Secretary of State John Kerry believes that time is running out for a two-state solution to the Israeli-Palestinian conflict, with at most two years before it is no longer possible.

During a House Foreign Affairs Committee hearing on Wednesday, Ranking Member Rep. Eliot Engel (D-NY) asked the Secretary about President Obama’s recent trip to Israel and the West Bank, inquiring about the stalled peace process. Kerry’s response highlighted the urgency with which the administration views restarting talks between Israeli and Palestinian leaders:

KERRY: But I can guarantee you that am committed to this, because I believe the window for a two-state solution is shutting. I think we have some period of time a year, a year and a half, to two years or its over. [...] So there’s an urgency to this in my mind, and I intend, on behalf of the President’s instructions, to honor that urgency and see what we can do to move forward.

Later in the hearing, Rep. Ted Deutch (R-FL) followed up on Engel’s earlier question, placing the onus of restarting negotiations solely on the Palestinians. Deutch specifically asked why Palestinian Authority President Mahmoud Abbas had not done more to “prepare his people for peace,” lamenting Palestinian preconditions on negotiations — like demanding Israel end its illegal settlement construction — and its push for statehood recognition at the United Nations.

“Look, the hurdle we have to get over here, part of the difficulty is the level of mistrust on both sides is gigantic,” Kerry responded. “President Abbas deep-down is not convinced — and that may be a light word for it — that Prime Minister Minister [Benjamin] Netanyahu and Israel are ever going to give them a state. And on the other side, Israel is not convinced that the Palestinians and others ever going to give them the security that they need. So we have to find an equation here, folks, where we can try to dispel those years of mistrust and get both sides to understand that both things are in fact possible.”

While President Clinton laid the groundwork, U.S. support for the two-state solution has been official policy since 2002, when President George W. Bush announced his desire to see an independent Israel and Palestine living side-by-side. Since then, the peace process has moved forward in fits and starts before and stalled in 2010. While a report from CAP in 2009 also implied that the window of opportunity is closing, this is the first time a Secretary of State has been so blunt in producing a narrow timeframe. Secretary Kerry recently returned from his third trip to the Middle East in the latest round of shuttle diplomacy intended to jump-start direct negotiations between both sides.

As CAP’s Matt Duss notes, however, in the absence of direct talks, there are several options the United States could pursue in the meantime to help lay the ground for a lasting peace. And while the political process has yet to move forward, the U.S. did win agreement from Netanyahu and Abbas to help boost economic development in the West Bank. Kerry, in response to questions from Rep. Ileana Ros-Lesthein (R-FL), made clear that the economic process is meant to move forward along side the political track, not as a replacement.

In an article published on FoxNews.com on Monday, the Palestinians are singled out for receiving aid from the United States during a time of sequestration, ignoring both the benefits of aiding the Palestinian people and the multitude of other countries the U.S. provided foreign assistance to.

At issue is the Obama administration decision to release $500 million of aid to the Palestinians, a decision Fox seems to take umbrage with given the continuing effects of sequestration. Fox goes on to list several departments and agencies under the knife thanks to sequestration, before pointing out once more the Palestinians’ relative largess in tough fiscal times:

Attorney General Eric Holder also said in a memo that he was using his “limited authorities” to shift around funds and give the Bureau of Prisons $150 million to avoid furloughing correctional workers at federal prisons. This, he said, would have created “serious threats to the lives and safety of our staff, inmates and the public.”

But he said he was still “evaluating” whether his department can avoid other furloughs.

Foreign aid to the Palestinian Authority alone, though, easily eclipses the amount Holder used to spare the correctional workers division.

Despite making the claim that lawmakers have “heavily scrutinized a number of foreign aid transactions,” the article only lists aid to the Palestinian people as being worthy of judgement in the current fiscal climate. But American foreign aid to over one hundred other countries somehow manages to go utterly overlooked.

The Center for American Progress has an interactive map that shows just how much aid flows to which countries and for what purposes, highlighting both the large amount that goes towards helping people as well as those funds devoted towards military spending. As just a small example, Poland managed to go unmentioned by Fox after receiving $39 million in foreign military financing during Fiscal Year 2011.

Congress attempted to block the amount paid to Ramallah — after previously appropriating the amount to the State Department — due to the successful Palestinian push for an upgraded status at the United Nations. President Obama overrode that decision, signing a waiver based on the clear national security interests served through providing the promised assistance.

According to the State Department, the Fiscal Year 2012 spending released includes $195.7 million is for economic, development and humanitarian assistance, with the other $100 million budgeted for narcotics control. The $200 million from Fiscal Year 2013 will go directly towards supporting the Palestinian Authority’s budget, a needed boost for the beleaguered government of President Mahmoud Abbas. All of this will help the Palestinian Authority end a budget crunch, helping stabilize a government seeking to move forward peace negotiations with Israel, an investment that Fox shouldn’t overlook.

President Obama told an audience of Israeli university students, in what is being hailed as a historic speech, that if they want see peace with the Palestinians, they must put more pressure on the Israeli government to act.

While Obama reiterated that Israeli settlement activity “is counterproductive to the cause of peace,” he acknowledged that Israel “has taken risks for peace.”

“You made credible proposals to the Palestinians at Annapolis. You withdrew from Gaza and Lebanon, and then faced terror and rockets,” Obama said, adding, “Across the region, you have extended a hand of friendship, and too often have been confronted with the ugly reality of anti-Semitism.”

But he said that ultimately, achieving peace will mean that they must urge their leaders to move forward to take the risks necessary to achieve an agreement. “You must create the change that you want to see,” he said:

OBAMA: That is where peace begins – not just in the plans of leaders, but in the hearts of people; not just in a carefully designed process, but in the daily connections, that sense of empathy, that takes place among those who live together in this land, and in this sacred city of Jerusalem. And let me say this as a politician, I can promise you this: political leaders will never take risks if the people do not push them to take some risks. You must create the change that you want to see. Ordinary people can accomplish extraordinary things.

Watch the clip:

Indeed, as CAP’s Rudy deLeon, Brian Katulis and Matt Duss observed recently, based on conversations with officials and experts from the Israeli government and Palestinian Authority, “There are few political incentives to tackle the Palestinian issue”:

There is little sense of urgency in Israel about the Israeli-Palestinian conflict beyond continued concerns about possible security threats from the Gaza Strip. Israelis seem resigned to the status quo and lack a clear sense of the next possible steps forward. Even among those Israelis who express more concern about the need for a two-state solution to the conflict, there is little clarity about the pathway forward to advance that agenda.

They recommend that Secretary of State Kerry “embark on an active process of listening to both Israelis and Palestinians, quietly encouraging both sides to take steps that build trust and public support for the eventual restart of negotiations in the coming year.”

(Photo: AP)

Transcript from Obama’s speech:

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President Barack Obama’s trip to Israel and the West Bank — his first during his time in the White House — will draw attention to a peace process that is currently going nowhere.

CAP’s Matthew Duss, who is currently in the region, is concerned that despite calls on all side for a new round of talks between Israel and Palestine, direct negotiations may wind up being counter-productive:

While the Obama administration and its partners in the Quartet on the Middle East—the group made up of the United Nations, the European Union, the United States, and Russia, established in 2002—have stressed the importance of returning to direct talks over the past few years, some analysts I spoke with suggested that this may not be a good option at the moment. Given the level of frustration among Palestinians at their own government’s failure to deliver, it’s possible that the Palestinian Authority could not survive another round of failed negotiations.

In the near-term absence of further negotiations, Duss recommended the United States working quietly to address key issues to boost the Palestinian Authority’s credibility, including Palestinian prisoners in Israel and the on-going construction of Israeli settlements in the West Bank. “It’s very important, however, that the Palestinian Authority not be supported simply with the aim of prolonging an unsustainable status quo,” Duss warns, noting the necessity of a permanent solution.

The last direct talks between Israel and the Palestinian Authority last took place in 2010, with the declared goal of developing a framework for an agreement within a year. The talks fell apart in late Sept. 2010, when Israel’s partial moratorium of new settlement construction expired.

President Obama’s trip to Israel, the West Bank, and Jordan will start next Wednesday and last until Saturday. While he is not expected to make any major policy announcements while there, his very presence is thought as an assist in revitalizing the peace process. According to Israel’s Channel 2, Secretary of State John Kerry will make a return trip to the region soon after Obama’s as part of a more substantive effort.

A bipartisan group of lawmakers are circulating a letter on Capitol Hill asking the White House to punish Palestinians for their successful statehood bid at the United Nations last month. Reps. Ileana Ros-Lehtinen (R-FL), Ed Royce (R-CA), Eliot Engel (D-CA), and Howard Berman (D-CA) have signed on to the letter imploring President Obama to shut down the Palestinian Liberation Organization’s (PLO) office in Washington, D.C. and “call our Consul-General in Jerusalem home for consultations.” The letter, which is supported by the American Israel Public Affairs Committee, says to use “every means at our disposal to ensure that this General Assembly vote does not serve as a precedent for elevating the status of the PLO in other UN bodies or international forums.”

Ros-Lehtinen last month called for cutting aid to the Palestinian Authority in response to the statehood bid (a move that isn’t a very good idea). And a Senate amendment to the National Defense Authorization Act last week would have done just that and also called on the U.S. to shut down the PLO’s diplomatic mission in the U.S.

CAP’s Matt Duss wrote that responses like these are mistaken and could potentially help groups like Hamas:

“U.S. policymakers and legislators should consider the words of several former Israeli officials who have come out in support of the Palestinian bid, including former Prime Minister Ehud Olmert, who said in a recent interview that “the Palestinian request from the United Nations is congruent with the basic concept of the two-state solution. Therefore, I see no reason to oppose it.” Writing in Foreign Policy this week, former deputy Israeli defense minister Ephraim Sneh warned that efforts to punish [Palestinian President Mahmoud] Abbas and the Palestinian Authority over the U.N. bid — which would likely redound to the benefit of Abbas’ more hardline rivals in Hamas — “would be a shot not in the foot but in the liver — Israel’s.”

In the end, the Senate amendment did not make its way into the final Senate NDAA. Groups like J Street, who heavily opposed the amendment, celebrated the move, saying that closing the mission would be too extreme and is “usually reserved for instances in which the United States is responding to deadly acts committed against our country or citizens, or gross violations of human rights by the government in question.”

CAP’s Duss adds that “rather than punishing Mahmoud Abbas’s government for the U.N. effort, Congress should recognize the considerable work it has done in building institutions and creating security in the West Bank. Congress should also support the Obama administration in bringing Israelis and Palestinians back into a credible negotiating process, with clear terms of reference in which both sides are held accountable to their commitments.”

After Palestine was upgraded to a non-member observer state at the United Nations, members of both houses of Congress proposed legislation responding to the Palestinians’ U.N. statehood bid by cutting off American aid. However, cutting off aid would harm the prospects for peace and immiserate thousands of Palestinians.

Rep. Ileana Ros-Lehtinen (R-FL) (who has done this before) was the first to call for defunding, followed shortly by two measures in the Senate. The proposals are essentially non-starters as they would also take away massive amounts of money from the U.N., a move Senate Democrats would most likely not allow to move forward.

A fourth proposal, amendment 3203 to the National Defense Authorization Act (NDAA), would only remove United States aid to the Palestinians in case any Palestinian authority brings a case at the International Criminal Court (a potential consequence of the U.N. upgrade). Regardless of whether or not one thinks the United States should seek to deter the Palestinians from going to the ICC, the blanket, automatic aid cutoff proposed in SA 3203 could have potentially devastating consequences. As CAP’s Matt Duss explains, diplomatic and financial support for the Palestinian Authority is a critical tool for bolstering the moderate Palestinian leadership vis-a-vis their hardline Hamas rivals:

U.S. policymakers and legislators should consider the words of several former Israeli officials who have come out in support of the Palestinian bid, including former Prime Minister Ehud Olmert, who said in a recent interview that “the Palestinian request from the United Nations is congruent with the basic concept of the two-state solution. Therefore, I see no reason to oppose it.” Writing in Foreign Policy this week, former deputy Israeli defense minister Ephraim Sneh warned that efforts to punish Abbas and the Palestinian Authority over the U.N. bid — which would likely redound to the benefit of Abbas’ more hardline rivals in Hamas— “would be a shot not in the foot but in the liver — Israel’s.”

Threatening aid in retaliation for the widely popular U.N. bid would undermine the moderate leadership’s argument that diplomacy with Israel, and not force, is the best way to advance the Palestinian national cause. Passing SA 3203 would undermine America’s main goal in the Israeli-Palestinian conflict — furthering a peace process towards a two-state solution.

It could also shatter the fragile Palestinian economy. Though Palestinian growth has averaged a massive 7.7 percent in recent years, that growth has been fueled by foreign economic assistance. Without foreign aid, the Palestinian Authority would be unable to pay for services and development projects, which is why the World Bank believes “it is imperative” that “donors maintain their support to the PA’s budget.” This situation is unfortunately likely to continue for the forseeable future, as the continued occupation makes sustainable, non-aid fueled growth difficult. Since the U.S. provides an enormous amount of non-military aid to the PA, and aid is already slowing down, further cuts could do serious harm to Palestinian economy, endangering both vulnerable Palestinians and the legitimacy of the moderate, economically-focused Fatah leadership.

Perhaps for these reasons, the White House is not supporting any sort of “punishment” for the Palestinian bid at the United Nations.

The United Nations Educational Scientific and Cultural Organization (UNESCO) is reeling after the United States abruptly cut funding to the organization last year. The cuts came following a vote by UNESCO’s Member States to allow Palestine to join the organization as a full member. In response, the United States, which provides about 22 percent of the UNESCO budget, cancelled its allocation to the U.N. body.

The result of these cuts has been that the organization has been “crippled”, in the words of Director-General Irina Bokova. The U.S. assessment generally equals about $60 million, which is then allocated both to specific projects and general funding for the organization. As of March, the U.S. had withheld about $78 million, the total of its current dues and amounts previously owed. It’s also unlikely that the United States will pay its dues for 2012, normally handed over at the end of the year. The net outcome of the newly drawn pursestrings is a $150 million deficit in UNESCO’s budget across 2012 and 2013.

Ending UNESCO funding was not the decision of the Obama administration, but rather the implementation of a 1994 law that prohibits the United States from providing money to international organizations that accords Palestine the same rights as Member States. The administration has included funds for UNESCO in its Fiscal Year 2013 Budget Request [PDF] hoping Congress will amend the law and released a memo on the U.S. interests UNESCO membership bolsters:

UNESCO actively promotes democratic values around the world, reinforcing U.S. efforts, particularly in politically sensitive environments and conflict zones where it can be difficult for the U.S. to operate. UNESCO programs are serving to sustain the democratic spirit of the Arab Spring, promote peace and nation-building in south Sudan, support democratic reforms in Iraq and Afghanistan, and encourage Holocaust Education in the Middle East and Africa U.S. contributions to UNESCO leverage funding from other donors for programs that promote media freedom, democratic institution-building, peace and stability, and disaster response and prevention. UNESCO’s operating costs in the field, including its security costs, are much lower than those of U.S. contractors, particularly in countries such as Iraq, Afghanistan, South Sudan and the Middle East.

It remains unlikely that Congress will move to alter or repeal the law in the near future.

While UNESCO has managed to raise around $89 million dollars towards its Emergency Fund, including large donations from Qatar and Saudi Arabia, these were one-time contributions, and can’t fill the permanent budget hole the United States’ withdrawal has created. Moreover, some of the larger donations, such as $20 million from Norway, are specifically donated with projects in mind.

Among those projects directly funded by the U.S. that now are lacking financial support are UNESCO’s Education for Holocaust Remembrance program and a project which researches tsunamis. Also hampered by the cuts would be a program to increase literacy among the Afghan National Police.