Israel and the Palestinian Authority are in the process of talks, that will hopefully lead to the end of the conflict between the two entities: an independent state for the Palestinians, and a recognition of the Palestinians in Israel and its borders.
As an Israeli I am exposed to whatever Israeli propaganda lets me know of Israeli strategic moves in this process: I learn that our Prime Minister, Benjamin Netanyahu, fights over technical silly details, like whether to talk first about the borders of the yet-to-be Palestinian state (which the Palestinians prefer) or on security arrangements (which Israel prefers); that he refuses to continue the freezing-of-new-house-construction in the Israeli settlements in the area of the yet-to-be Palestinian state; that Israel’s Foreign Minister makes statements about the negotiations that disagree with Israel’s official policy, and he is not fired by Netanyahu. And I wonder, does Netanyahu really want to end the conflict, or whether he is talking only because of inertia and American pressure? If I were Israel’s Prime Minister, and I did not want the negotiations to succeed, this is exactly what I would do: I would fight over technical issues to make the Palestinians quit the negotiations; for the same reason I would refuse to halt construction of new houses in the Israeli settlements in the west bank; and I would be happy to have a Foreign Minister who makes statements that show that I do not have the political power to accept the demands of the Palestinians.
But then I thought, suppose that I were Israel’s Prime Minister and I did want the negotiations to succeed. What would I do then? Well, the people who voted for me, and the people who sit in my government, are people who live in Israeli settlements in the west bank, people who support them, and in general people who believe that Israel should not retreat from the west bank, and especially continue to rule Jerusalem. So I will have to convince them that retreating from most of the west bank and from parts of Jerusalem is to their interests. How would I do that? Well, the general lines of the final agreement between Israel and the Palestinian Authority are clear: a Palestinian state in the region that Israel captured in the 1967 war, give and take few square miles here and there to make sure that the large Israeli settlements in the west bank remain under Israeli rule, and to compensate the Palestinians with alternative land; Jerusalem is the capital of both states; end of war. So if I were Israel’s Prime Minister, I would secretly reach an agreement along these lines, and then I will have to convince my people that this agreement is to their benefit. I will have to convince them that I am one of “their” men; to this end I will make silly statements, I will fight over technical issues, I will have one of my ministers disapprove of the current negotiations and I will not fire him, to hint that in fact I agree with him. Then I will ask the US, Israel’s best ally, to put pressure on me, to threaten that if Israel does not yield to many demands then the US will withhold its aid to Israel. I will let everyone believe that the relationship between Israel and the US are on the brink of explosion, until everyone in Israel is terrified that Israel’s best ally is going to leave it alone. Finally, I will present the agreement as a victory: Israel yields to fewer demands, Israel keeps its major settlements in the west bank, the US gives Israel Billions of dollars. Then it will be easy to have the high majority of Israeli population, including my voters, accept the agreement.
The bottom line is that up to the last stage of negotiations, in which I will present the agreement, nobody will be able to tell from the behavior of the participants whether we are in scenario A, where I do not want peace, or in scenario B, where I do want peace. Pooling equilibrium at its best.