While Secretary of State of John Kerry has been discussing a framework for Israeli-Palestinian negotiations, perhaps to be revealed next month, many Israelis and pundits this week focused on the potential consequences of a failure to bridge the gaps between the two sides. There was particular concern about the economic and political costs for Israel should negotiations collapse while West Bank occupation and settlement construction continues.  

Last week, Finance Minister Yair Lapid said, “If the negotiations with the Palestinians get stuck or break down and we enter a reality of a European boycott, even a very partial one, Israel’s economy will retreat…Every resident of Israel will get hit straight in the pocket; the cost of living will rise, the education, health, welfare and defense budgets will be cut, and many international markets will be closed to us.” According to the Israeli paper Haaretz, he said, “If talks with the Palestinians break down, a ‘medium-range scenario; prepared by treasury experts shows the Israeli economy getting battered by a massive loss of trade with Europe, with 10,000 people getting fired ‘immediately.’”

In Munich over the weekend, Secretary Kerry echoed this sentiment for the first time: “The risks are very high for Israel. People are talking about boycott. That will intensify in the case of failure. We all have a strong interest in this conflict resolution.”

Kerry’s statement swiftly raised the ire of Prime Minister Netanyahu and some of his ministers. At his weekly cabinet meeting, the prime minister said, “Attempts to impose a boycott on the state of Israel are immoral and unjust.” Israel’s strategic affairs minister called Kerry’s comments,  “hurtful,” “unfair” and “intolerable” and said, “Israel cannot be expected to negotiate with a gun to its head.”

The State Department responded sharply, saying “Secretary Kerry has a proud record of over three decades of steadfast support for Israel’s security and well-being, including staunch opposition to boycotts…he also expects all parties to accurately portray his record and statements”

The spat over Secretary Kerry’s remarks have sparked a debate over the degree of seriousness of the economic threat Israel would face should peace not be achieved. In a New York Times column “The Third Intifada,” Thomas Friedman wrote that Israelis should fear “not an intifada with stones or suicide bombers, but one propelled by nonviolent resistance and economic boycott.” He provides a potential solution, “If Israel really wanted to slow down the boycott campaign, it would declare that as long as Kerry is trying to forge a deal, and there is hope for success, Israel will freeze all settlement activity to give peace its best chance.”

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