The Hong Kong solution

By the middle of the 19th century Britain was in the full flood of its imperial expansion. It genuinely “ruled the waves” and China, losing the first Opium War in 1841, was forced to cede the island of Hong Kong. Following the second Opium War in 1860, Britain also took possession of the Kowloon Peninsula.

During the following decades, Hong Kong flourished. Trade expanded rapidly, and banking and insurance began to thrive. But the island lacked resources such as water and farmland, and Britain pressed China to cede more land. In 1898 Britain succeeded in gaining rights in areas known as the New Territories. Unlike the previous agreements, the New Territories were offered to Britain on a 99-year lease, due to expire in 1997.

Let’s complete the story. As 1997 approached, it became clear that although the treaties signed by Britain and China gave Britain possession of Hong Kong Island and the Kowloon Peninsula for all eternity, if they attempted to hand back only the New Territories China would want the rest as well. In late-1984 an agreement was reached: China would take over the entire colony on 1 July 1997, but Hong Kong's unique free enterprising economy would be maintained for at least 50 years. Hong Kong would become a Special Administrative Region (SAR) of China with the official slogan, "One country, two systems".

Now, absence of news provides a fertile breeding ground for rumour, and there has certainly been a lack of solid information emanating from Israeli-Palestinian sources over the past few weeks. We are now nearing the end of the month specified by the Arab League for the US to come up with some formula for renewing the direct peace talks. These, it may be recalled, were broken off on 26 September, when the building freeze ended and construction in the West Bank settlements resumed.

Diplomatic activity masterminded by Washington has continued throughout the period, and Israeli prime minister Netanyahu is flying to the States on 7 November to meet US Vice President Joe Biden and other officials to discuss "a renewal of the peace process with the aim of reaching an agreement on peace with security for the state of Israel." He will not be meeting President Obama, who will be travelling in Asia at the time.

The question is: will Netanyahu be seriously discussing the very odd, but apparently genuine, possibility reported by the London-based newspaper Al-Sharq al-Awsat on 29 October. Israel, the paper reported, in its secret negotiations with the American administration aimed at clarifying the nature and demarcation of a Palestinian state, has been discussing the option of Israel leasing land in east Jerusalem and the Jordan Valley from the Palestinian state for 40-99 years. Palestinian sources have apparently confirmed the story.

According to one of the sources, the initiative, which he said was "American, not Israeli," has been on the table for a while now "in order to reach common ground with the Israeli side regarding the borders issue and to reach an agreement on what will remain under Israeli sovereignty." Officials in Washington refused to confirm or deny the report on the new initiative. A State Department source told the paper that Israel and the US are discussing matters "as a part of the close relations between the two countries.”

Does the Hong Kong model provide any sort of template for a future Israeli-Palestinian accommodation, or is the whole concept “pie in the sky”? Of course, extremer right-wing Israeli political opinion will immediately demand: “Why on earth should we lease our own land from the Palestinians?” But if this US proposal is indeed being discussed, it is clearly designed to address some of Israel's key security concerns. Netanyahu has said that Israel must maintain a security presence along the border in a peace deal with the Palestinians to ensure that heavy weapons are not smuggled into the new state, and to prevent infiltration by extreme Islamist interests, such as Hamas, armed by their Iranian and Syrian paymasters. The leaseback option might indeed provide a medium- to long-term solution to that problem, while allowing Israel to agree the borders of a future sovereign Palestine that accords with Palestinian aspirations.

But, as they say, there is nothing new under the sun, so it is not perhaps surprising to find that five years ago a plan was seriously being mooted for the biggest Jewish settlement blocs in the West Bank to be "leased" from the Palestinians. The proposal was being discussed within the Israeli Labour Party in a bid to overcome one of the most difficult obstacles to a lasting peace.

The London Independent newspaper reported in December 2005 that a group advising Amir Peretz, then Labour Party leader, had been considering a proposal for a long-term leaseback of the main settlement blocs on the model of the 99-year agreement that provided for Hong Kong to remain under British control until 1997. Clearly the proposal was an attempt to square the circle between Palestinian insistence that any two-state solution should broadly conform with Israel's pre-1967 borders, and the view of a wide segment of Israeli opinion that the major settlements should remain in Israeli hands.

Since then the situation has somewhat changed. Even PA President Mahmoud Abbas has on several occasions acknowledged that in any final agreement the major Israeli settlements would probably remain in Israeli hands, subject perhaps to a land-swap deal. The same would not be true of the plethora of smaller settlements scattered across the West Bank, and it may be that a lease-back deal affecting some of them could form part of a final accord.

But whether a final accord will indeed emerge from the current peace initative seems at the moment very much in the balance. The good news is that the Arab League appears reluctant to pull the plug on it, and much rests on whether the US can devise a formula within the next week or so that satisfies both Israel and the Palestinians. If they don’t, it has been suggested that the Arab League, rather than opting to end the face-to-face negotiations, might propose a return to the “proximity talks” that preceded them, at least temporarily. The next few weeks should resolve that matter, at least.