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On 15 November 1988, the PNC - meeting in Algiers - adopted a resolution accepting the principle of a twostate- solution to the Palestine-Israel conflict. Fulfilling long-standing US preconditions for recognition, the Palestinian leadership-in-exile acknowledged Israel’s right to exist and - in December - renounced all forms of terrorism, while unconditionally accepting UNSC Res.s 242 and 338. In doing so it gave up any claim to the 78% of Mandate Palestine conquered and depopulated in the 1947-1948 War and limited its demands to the 22% of Palestine made up of the OPT. The outgoing Reagan Administration responded by immediately opening dialogue with the PLO in Tunis. While encouraged by the Palestinian position, the US was disturbed by the daily news footage of “savage Israeli beatings of Palestinian youngsters,” which it knew could easily ignite regional radicalism. The UN had described Israel’s strong-hand measures against the Intifada as, “a grave subject of concern for the international community,” and in May 1989, Secretary of State Baker urged Israel to “lay aside the unrealistic vision of Greater Israel ... forswear annexation, stop settlement activity [and]... reach out to the Palestinians as neighbors who deserve political rights.” Reviving the stillborn Camp David ‘autonomy’ framework, the Bush Administration placed unprecedented pressure on Israel’s extreme-right government. Prime Minister Shamir had come to power in 1988, pledging, “not [to] give land in return for peace,” and “to strengthen settlement, to broaden and develop it.” His government, which included advocates of mass-expulsion of ‘non-Jews’, snubbed all US pressure and infuriated Baker: “I can only say; ‘take this number: 202 456 1414 [the White House switchboard]. When you’re serious about peace, call us.’” In October 1990, Israeli forces massacred 21 Muslim worshippers at Al-Haram Ash-Sharif in Jerusalem, incurring worldwide and UNSC condemnation. But despite the increased pressure, Israel rejected US demands that it engage in talks with freely chosen Palestinian representatives and instead pursued its increasingly brutal attempt to suppress the popular uprising. The PLO’s misguided attempt to elevate international engagement by demanding ‘linkage’ between the occupation of Palestine and Iraq’s 1990-1991 occupation of Kuwait cost it the diplomatic advantage it had gained as a result of Israel’s belligerence. In the wake of the Gulf War, the US was able to limit the enhumbled PLO’s role in proposed talks and thus increase its pressure on Israel. By assuring Prime Minister Shamir that no PLO representatives would be involved and then threatening to withhold a $10 billion loan guarantee by which Israel planned to absorb Russian immigrants - partly through settlement construction - the US finally coaxed the Israelis to talks. The Madrid Middle East Peace Talks convened on 30 October 1991 under the guidance of US Secretary of State Baker and with the symbolic co-sponsorship of the Soviet Union. The basis of the talks was UNSC Res.s 242 and 338, embodying the formula of land-for-peace. Due to stubborn Israeli insistence and the PLO’s Gulf War error, the non-PLO Palestinian delegates were further limited to non-Jerusalemites from inside the OPT. Gaza physician Haidar Abdel Shafi led the Palestinian delegation, telling the assembled that, “[m]utuality and reciprocity must replace domination and hostility for genuine reconciliation and coexistence under international legality.” Madrid saw Israelis and Palestinian leaders enter formal peace talks for the first time. The powerful symbolism of the event was matched by a concerted US drive for Israeli acceptance of the land-for-peace formula, and set in motion a series of multilateral and bilateral talks. Shamir proved unequal to the historic role assigned him and returned from Madrid to inaugurate yet another new settlement in the OPT. Shunned by his right-wing allies, Shamir lost the 1992 elections as he tried to excuse his attendance at Madrid: “I would have continued talks for 10 years and by that time we would have half a million people in Judea, Samaria and Gaza [the OPT],” he promised. By 1991, more than 150 settlements had been established throughout the OPT. With Palestinian building barred in 68% of the OPT, the incoming Rabin government prepared to spend 20% of its national housing budget on settlements. Of the 220,000 settlers, 120,000 were living in East Jerusalem, where three new sites had been started in 1991 alone. As US brokers prepared to build on the land-for-peace formula, the new Labor government stepped up Israel’s campaign to create intractable facts on the ground. Armed with a new master plan (N[ational] M[aster] P[lan] #31) aimed at adding 140,000 settlers over five years, Prime Minister Rabin announced, “[w]e are in control of the territory and we will not move one inch.”

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