Syria’s position in the Middle East continues to strengthen as Saudi Arabia, Europe, and the US seek to engage it in an effort to win Syrian support for their policies in Iraq and the region as a whole. Despite Assad’s recent summit with Ahmadinejad, during which he stated that Syria would not distance itself from Iran, Western leaders continue to believe that strengthening ties with Syria is a good thing. Saudi Arabia is discussing extending development loans to Syria. Europe’s  top diplomat arrived in Damascus late Monday as part of a regional tour to win more clout on the world’s diplomatic stage and to encourage Syria to sign the Euro-Mediterranean Association Agreement. The US military remains keen on developing security agreements with Syria.

At the same time that the West is relatively bullish on Syria, Israel’s stock seems to have hit a bear market. The Biden face slap delivered by Netanyahu this weekend has caused a crises that the White House seems to be taking seriously. Its two-state policy as a solution to the Arab-Israeli conflict is in a shambles. Everyone recognized that it was toothless once Obama climbed down from his “no-settlement” policy. But Netanyahu’s empty promise to freeze settlement expansion served as a useful fig leaf for Obama. It allowed him to pretend that the two-state policy remained viable. With Israel’s announcement of 1,600 new units to be build, the fig leaf has been pulled away.

The Palestinians are now backing away from the the proximity talks that the US was counting on. Saudi Arabia has all but abandoned its cozy relationship with Israel. Obama’s failure to rally world opinion behind his Iran policy had already made him look weak and directionless in the Middle East. But with America’s closest ally making a mockery of its policies, the fat has hit the fire. AIPAC issued a sharp warning to Obama today not to make an issue of the settlement construction. If past is any precedent,  Obama will find a way to turn down the rhetoric and avoid conflict with Israel. This spat is likely to be a flash in the pan. Israel will continue to settle the West Bank and the Golan Heights and spurn meaningful peace with the Arab world. Some analysts believe that the US military may be braver in taking on Israel than elected officials have been. I am not so sanguine. When it comes to Israel, Washington’s policies so often have few teeth.

All the same, with Hillary Clinton serving as the keynote speaker at the AIPAC meeting this Sunday, there is intense speculation about the impact on the conference of the crisis that Israel’s ambassador to Washington, Michael Oren, reportedly called the worst in 35 years. James Besser at Jewish Week writes:

[Netanyahu] will will find many congressional Republicans eager to embrace him – and to use the perception of a U.S. overreaction to score political points against the hated Obama administration.  Will Netanyahu focus on generating congressional back pressure against the administration, or will he emphasize mending fences with the White House?

“The administration’s decision to escalate its rhetoric following Vice President Biden’s visit to Israel is not merely irresponsible, it is an affront to the values and foundation of our long-term relationship with a close friend and ally,” read a statement by House Minority Leader John Boehner, R-OH. Similar statements have been issued by Sen. Sam Brownback, R-KS, Rep.Ileana Ros-Lehtinen, R-FL, and others…”

My guess is that Obama will be cautious, as is his want. AIPAC will most likely choose caution as well. It has nothing to win by trying to break Obama or humiliating him further. Steve Clemons of the Washington Note writes that:

To gain his global standing, Obama will have to turn this worsening crisis with Israel and Netanyahu into a pivotal moment for US foreign policy

But he doubts that Obama will have “the vision and strategic capability to pull off something that leaves Israel, the US, and the Middle East in a better place.” Israelis are pitching this as a fight over who owns Jerusalem. That is a fight that Obama will not want to take on. Congress has been voting for years to recognize all of Jerusalem, including those expanded parts that Israel unilaterally annexed after 1967, as Israeli. Of course, this has huge implications for the two-state solution and largely puts paid to the notion of a viable Palestinian state. The wind has been going out of that notion since the failure of the Oslo process. Increasingly, policy makers recognize this but continue to maintain the two-state solution on life support, fearing what happens when they pull its tubes out. When they do admit that it is no longer a viable option, they must accept the terrible implications – that the Palestinians will be forever condemned to Israeli over-lordship. The US will then have only two choices: distance itself from Israel, or assisting Israel in controlling Palestinians and limiting the damage they and their sympathizers can do Israel or US interests in the region. The obvious choice for the US is the later option. It is the option Washington has flirted with since Truman decided to back the creation of a Jewish State in Palestine.

Saudi Arabia plans aid to Syria as ties improve
By Khaled Yacoub Oweis, Mon Mar 15, 2010
* Differences linger, but agreement on Lebanon
* Saudi investor appetite for Syria recovers

DAMASCUS, March 15 (Reuters) – Saudi Arabia is discussing extending development loans to Syria as ties between the two countries improve but there will not be direct cash assistance, the Saudi central bank governor said on Monday.

Diplomatic activity between Damascus and Riyadh picked up in the last months after they agreed to set aside their political differences and lower tension between their allies in Lebanon, which is a recipient of large Saudi cash injections.

Ties deteriorated after the 2005 assassination of Rafik al-Hariri, a Saudi-backed Lebanese member of parliament and former prime minister, resulting in the waning of Saudi investment appetite and aid to Syria.

“Syria is one of the most important Arab economies. It’s a promising market to whoever has money to invest,” Muhammad al-Jasser, head of the Saudi Arabian Monetary Agency, said after attending a banking conference in the Syrian capital.

“The Saudi finance minister was in Damascus and talked about this and what the Saudi Fund for Development is doing along with other Saudi government institutions,” he added.

Syria needs billions of dollars in investment to overhaul its infrastructure, resuscitate its drought hit east, lower unemployment and deal with a 2.5 percent annual population growth.

Most of the investment has been by amongst others Syrian expatriates and from the Gulf into banking and real estate. Economic growth fell to 3 percent last year compared with 5.2 percent in 2008, according to the World Bank.

Asked whether Saudi Arabia could deposit cash directly into the Syrian central bank, as it did with Lebanon, Jasser said such a move “will not be considered”.

But he said that the Saudi Fund for Development signed a memorandum of understanding with the Syrian finance ministry last week to lend $140 million to raise output at a power station in Syria.

INVESTOR MOOD

If extended, the loan will be the first since the Hariri assassination, which Saudi-backed politicians in Lebanon blame on Syria. Damascus denied any involvement.

Syria, which is under U.S. sanctions for its support of militant groups, has opened several sectors of the economy to private investment, especially banking and insurance, since President Bashar al-Assad succeeded his late father, Hafez al-Assad, in 2000.

The ruling Baath Party, which Bashar controls, nationalised large parts of the economy and enacted bans on private enterprise when it took power in 1963. It also imposed emergency law which is still in force and banned any opposition.

In a sign of changing investor mood, Saleh Kamel, a leading Saudi businessmen, addressed an investment forum in Damascus this month.

He said Syria was underperforming compared to Lebanon, its much smaller neighbour, because of what he described as antiquated laws, corruption and a lack of pro-investment culture.

Syria supports the Lebanese opposition led by the armed Shi’ite movement Hezbollah, which is also backed by Iran. Saudi Arabia is the political patron of Lebanese Prime Minister Saad al-Hariri, son of the late Rafik al-Hariri.

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EU Renews Push for Mideast Peace Talks
George Bagdadi for CBS

The European Union’s top diplomat arrived in Damascus late Monday for talks with Syrian President Bashar Al-Assad, as part of a regional tour to try to give the EU more clout on the world’s diplomatic stage…. Baroness Ashton’s ambitious visit — her first big international test of the “quiet diplomacy” that she promised would deliver results for Europe — will also take her over the course of the week to Lebanon, Jordan, Israel and the Palestinian Territories to meet with political leaders and civil society representatives, before heading to Moscow on Friday for a meeting of the international quartet on the Middle East. The Middle East Quartet comprises Russia, the United Nations, the United States and the EU.

Ashton was scheduled to meet with Assad and foreign minister Walid Mouallem Tuesday morning before holding a press conference.

A major economic deal between Syria and the EU (known as the Euro-Mediterranean Association Agreement) has been on hold for the last six years, and is on top of the agenda. The two sides came close in October to sealing the pact, which centers on economic and legal reforms as well as respect for human rights and democratic values.

The agreement would qualify Syria for more aid from the European Union, beyond the €500 million ($748.6 million) it has received since 1979.

Netanyahu Offers Apology, but No Shift in Policy
BY: ISABEL KERSHNER | THE NEW YORK TIMES

Prime Minister Benjamin Netanyahu of Israel told his cabinet on Sunday that the ill-timed announcement of new housing plans for a Jewish neighborhood in East Jerusalem during a visit by Vice President Joseph R. Biden Jr. last week had been “regrettable” and “hurtful. … But he did not indicate that the building project would be canceled …

Obama’s Turn Against Israel
MARCH 15, 2010, Wall Street Journal, Editorials
The U.S. makes a diplomatic crisis out of a blunder.

In recent weeks, the Obama Administration has endorsed “healthy relations” between Iran and Syria, mildly rebuked Syrian President Bashar Assad for accusing the U.S. of “colonialism,” and publicly apologized to Moammar Gadhafi for treating him with less than appropriate deference after the Libyan called for “a jihad” against Switzerland.

When it comes to Israel, however, the Administration has no trouble rising to a high pitch of public indignation. On a visit to Israel last week, Vice President Joe Biden condemned an announcement by a mid-level Israeli official that the government had approved a planning stage—the fourth out of seven required—for …

AIPAC CALLS RECENT STATEMENTS BY THE U.S. GOVERNMENT “A MATTER OF SERIOUS CONCERN”
URGES OBAMA ADMINISTRATION TO WORK TO IMMEDIATELY DIFFUSE THE TENSION WITH ISRAEL

The Administration should make a conscious effort to move away from public demands and unilateral deadlines directed at Israel, with whom the United States shares basic, fundamental, and strategic interests.

The escalated rhetoric of recent days only serves as a distraction from the substantive work that needs to be done to with regard to the urgent issue of Iran’s rapid pursuit of nuclear weapons, and the pursuit of peace between Israel and all her Arab neighbors.

We strongly urge the Administration to work closely and privately with our partner Israel, in a manner befitting strategic allies, to address any issues between the two governments.

As Vice President Biden said last week in Israel, “Progress in the Middle East occurs when there is no daylight between the United States and Israel.”

Haaretz via FLC

In Oren’s Saturday conference call with the Israeli consuls general, he said that the current crisis was the most serious with the Americans since a confrontation between Henry Kissinger and Yitzhak Rabin in 1975 over an American demand for a partial withdrawal from the Sinai Peninsula. …..Four consuls discussed the conference call with Haaretz. Some noted that in previous conference calls with Oren, the ambassador took pains to make clear that relations with the United States were excellent. This time, however, Oren sounded extremely tense and pessimistic. Oren was quoted as saying that “the crisis was very serious and we are facing a very difficult period in relations [between the two countries].” ….. Oren told participants in the conference call of a meeting he was summoned to on Friday with Deputy Secretary of State James Steinberg for a reprimand. Oren spoke of his surprise at being summoned after believing that the crisis had ended on Thursday. ..”

MEET THE PRESS 3/14/10

…..MR. BROKAW: Why didn’t the president pick up the phone and call “Bibi” Netanyahu on…
MR. AXELROD: Well, the vice president was right there to convey the president’s view. The secretary of State conveyed that view. The ambassador was called to the State Department and our views were made clear to them. And I know the prime minister spoke to this this morning after his Cabinet meeting. I think the message was received.

TOM FRIEDMAN:
MR. BROKAW: All right. Let’s talk about something else that was in the news this week and almost got overwhelmed by the healthcare reform except for the audacity of what it was. Vice President Biden goes to Israel to have a high-level meeting with the prime minister to talk about trying to get the peace process started again. While he is there, the Israeli government announces that they’re going to build 1,600 new settlements in East Jerusalem. Tom, you had something to say about that. The secretary of State had something to say about it. We’re going to begin by sharing her interview with Andrea Mitchell. Here is Hillary Clinton.
(Videotape, Friday)

MS. ANDREA MITCHELL: Here you are with the Middle East just beginning to approach negotiations, and Israel announces an expansion of settlements. It was really a slap in the face to the visiting vice president.

SEC’Y HILLARY CLINTON: It was, Andrea. And I’ve expressed that directly to the prime minister. It was not just an unfortunate incident of timing, but the substance was, you know, something that is not needed as we are attempting to move toward the resumption of negotiations. … It was insulting. And it was insulting not just to the vice president, who certainly didn’t deserve that. He was there with a very clear message of commitment to the peace process, solidarity with the Israeli people. But it was an insult to the United States.
(End videotape)

MR. BROKAW: And that’s Secretary of State Hillary Clinton. Today, in The New York Times, Tom Friedman, who really began his career or certainly commanded all of our attention by writing from the Middle East, has written this. “Biden should have snapped his notebook shut, gotten right back on Air Force Two, flown home and left the following scribbled note behind: `Message from America to the Israeli government: Friends don’t let friends drive drunk. And right now, you’re driving drunk. You think you can embarrass your only true ally in the world to satisfy some domestic political need with no consequences? You have lost total contact with reality. Call us when you’re serious. We need to focus on building our country.'” Has it ever been more serious between the United States and Israel in recent years than this?

MR. TOM FRIEDMAN: No, this is a serious crisis, Tom. But I, I put it in–first of all, I think the president, the vice president, secretary of State did exactly the right thing for American interests and for Israel, by, by the way. I think we got to put this in a, in a broad context, all right? I think what Hillary–Hillary’s reaction and Biden’s reaction, first of all, they were speaking for many secretaries of State, many presidents in the past who have had Israeli settlements shoved in their face before, during, and after a visit by Israel saying, “Look, you guys do what you do, but we need to take care of our politics.” So there’s a lot of backstory here, this isn’t just about that trip.

Second, I think we need to keep the following in mind. What have we been–we, the United States–been doing for Israel rightly, I believe? We didn’t, we didn’t fight the Iraq war for Israel, but the fact is, in taking out Saddam Hussein, we took out a guy who had scud-missiled Israel and was giving $25,000 to any Palestinian who committed suicide against Israel. We have fought against the–what I think was the tendentious Goldstone Report on, on the Gaza war on the world stage. We’ve helped Israel protect it from that. We’ve been trying to organize a global coalition against Iran. And we give Israel, in the FY 2011 budget, $3 billion in military aid, the most advanced equipment. So let’s put that context on.

Then let’s look at the moment we’re in. We have an Israeli prime minister from the right who actually could deliver the right. He’s done actually a lot of good things on the ground in the West Bank. You have to give him credit for that. We have the best Palestinian leadership we’ve had in a long time. And we have a Sunni Arab world obsessed with Iran, ready to work with Israel more than ever. You’d think in that context Israel could say to the United States, you know, “You’re doing all this for us, we’re just going to stop settlements in Jerusalem, in the West Bank, not temporarily, not moratorium. We’re going to give you a chance to actually test the other side whether they’re for real. We’ve got enough settlements, we’ve go enough housing. Barack Obama, this Bud’s for you. We’re going to do this for the American people.” Is that anti-Semitism, is that anti-Israelism, to ask that of an Israeli government, to ask, act first in its own interest and then in America’s interest? I don’t think so.

The State Department released its annual country reports on human rights, which described deteriorating conditions across the Middle East. The country reports for the Middle East and North Africa region included several recurring themes such as judicial misconduct, fraudulent or rigged electoral systems, a disregard for basic human freedoms, and general malfeasance by public officials. You can find a detailed summary of the reports for particular MENA countries of concern on the POMED blog.

Ali Gharib writes at Lobelog:

In the March 11 London Review of Books, (behind a fire-wall, unfortunately,) Yonaton Mendel has a short primer on recent “hasbara” campaigns — essentially Israeli propaganda. In it, he summarizes instructions that would be given to diplomatic conscripts (to include all Israelis and other Jews): ‘Stick to your personal stories,’ they were told, ‘do not be drawn into political discussions. There will be people who irritate you and say that you are occupiers … do not go there.’

Nasrallah announces Jumblatt’s visit to Syria in Daily Star

Jumblatt apologises to al-Assad
14 March 2010, Al Jazeera English

Walid Jumblatt, a Lebanese MP and leader of the Progressive Socialist Party, has made a public apology for “indecent comments” he made in the past against Bashar al-Assad, the Syrian president. Jumblatt, who was part of the anti-Syria March 14 movement, had described al-Assad in 2007 as “Damascus’ dictator”, “a savage” and “an Israeli product”. Participating in Hiwar Maftouh (Open Dialogue), an Al Jazeera Arabic talk show, Jumblatt said his comments were made out of anger, amid stressful atmosphere and at a time the sectarian and ethnic split in Lebanon was at its peak.

He said: andldquo;My remarks were indecent, out of context and go beyond the political manners.” Jumblatt expressed his willingness to open a new chapter with Syria, the country that many in Lebanon hold responsible for the murder of his politician father, Kamal Jumblatt in 1977. Damascus has also been blamed by many for the 2005 assassination of Rafiq al-Hariri, the former Lebanese prime minister.

Asked whether he was willing to visit Damascus, he said his visit to Syria depended on Syrians’ willingness to move on. He said: “I call on the Syrian leadership; for the sake of nation’s (Arab nation) interest, regional interests, Arab objective dialogue, objective Syrian-Lebanese relations and the ties between the two neighbouring countries, can he (President al-Assad) rise above this issue? I simply ask for this.” “Yes, I want to turn the page,” he stressed.

After joining the March 14 movement, Jumblatt had pressed for the withdrawal of Syrian forces from Lebanon following al-Hariri’s murder. Under intense pressure, Syria withdrew its troops from Lebanon in April 2005, ending three decades of military presence in its smaller neighbour. Jumblatt has since split from the March 14 movement.

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