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Sharon Threatens to Shoot the Hostage, Palestinians Panic

Sharon's "No More Games" declaration that he will unilaterally annex large chunks of the West Bank (although, let's be honest, not much of the Gaza Strip - no one really wants that cesspool anyway) has thrown the Palestinian leadership into a panic.
First, they threatened to push for a single, bi-national state. That would be a single Jewish and Arab state between the Jordan and the Mediterranean, which would effectively mean the end of the Jewish state (few people discussed that this situation had always been Arafat's goal anyway). That idea got slapped down by Powell with something approaching breakneck speed:

Asked whether he thinks the idea of a bi-national state is viable, Powell told reporters at a news conference: "No, we're committed to a two-state solution. I believe that's the only solution that will work, a state for the Palestinian people called Palestine, and a Jewish state, the state of Israel, which exists.
"I don't believe that we can accept a situation that results in anything one might characterize as apartheid or Bantu [stan]ism," Powell added. "What we need right now is for the prime minister of the Palestinian Authority to get control of security forces and to use those forces and use the other tools available to him to put down terror and to put down violence. And if that happens and we see that kind of commitment, then I'm confident that we can move forward on the road map.
"Mr. Sharon's comments recently and some of the plans that he has talked about or have been speculated about are just that right now, plans. Mr. Sharon begins all of his discussions by saying he would like to see a solution. He is looking for a reliable partner he can work with. And his plans that he has spent some time presenting recently suggest what he feels he might have to do if he doesn't have a reliable partner. What we are trying to do is to get that reliable partner to stand up and start acting," he said.

So now, in their childish anything-you-can-do-I-can-do-more-pathetically way, the Palestinians have announced that they will declare their own state in the West Bank and Gaza:

A top Palestinian political group said Saturday that Palestinians reserve the right to declare a state if no Middle East peace deal can be reached, a move that mirrors Israeli talk of possible unilateral action.
Peace efforts have long been based on the premise that all major steps must be taken by mutual agreement. But with talks stalled, both sides have warned that they could abandon discussions and attempt to reach their aims without a formal deal.
The Palestine Liberation Organization's executive committee, which is headed by Yasir Arafat, the Palestinian leader, met late Friday night and issued a statement early Saturday saying the Palestinians had "the right to declare an independent democratic Palestine on all the territories that were occupied" since the 1967 Arab-Israeli war.
That would include all of the Gaza Strip and the West Bank, including East Jerusalem, where the Palestinians want to establish a capital.

I'm not sure how this will play out, but right now it seems to be a strategic and diplomatic victory for Sharon. Even if the Palestinians unilaterally declare a state and then continuing their conflict with Israel in precisely the same way, fighting the State of Palestine is preferable to fighting the Palestinian people.
First, what Arafat is threatening to declare is exactly what he was offered at Camp David II. He's essentially saying that what he was unwilling to accept four years ago, what he turned down in order to unleash torrents of suicide bombers and baby killers on Israel, what he was willing to destroy his society rather than take - he's now willing to accept! Sharon has thus succeeded precisely where Barak failed - he has managed to convince Arafat that a state in the Gaza Strip and the West Bank, with its capital in East Jerusalem, is the best deal he can possibly get.
Second, a border war between two established states is a far preferable position to a terrorist war by an occupied population against their military occupiers. A border war is something that can be made sense of. It has structure and rules that one is expected to follow. Palestinian terrorists won't follow them of course, but there is at least a greater expectation that they should. That can't hurt.
Finally, and perhaps most importantly, fighting for a state makes no sense if you've already got a state. The Palestinians will have to default to the same strategy that Hezbollah used after Israel withdrew from Southern Lebanon - "sure, you've withdrawn. But we're still going to kidnap your children and bomb your soldiers because we think that *this* is ours too." In the case of Hezbollah and the Sheba farms, the pretext is naked and laughable. The land that the Palestinians point to as "still occupied" will create a thornier issue, but at some point refusing to take what you've got makes you seem more like a whiney child than a freedom fighter, even to the Europeans.

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