherence on issues of vital regional concern.

As the Syrian civil war reaches its denouement with the imminent fall of the Idlib enclave—the last stronghold of forces fighting Bashar al-Assad’s regime—Iran’s presence in Syria has reached the top of the American agenda for the Middle East. When US National Security Advisor John Bolton met with his Russian counterpart, Nikolai Patrushev, on 23 August in Geneva, he demanded that Russia persuade Iran, with which it has been collaborating in Syria in defence of the Assad regime, to remove its forces from Syria. Patrushev made it clear that, while Russia wasn’t necessarily opposed to the idea of Iranian troops withdrawing from Syria, it couldn’t force them to leave.

In fact, the pressure mounted by the US (and Israel) has had the unintended effect of solidifying the Iran–Syria alliance. Syria and Iran signed a fresh military cooperation agreement on 27 August at a meeting between their defence ministers at which they reiterated the need for Iranian forces to stay in Syria.

What makes the Iranian presence in Syria hard for the US to swallow is that, unlike the Russian presence, it threatens Israel’s self-defined security interests. But Washington must understand that Iran’s commitment to the Assad regime is qualitatively different from Russia’s. A couple of years ago, before the military tide turned decisively in favour of the regime, Moscow seemed willing to countenance Assad’s removal in order to forge a settlement between the regime and opposition forces.

Iran’s alliance with the House of Assad, on the other hand, is much more firm. It goes back to 1980 when Syria under Hafez al-Assad was the only Arab country that stood by Iran when Saddam Hussein, fearing the effect of the Iranian revolution on Iraq’s Shia majority, launched a bloody war against Iran that was bankrolled by Saudi Arabia and the Gulf sheikhdoms to the tune of US$20 billion. It lasted eight years and left a million Iranians dead.

More importantly, several realpolitik calculations determined Iran’s stance once the Assad regime was challenged—including the support extended by Iran’s nemesis Saudi Arabia and its Gulf allies to insurgent factions and the initial US determination to expedite regime change in Damascus because of Assad’s close relations with Iran. The increasingly Sunni Islamist and virulently anti-Shia colour of the Syrian insurgency further influenced Iranian decision-making.

Now that the Assad regime has regained control of most of Syria, Iran wants to reap the rewards for its assistance during the regime’s worst times. Much of the regime’s success can be attributed to the military training and advice provided by Iran’s Islamic Revolutionary Guard Corps and the fighting capability of battle-hardened Hezbollah forces from Lebanon trained by the IRGC. Hundreds of Iranians, including senior members of the IRGC, have been killed fighting on behalf of the Assad regime.

Iran is also keen to profit financially from the reconstruction program that’s bound to follow the end of the civil war. And it isn’t willing to give up its strategic foothold in Syria, which would complement its political presence in Iraq and, through its Hezbollah proxy, in Lebanon, and also provide it direct geographical access to its Lebanese ally.

This strategy isn’t so much about creating a ‘Shia Crescent’ in the heart of the Arab world. It’s more about Tehran’s desire to help stabilise friendly regimes in Iraq, Syria and Lebanon to counter Saudi moves, which are part of the cold war raging between the two principal powers of the Persian Gulf to deny Iran entry into the Arab world. Therefore, to expect Iran to eliminate or even reduce its presence in Syria is a pipe dream. Despite speculation to the contrary, Assad is more than comfortable with the Iranian military presence in the country—both because it serves his immediate purpose of regime maintenance and because he doesn’t want to become overly dependent on Russia, which might withdraw its support to preserve its other more pressing interests.

Under these circumstances, America’s efforts to persuade Russia to induce Iran to leave Syria appear futile. To avoid getting embroiled in a Middle Eastern conflagration, Russia has assured Israel that it will keep Iranian forces at least 85 kilometres from the Israeli border (except for in and around Damascus, where there’s a formidable Iranian presence which Tehran considers non-negotiable). So far, it has succeeded in doing so. But Russia is in no position to force Iran to leave Syria or even reduce its military and political presence. Washington will have learn to live with the fact that Iranian forces will be in Syria for a long time.

Israel’s Prime Minister Benjamin Netanyahu recently revealed that Israeli intelligence had shared information with our security agencies that foiled an Islamic State plot to blow up an Etihad flight from Sydney last July.

Police arrested two brothers, Khaled Khayat and Mahmoud Khayat, and charged them with plotting to bring down the jet. They’re now before the courts accused of trying to smuggle an improvised explosive device hidden inside a meat grinder onto the plane. The attempt was aborted before they reached airport screening (the device was too heavy to pass through check-in).

The plot had been orchestrated by a senior commander of the Islamic State based in Syria, alarming our security agencies by demonstrating the ability of homegrown jihadis to access technical planning directly from terrorists in the Middle East. Home Affairs Minister Peter Dutton has publicly thanked Israeli authorities for the intelligence tip off. He pointed out that Israel has an ‘enormous capacity’ within its intelligence community and it’s an ‘important relationship with ASIO and the Australian Federal Police’.

During his visit to Australia last February, Netanyahu pointed out that both states had ‘superb intelligence services’ that could be better if they worked more closely together to counter violent Islamist extremism.

Israeli intelligence is now taking a more global approach. It’s part of the international effort to fight radical Islamist terror, with Israeli intelligence bodies having ‘tightened coordination with counterparts in friendly countries in recent years’.

Last May, a storm arose after it was reported that President Donald Trump had revealed in a conversation with the Russian foreign minister and Russian ambassador to the US details of Israeli warnings regarding a plan by Islamic State to blow up passenger jets flying to Europe using laptop bombs.

In January this year, Prime Minister Netanyahu told a group of ambassadors from NATO member states that Israel’s intelligence services had provided information that had thwarted several dozen major terrorist attacks, many of them in Europe. Many could have been the worst kind of mass attacks because they involved threats to civilian aviation, he said.

One of the main challenges our intelligence agencies face is working with fragments of information and trying to assemble a picture of what might happen. In the battle against global jihadism, it’s good to know that along with our core Five Eyes intelligence partners (Britain, the United States, Canada and New Zealand), Israel is increasingly being consulted on terrorism intelligence. Last November Israel and NATO, for example, signed an agreement on protecting classified information to expand intelligence sharing.

Israel plays a pivotal role in Middle East intelligence. We have good information on Islamist extremist groups in Asia that Israel would find of interest. It’s reasonable to assume that Australia and Israel security agencies have been working hard to build trust after the events of eight years ago. At that time, we expelled an Israeli intelligence officer in response to Israel forging Australian passports that were used in the assassination of a Hamas leader.

Last February we had the first visit of a sitting Israeli prime minister to Australia. And last October Malcolm Turnbull made the first visit of a sitting Australian prime minister to Israel since 2000. As a result, we’ve pursued closer ties to Israel through a memorandum of understanding on defence industry cooperation. Our respective defence officials will hold annual discussions on strategic and security priorities. Consideration might be given in the near future to having a regular defence ministerial-level dialogue and undertaking a small-scale joint Australia–Israel military exercise in an area of mutual interest.

At a time when the cyber threat is growing, this year Australia and Israel will develop closer cooperation in cybersecurity by convening a bilateral cyber dialogue. We can learn lessons from the Israeli cybersecurity success story, particularly in start-ups and skills development. Last year, for example, Israel and the US formed a bilateral cyber security working group.

The intelligence cooperation we received from Israel in rolling up last year’s complex Sydney bomb plot continues a tradition of looking out for your mates, highlighted at last year’s centenary commemorations of the Light Horse’s military campaign in Palestine in Be’er Sheva and ASPI’s own strategic dialogue with Israel’s Begin-Sadat Centre.