The Palestinian uprising has stripped away Israel’s externally oriented masks (propaganda) and its internally oriented masks (defense mechanisms), as political rationality has steadily retreated before the state’s frantic response. Israel’s confrontation with the colonial reality of the occupied territories has led to political polarization which is not contained within existing party boundaries. It has penetrated all the parties and raised real questions which Israeli society must deal with. As the uprising continues, the cleavage in Israeli society becomes deeper over two basic issues: negotiations with the PLO and recognition of the Palestinian right to self-determination, including the establishment of a state. This has already had the effect of placing the Palestine question as the primary agenda item for the first time ever in an Israeli electoral campaign.
Israel’s existing political formations have so far been unable to pose a coherent response. Over this past year some groups in the Likud moved closer to Tehiya and others to the right wing of Labor. Similarly, some groups in Labor moved closer to MAPAM (the United Workers’ Party, formerly Labor’s junior partner in the Alignment) and the Citizens’ Rights Movement (CRM), others towards the Likud. This polarization within each bloc has created a new center in the Israeli political structure comprising groups from both the Likud and Labor who oppose negotiations with the PLO and a Palestinian state but also refuse to annex the occupied territories. This is the political foundation of the “national unity” government.
Ariel Sharon articulated the program of this new center in March 1988, when the Labor Party began to speak of “American pressure” in the form of the Shultz initiative. Sharon drew a line which, he said, no amount of American pressure could breach. According to Sharon, the Likud and Labor agreed on the most important points concerning the future of the occupied territories: 1) United Jerusalem is the eternal capital of Israel; 2) The Jordan River will remain forever Israel’s eastern border; 3) No non-Israeli military force will be allowed to enter the West Bank of the Jordan River; 4) Israel is responsible for the internal and external security of the land to the west of the Jordan; 5) There will be no foreign sovereignty in “Judea, Samaria and the Gaza Strip”; 6) There will be no Palestinian state west of Jordan; 7) Settling the refugee question should be part of any solution; 8) The Golan Heights are an integral part of Israel; 9) The Arabs of the occupied territories should maintain their present nationality and should be given relatively broad authority to administer their internal affairs without interference. 
The election campaign saw some convergence of Likud elements and Labor Party hawks. Thus, during discussions between Labor and Likud branches in Jerusalem, Labor supported annexing the satellite settlements around Jerusalem, while the Likud rejected this on the grounds that the time was not ripe. At the start of the electoral campaign, Sharon, who appears to be the most hostile toward Labor, proposed annexing parts of the West Bank and the Gaza Strip in accord with the Allon Plan, using the demographic threat argument favored by Labor.  Rabin responded that Sharon’s distinction between important and unimportant occupied areas brought him very close to Labor’s thinking. 
The recomposition that has drawn together fractions from Likud and Labor to form this new center has driven others from Labor to the Zionist left and from Likud to the extreme right. The new right consists of groups from the Likud, the National Religious Party (NRP), Tzomet (Crossroads), Moledet (Homeland) and Tehiya (Renaissance), the classic Greater Israel party with both religious and secular elements. They share the demand to annex the occupied territories and regard Jordan as the Palestinian state. They reject autonomy for the territories and call for increasing the suffering of the Palestinians in the territories until total “transfer” is achieved. These parties also represent the settlers’ lobby.
The new Zionist left includes groups from Labor, MAPAM and the CRM. They are ready to negotiate with the PLO under certain conditions, accept Israeli withdrawal from most of the territories and recognize the principle of partition. A fourth political bloc, the non-Zionist ultra-orthodox parties (Agudat Yisra’el, SHAS and Degel Hatorah), puts political issues as a third or fourth priority. This results in a flexible position on the territories which currently reflects the prevailing rightwing atmosphere.
The fifth bloc in Israeli politics is composed of the non-Zionist left parties — the Communist Party, the Progressive List for Peace and the Arab Democratic Party. They have consistently supported a Palestinian state in the territories occupied in 1967.
“Peace for Nothing”
Before 1977, the Likud had advocated annexing the occupied territories to Israel. Yet once it attained power, it realized that enforcing Israeli sovereignty on the territories was no rhetorical matter, and shifted to maintaining the status quo. Menachem Begin’s autonomy plan at Camp David was an attempt to reconcile the Likud with its ideology by giving a de jure status to a de facto situation.
The Likud has relied on one basic propaganda line: calling for direct negotiations with the Arabs and simultaneously anticipating their results — “peace for peace” as Shamir likes to declare, or “peace for nothing.” Despite the uprising, the Likud introduced no change in its political program. But it would be wrong to assume that the Likud has not been affected by the uprising simply because it has not changed its political program. During the last year Moshe Arens, Dan Meridor and others proposed “unilateral autonomy&rdquo — i.e., without a peace treaty, after elections in the territories.  They reject annexation and propose to leave open the question of sovereignty. Other Likud factions, which opposed forming the national unity government, called for immediate annexation of the territories.
During the campaign, the Likud’s position was clearer than that of Labor It rejected all peace proposals and did not offer a plan of its own. Shamir declared repeatedly that the conflict is not a question of borders, but of existence: either all of Israel or no Israel at all.  No negotiations with the PLO — not now, not in the future and not under any circumstances. 
Likud’s 40 Knesset seats (30.8 percent of the votes) were not a direct consequence of its political positions. Likud supporters are the least ideological group in Israeli society. In order to market itself, the Likud purveys a hostile attitude to the Ashkenazi, defeatist Labor Party which has treated Oriental Jews with contempt and discrimination and exploited the state’s economic resources for its failing projects (the Histadrut’s Kupat Holim health insurance plan, the Koor industrial complex, the kibbutzim). For the Likud, making peace means putting an end to the uprising. As in any business deal, one starts by demanding the maximum. This language of the market finds receptive ears among Likud voters. 
The nonideological stance of Likud voters does not mean that they are ready to change their political allegiance. Nor does the lack of ideology at the base diminish the ideological commitment of the leadership. The Likud constituency would not present an obstacle if the leadership changed its position, but the absence of ideology among voters is insufficient to change the party’s political positions. More likely, it will be exploited by the demagoguery of the leadership.
The Labor Party seemed to be the most confused during the uprising. The right accused Foreign Minister Peres of being defeatist and of dragging Israel into an international conference adventure more dangerous than the status quo; the left accused Defense Minister Rabin of carrying out the Likud’s policy in the territories. Its political line was based on the “demographic threat” — the fear that the Arabs might become a majority if Israel insisted on keeping all the occupied territories. But the Israeli Jewish public’s comprehension of this racist notion does not necessarily favor territorial compromise. People are likely to conclude instead that the Arabs must be expelled, or that they should not be counted as citizens — in other words, apartheid.
The “General’s Plan,” introduced by some senior officers close to the Labor Party before the elections, called for withdrawal from the populated Arab areas in the West Bank, positioning the Israeli army along the Jordan River, demilitarizing the area, setting up early warning stations and keeping the Jordan Valley and Jerusalem under Israeli sovereignty. This plan complements a political proposal by Peres and Rabin to negotiate with a joint Jordanian-Palestinian delegation in the framework of a nominal international conference, hold elections in the occupied territories six months after suppressing the uprising, and thereby to reach a temporary settlement of the “problem of the territories.”  The Peres-Rabin plan also includes a pledge not to withdraw to the 1967 borders or remove the settlements.
Abba Eban polarized the party when he proposed amending the Labor program so that it did not specify with whom Israel refuses to negotiate, but instead set out the conditions for negotiations with any Palestinian party (the three American conditions — recognition of Israel, acceptance of 242 and 338 and renunciation of terrorism). Yossi Beilin, Haim Ramon, Avraham Burg and Ezer Weizmann supported Eban in terms that resembled the stand of MAPAM or the CRM. These elements within Labor also generally opposed establishing a national unity government. Labor’s hawks viewed Eban’s conditions as a means to prevent the PLO from participating in negotiations; their prevailing interpretation ended up making Labor’s platform very similar to Likud’s. Rabin reiterated that he would never accept withdrawal to the 1967 borders, even if this would prevent peace. 
Right and Left
The programs of extreme rightwing parties, religious and secular, presented the clearest response to the uprising: a) suppress the uprising with all necessary force; b)increase settlements; c)annex the territories; d) “persuade"” the Palestinians to emigrate. Two new rightwing parties have emerged: Tzomet, led by Rafael Eitan (chief-of-staff during the Lebanon war) and Moledet, led by Gen.(res.) Rehavam Ze’evi. Both come from the Palmach, the elite military organization of Labor Zionism during the 1940s. Their political-ideological message is not justified by religious mysticism, but is posed as a pragmatic answer to practical necessities. Eitan believes that the main challenge is educating youth and imbuing it with “the spirit of the first pioneers.” If achieved, this will be sufficient to end the conflict with the Arabs (Eitan refrains from using the word Palestinians.)  As for the uprising, Eitan’s solution is very simple: “a bullet in the head of every stone thrower.”
Moledet openly calls for transferring the Arabs out of the country. Its supporters, unlike Kahane’s, represent a broad ethnic and geographic spectrum of Israeli society. It is true that its electoral support in the settlements is higher than its national average, but its highest rate of support came from Kibbutz Beit Guvrin (45 percent). 
Both parties are the product of the rightwing forces which have always existed in Israeli society, yet the atmosphere of the uprising contributed to their crystallization. Together they attained four seats in the Knesset, while Tehiya lost two, and Kach was disqualified from participating in the elections. In other words, the extreme right (without the ultra-orthodox parties) won seven Knesset seats (one more than in 1984) and 6.5 percent of the vote; together with the NRP they received 12 seats and 10.5 percent of the vote, the same as in the previous Knesset.
The uprising precipitated an important change in MAPAM and the CRM. MAPAM ran independently of the Labor Party for the first time since 1965; it had left the Alignment in 1984 when the previous national unity government was formed. MAPAM received three seats and 2.5 percent of the votes. Its April 1988 congress amended the party program to include willingness to negotiate with the PLO if the PLO recognized Israel and renounced terrorism, and recognition of the Palestinians’ right to self-determination in the framework of an Israeli peace initiative.  The CRM also amended its political program during the uprising to include recognition of the Palestinian right to self-determination and negotiations with the PLO provided that the latter recognized Israel’s right to exist and ceased hostile actions. 
Until the uprising, the Communist Party of Israel and the Progressive List for Peace were the only parties which called for a two-state solution and for recognition of the PLO. Endorsements of these positions by writers, artists and university professors did not represent the official programs of the Zionist parties with which, for the most part, they identified. Only in 1988, as a direct result of the uprising, has a relatively large left Zionist camp emerged calling for negotiations with the PLO and for the establishment of a Palestinian state. MAPAM and the CRM together won 8 seats in the Knesset, as opposed to the three won by the CRM alone in 1984. (In the previous Knesset two MKs joined the CRM after they were originally elected on other lists, while MAPAM received seven Knesset seats — far more than its real strength — because it ran as part of the Alignment.)
Security and Anxiety
The uprising has sparked an unprecedented debate over the strategic importance of the occupied territories for Israel. Hundreds of high ranking officers have contributed to this discussion through dozens of interviews and symposia. Military arguments were widely used in the election campaign by the two major parties. One group of senior officers sees the occupied territories as the most important strategic defense factor for Israel in a coming war. The territories should be kept under Israeli control even if this prevents peace. In any case, peace with the Arab world is not on the agenda, and Israel should adopt Henry Kissinger’s notion that no-war arrangements are better, for Israel than peace agreements. This doctrine is best articulated by Yehoshu‘a Sagi, former head of military intelligence.
A second group would give up most of the territories with certain security arrangements (observation points, disarmament, etc.). Proponents of this view advocate a wide range of political positions, from autonomy to confederation with Jordan. It is best represented by former chief-of-staff Mota Gur, Uri Or, former commander of the central region and Avraham Ben Gal, former commander of the northern region. All are supporters of Labor, as are most high-ranking officers.
A third group of officers regards the territories as a security burden which threatens internal security and increases the likelihood of a future war. They call for negotiations with the PLO and do not object to the establishment of a Palestinian state if that is the only solution. They are best represented by Yehoshafat Harkabi.  Organizations like the Labor-leaning Committee for Peace and Security, which includes more than 130 senior officers, are careful not to cross the line from the second to the third positions.
The prevalence of national security discourse in Israeli political culture confuses the analytical categories of the protest movement and those of the military establishment and hinders the development of the protest movement. Peace groups expend great energy trying to prove their patriotism at the expense of effective opposition to atrocities in the occupied territories. Peace Now wasted a lot of time contributing to the security discussion within the Labor Party. Only on November 23, 1988, after a year of the uprising and much criticism from its supporters, did Peace Now call for negotiations with the PLO. Militant organizations like End the Occupation, Yesh Gvul, Women in Black, Women for Political Prisoners and other movements in solidarity with the Palestinian struggle do not bother with the security discourse.
The uprising has highlighted the failure of Israeli democracy when it clashes with the national question. This is evident in the closure of the newspaper Derech Hanitzotz/Tariq al-Shamra, imprisonment of those who refuse to serve in the occupied territories for reasons of conscience, confiscation of foreign reporters’ press credentials, restrictions on radio and TV reports, politicization of the judicial system. Norms common in the occupied territories have been transposed to Israel.
Wide media coverage of extreme instances of oppression has played some part in removing Israel’s internal masks: The village of Salim, where soldiers buried alive several inhabitants; Beita, which suffered a pogrom when the army believed the lies of the settlers; the trial of Giv‘ati brigade soldiers accused of beating an injured prisoner to death; three Arab workers burned alive in Or Yehuda; atrocities of the army in the raid on Qalqilya (publicized by the participants) ; a prison guard training a schoolboy to beat up Arab prisoners. Since reality is what is represented in the media, these events have shaken the Israeli collective consciousness by forcing Israelis to watch themselves. Some blame the media; others learn to live with it — because a drama is trivialized through repeated publicity. Others are shocked and anxious.
But anxiety is not enough to provoke action. It can be treated; defense mechanisms are available. The chief education officer in the army demonstrated this in a lecture to his troops:
The 18-year-old Israeli soldier who grabs the club considers the Arab the source of all his problems. The Arab takes a stone and throws it at the face of the soldier, and suddenly 2,000 years of diaspora, the destruction of the first and second temple, and his girlfriend, lying on a Tel Aviv beach — all this enters his hand [which holds the club]. 
That the 2,000 years of diaspora and the destruction of the first and second temple will smash the head of the Palestinian in another instant does not seem to bother the officer. But does the 18-year-old soldier really think about all these things before the education officer puts them in his head? Such cynical use of historical Jewish suffering is an extreme expression of the psychological approach to the uprising, which typically tries to understand the oppressors, not the oppressed (who in any case lack a psychology). Palestinians can not become agents for assuaging Israeli fears. They can not be expected to presuppose such fears among their oppressors. Moreover, they do not see this as their task when they are suffering from occupation. If the Palestinian issue is a psychological problem for the Israelis, the cure might be group therapy, or it might be eliminating the problem — i.e., “transfer.” This psychological approach is another obstacle to the expansion of the Israeli protest movement.
In any case, the psyche of the mythical “average” Israeli is home to many conflicting ideas: We should treat the Arabs a lesson so that they won't be able to raise their heads again; but we are tired of these problematic settlers. We should make peace with the Arabs; but they are liars from birth. We should negotiate with the PLO if it is ready for peace; but who believes the PLO; we should eliminate it. We should negotiate with Hussain; but he wants the West Bank and East Jerusalem; we won’t give them to him. Anyway the people of the West Bank and Gaza want the PLO, not Hussain. All the world is against us; but our international relations have never been so good. The US supports us; but it talks to the PLO. Sharon is a provocateur. Why did he move to East Jerusalem? But he is the only one who can smash their heads; we should kill them all…
Opinion polls find considerable (even majority) support for all these ideas. One indicated that 51 percent (including 39 percent of Likud voters) favor negotiating with the PLO if the latter recognizes Israel and renounces terrorism. Another poll showed that 41 percent of Israelis supported the idea of “transfer,” and 45 percent regard Israel as too democratic.  These contradictory ideas can coexist simultaneously because none of the political leaders of the new Likud/Labor center has been willing to speak honestly and explain in unequivocal terms the real options Israeli society faces. Instead, demagoguery and outright lies have been deployed to exacerbate people’s fears and insecurities and encourage political fantasies and delusions.
The Uprising and the Economy
While Israel has minimized the economic impact of the uprising, there was a certain Palestinian illusion in its early stage that it would be possible to deliver a heavy blow to the Israeli economy by achieving total civil disobedience. This notion derives from an abstract understanding of civil disobedience, divorced from the actual situation. The struggle against the occupation has essentially been a political conflict with important economic, social and cultural aspects. It is not an economic struggle with political aspects. Strikes, boycotts, refusal to pay taxes — these are primarily political tactics to mobilize as many people as possible into the struggle against the occupation. But the results have indeed transformed the occupation into an economic burden for Israel.
Shlomo Gazit, writing in 1985, summarized the economic policy in the West Bank at the beginning of the occupation: 1) “Political and security” considerations should be placed above economic considerations; 2) While planning for economic activity in the territories, priority should be given to the needs of the Israeli economy; 3) There should be no Israeli investments in the economy of the occupied territories; 4) The Palestinian economy should have safety valves (open bridges, work in Israel, etc.). But economic forces have constantly created new realities, randomly and without prior planning.  Today the economy of the occupied territories is subordinate to the Israeli economy and bound to it in a periphery-center relationship. 
The “national” income in the occupied territories amounts to $1.5 billion, of which two-thirds comes-from local resources and one-third from elsewhere, mainly work in Israel. Production per capita in the West Bank is only one-third of that in Israel and in Gaza only one-sixth. Comparing consumption per capita results in about the same ratio. 
Agricultural products constitute about one-third of the West Bank’s production and in Gaza less than that. The proportion of the West Bank labor force engaged in agriculture has declined from 46 percent in 1968 to 27 percent in 1985, and in Gaza from 32 percent to 18 percent. West Bank exports constitute only 2-4 percent of Israel’s agricultural exports.  In the West Bank 54 percent of the wage labor force is employed in Israel; in Gaza, 67 percent.
In 1986 Israel’s exports to the occupied territories were valued at $780.3 million, about 10 percent of its total exports and 1.5 percent of the Israeli GNP. The same year the occupied territories’ exports to Israel amounted to $289.1 million.  Israel collects $383 million in taxes from the occupied territories and allocates $240 million for expenditures in the territories. The residents of the occupied territories (like all Israeli residents) also pay a Value Added Tax on all purchases and services from Israel. Palestinian workers in Israel save about $500 million for Israeli employers in lower labor costs, not to mention the amounts they save the Israeli treasury in social security benefits that they do not receive despite deductions from their paychecks. All this totals more than $1 billion in net revenue for Israel. 
Has the uprising made the occupation a losing economic proposition for Israel? In March 1988, Bank of Israel Director Michael Bruno minimized Israel's economic losses as of then.  Today the situation looks dramatically different. Military expenditures are the most important because they also reflect the escalating level of the uprising. Last March, Finance Minister Moshe Nissim claimed that the Ministry of Defense had not asked for a budgetary supplement and that the construction of 600 new police and border police posts in the territories had been decided on before the uprising. Three months later, the army requested an additional $450 million to cover the expenses of its activities in the territories. Reserve service was increased from 45 to 60 days per year, at an estimated cost of 100-200 million.  This loss may become permanent, as large numbers of Israeli troops will have to remain in the territories. Four months after the uprising began, the army had increased the number of troops in the territories by up to five times.  It is likely that the number of troops has doubled since then.
In early March the government-operated labor exchanges began to hire workers from south Lebanon and Portugal to work in hotels and agricultural harvesting. The Likud’s former Minister of Labor (now Transport) Moshe Katsav, who opposed the idea of importing new workers, announced that he had given 3,576 work permits to foreigners as of March. 
The labor shortage was more serious than this number would indicate. In July the head of the contractors’ association called for importing 10,000 workers from abroad “to rescue the construction sector” from collapse.  On November 28, 1988, the director of the agricultural association declared that there was a shortage of 4,000 workers for the citrus harvest. Labor contracting companies and land owners asked the government to import an additional 2,000 workers from Portugal and Turkey.  According to the ministry of industry, in the first three months of 1988, industrial production dropped by 3.5 percent, and over 70 percent of the decrease (2.5 percent) was related to the “disturbances” in the territories — work absences and loss of sales. 
There are two Israeli views about the absence of Arab workers. Moshe Katsav claimed that things would return to normal and that work in Israel should be seen as a means to normalize relations with the territories. He rejected the idea of importing workers, arguing that there is no alternative to the labor force from the territories. Others claimed that, for security reasons, strikes and work absences should be used to punish the residents of the territories and disrupt the plans of the organizers of the uprising. Workers from active villages should not be allowed to work in Israel. In May, Rabin declared that he supported “importing 3-6,000 workers from abroad, even 8,000, for the construction sector, because this is of security value.” He wanted the Palestinians “to understand that work in Israel is an advantage that we provide, not a favor that they extend to us.” 
From Asset to Liability
Strikes have been one of the most important weapons of the uprising. For the Palestinians, as for Israel, political considerations (strikes as an expression of rejecting the occupation) remain more important than economic losses. The uprising has maintained a balance between these two considerations: workers are allowed to work in Israel; incidents of burning buses which transport workers have stopped. The continuation of the uprising and the ability of the people to live with it are two sides of the same coin — resistance and steadfastness.
Palestinians have boycotted Israeli products whenever an alternative local product is available, and have tended to buy only necessities. Demand for fresh beef has dropped by 70 percent, creating a crisis for Israeli ranchers, because Arabs are the main consumers of fresh (as opposed to imported, frozen) meat. In response, the army considered providing troops with fresh meat instead of the frozen meat they usually consume.  Dubek cigarette company sales decreased by 16 percent.  By May 1988, the purchasing power of Arab residents of the territories had decreased by 35 percent due to diminished income and the boycott of Israeli products. 
On December 15,1988, Finance Minister Nissim estimated that total production losses during the first year of the intifada were equivalent to 2.5 percent of the total production of the business sector. Three sectors were especially hard hit: textiles, construction and tourism. Textiles and shoemaking depend considerably on subcontractors with small and medium-size workshops in the territories, especially in Hebron and Nablus. Losing contact with these workshops led to the closure of tens of medium-sized workshops in Israel.  The existence of some textile enterprises in the territories contributed to the success of the boycott on Israeli textile products. Before the uprising certain Israeli textile products used to find their way to Arab countries through the West Bank, but this has now stopped. 
The loss of production in the construction sector — caused mainly by the absence of Palestinian workers — is estimated at $16 million monthly, equivalent to eight percent of the economic activity in this sector. 
Through March 1988, tourist reservations registered a drop of only four percent because of reservations booked before the Middle East Report uprising. In April, Jerusalem hotel reservations were down 40 percent compared with the previous year.  The ministries of finance and tourism in August 1988 set up a special team which allocated $2.2 million for publicity and marketing and postponed all payments due to the government from hotel owners.  For all of 1988 the decline in reservations compared to 1987 was expected to total 15 percent — a direct loss of $110-150 million to the hotel industry alone.  The comprehensive loss to the tourist industry in 1988 may have been as high as $500 million. 
There is no official or semi-official estimate of the impact of the uprising on tax collection. Tax payments dropped in response to the political call to refrain from paying taxes and because diminished income reduced people’s capacity to pay them. The civil administration announced it would reduce its services — paid for by the Palestinian taxpayer — because of the decrease in tax collection. 
Certain economic losses do not fit the categories of Israeli reports. For example, Egged bus company reported damages to 1,260 buses since the beginning of the uprising, of which 41 were totally burned. 
Former economy minister Gad Ya‘acobi estimated that the total cost of the intifada to the Israeli economy in 1988 exceeded $900 million.  But the economic aspects of the intifada must be set in their political context. As Israelis refrain from residing in the territories and others even leave, the ministry of housing has decided to increase the construction of apartments in the territories by 33 percent, from 1,500 in 1987 to 2,000 in 1988. The ministry also raised its share of the investment in contractors’ projects. The financial support to every family wishing to buy an apartment in the territories is higher by 20,000 shekels.  These figures represent an economic loss, but indicate that the government is committed, and to a considerable extent still able, to maintain the status quo which the uprising is challenging.
The uprising has not yet accomplished anything significant in the area of foreign economic pressure on Israel. The refusal of the European parliament to approve the EEC agreement with Israel in March 1988 was not based on political convictions. The parliament later approved the agreement by a vote of 314 to 25 with 19 abstentions. And the uprising had no impact on the $3 billion of US aid Israel received last year.
True, the uprising has transformed the occupation from an economic asset into a liability. But this pressure on the Israeli economy is insufficient in and of itself to force a change in Israeli policy. This cannot be achieved unless the gains on the level of world public opinion are translated into foreign economic pressure on Israel. The Western countries will only threaten to apply such pressure when they come to realize that the continuing uprising may endanger their interests in the Middle East.
A Losing Project?
The new Israeli government has so far pursued the same policies toward the uprising as the previous one. Shamir continues to assert, at least in public, that he is prepared to crush the uprising by any means necessary. Rabin and Peres continue to hope that the uprising will give birth to a new Palestinian leadership that will “qualify” for “negotiations” with Israel. While recent public opinion polls indicate that a majority of Israelis favor negotiating with the PLO, this sentiment has as yet had no impact on government policy. 
Israel’s campaign to portray the uprising as “terrorism” has largely failed. But long before Washington agreed to talk with the PLO, the Israeli government had decided that the issue was not one of recognition, acceptance of Resolution 242 or renouncing “terrorism.” Members of the Israeli establishment from both the Likud and Labor have stressed that their refusal to negotiate with the PLO is a consequence of their belief that such negotiations will eventually lead to a Palestinian state. The questions facing Israel today are those which face any colonial power: Has the occupation become a losing project or not — politically and socially as well as economically? Are there enough forces in the colonial state to sustain it even if it is losing? Self-determination and a Palestinian state are the objectives of the uprising. Israel’s ability to block these goals is still substantial, but the intifada has overturned the balance of power that has prevailed since the Lebanon war and become the basic strategic asset for future Palestinian action.
 Yedi‘ot Ahronot, March 7, 13, 1988.
 Ha’aretz, August 18, 1988.
 Ha’aretz, August 24, 1988.
 Dan Margalit, Ha’aretz, August 28, 1988.
 Akiva Eldad, Ha’aretz, July 4, 1988.
 Interview with Shamir, Ha’aretz, March ll, 1988.
 Ya’ir Sheli, Ha’aretz supplement, August 15, 1988.
 Ha’aretz, October 18, 1988.
 Yedi‘ot Ahronot, October 26,1988.
 Ha’aretz, April 7, 1988.
 Dr. Gidon Biger, Ha’aretz, November 15, 1988.
 Ha’aretz, May 6,1988. See also MAPAM's program.
 CRM program.
 Ha’aretz, June 12, 24, 1988; September ll, 1988. Y. Harkabi, Hachra’ot Goraliot [Fateful Decisions] (Tel Aviv, 1986), pp. 49-78.
 Yerushalayim, October 7, 1988.
 Ha’aretz, June 24,1988.
 Ha’aretz, June 8, August 14, 1988.
 Shlomo Gazit, Hagezer vehamakel [The Carrot and the Stick] (Tel Aviv, 1985), pp. 150, 179, 182.
 Dan Sagir series in Ha’aretz, April 20-May 3, 1988.
 Ha’aretz, April 25, 1988.
 Judea, Samaria and Gaza Area Statistics, March 1987.
 Tzvi Timor, Al Hamishmar, January 1, 1988.
 According to Bruno: 1) There was no significant drop in Israeli exports to the territories, except for textiles which depend on workshops in the territories; 2) The number of workers from the territories coming to work in Israel decreased by 20 percent, affecting mainly the agricultural and construction sectors but generally not at the macroeconomic level; 3) Increased military expenditures (estimated at $65 million) were not considered real expenses because they were moved from one line item to another in the military budget, though increasing the number of troops would lead to additional expenses; 4) Tourism had not been affected, but a drop was expected in April. Ha’aretz, March ll, 1988; Hadashot, March 13, 1988.
 Davar, May 5, 1988.
 Davar, March 15, 1988.
 Ha’aretz, August 31, 1988.
 Ha’aretz, July 27, 1988.
 Ha’aretz, November 29, 1988.
 Ha’aretz, June 28, 1988.
 Lecture in a meeting with contractors. Hadashot and Davar, May 4, 1988.
 Ha’aretz, April 1, 1988.
 The drop is not only the result of the boycott; customs taxes on foreign cigarettes were lowered as well.
 Data given by officer for agricultural affairs, Ha’aretz, May 27, 1988.
 Yedi‘ot Ahronot, June 2, 1988.
 Ha’aretz, June 24, 1988.
 Ha’aretz, August 23, 1988.
 Ha’aretz, April ll, 1988.
 Ha’aretz, August 2, 1988.
 Davar, May 5,1988; Yedi‘ot Ahronot, October 17, 1988.
 Yedi‘ot Ahronot, June 13, 1988.
 Ha’aretz, May 5, 1988; The West Bank DataBase Project, 1987 Report, pp. 30.
 Ha’aretz, November 7, 1988.
 Ma‘ariv business supplement, December 16, 1988.
 Eliyahu Slefter, Ha’aretz, March 10, 1988.
 Yedi‘ot Ahronot, December 23, 1988.