Confederation in Israel-Palestine? Principles for Effective Design and the Continuing Challenges

Although many still hold out hope for the two-state solution to the Israeli-Palestinian conflict, a recent set of discussions with Israelis and Palestinians revealed increasing pessimism on both sides that it would transpire any time soon—or was even viable at all. On the Israeli side, some consider the Palestinian Authority to be a failed partner in the peace process. Others are willing to sacrifice any possible agreement in order to solidify Israel’s control and assert sovereignty over the West Bank. Still other Israelis recognize that the continued expansion of the settlements on the West Bank has created “facts on the grounds” that make giving up the area politically impossible.

I heard similar, if reciprocal, fears from Palestinians. They complained that the government of Benyamin Netanyahu government is not interested in a permanent status agreement, and that the right-wing coalition now in power is quite happy with the status quo. The growth of the settlements on the West Bank has made promises of a future state ring ever more hollow to Palestinian ears.One alternative, presented in an impassioned pitch by a former Israeli intelligence officer and negotiator, was for a confederation between Israel and the Palestinian Authority. The idea of confederation has been floating around the edges of the peace process for years, but it appears to be gaining new currency, at least in certain circles, as the two-state option recedes from the political horizon. The idea, as this officer pitched it, is that the two-state solution—even at its best—involves one viable state and one less-than-viable state that would be unstable and is thus insuffiently attractive to Palestinians and a dubious promise to Israelis of a true end of the conflict. By thinking about what the relationship between these states might look like after the deal, he argued, the parties might be able to create a better pot of goods to distribute in negotiations.Color me skeptical that confederation offers much of an opportunity here. The attraction of the idea is that each unit retains its sovereignty, thus fulfilling the aspirations of the Palestinian people to a state of their own. At the same time, a confederation arrangement might regularize or legitimate some degree of Israeli authority over Palestine, particularly with respect to sensitive issues such as water, the movement of workers, and above all security.

The trouble is that constructing a confederation presents many of the same problems as negotiating and implementing a two-state solution itself. Four simple design principles are central to all confederations, and for this reason would be key to any Israel-Palestine confederation as well. In working through these design principles, it becomes obvious that far from being a panacea or an “easier” alternative to the two-state solution, building a confederation might pose even a greater challenge.

To put the matter bluntly, despite its increasingly tenuous hold on the political imaginations of all parties to the conflict, it appears we may be stuck with the two-state solution--or no solution at all.

What is a Confederation?

Before turning to the design principles and their difficulties, a brief word on confederations is in order. Confederations are polities created by constituent units that transfer authority for a limited number of policy areas to a central government. The “states” retain all other powers. Under the general principle of subsidiarity, as it is known in the context of the European Union, policy areas with large externalities or spillovers across otherwise “national” borders should be allocated to the joint decision-making body at the center, and issues with few or no externalities should be decided by the states. An Israeli-Palestine confederation might be granted rights, say, to make policy on water and security and the governance of Jerusalem, which affect both Israel and Palestine, while other, more local policy areas such as infrastructure, social welfare, and education could be reserved to the two states.

The closest analog to a confederation is a federal state. Confederations and federations differ mostly in degree, defined by the increasing number of policy areas allocated to the center. Precisely where a polity transitions from a confederation to a federation is not entirely clear; counting the number of policy issues possessed by states and the center is never easy, and no standard metric applies. One key difference, however, is where the “residual rights of decision-making” are allocated, a bit of technical language that is necessary to explain before considering the design challenges below. When policy areas overlap and jurisdictions become unclear, as is inevitable in any confederation, the member states must have some mechanism for resolving disagreements. If security requires new roads to the border to better deploy troops against attack, is this a matter for the center (under its responsibility for security) or an area reserved to the states (under their individual responsibilities for infrastructure)? And when there are disputes over jurisdiction, who has the residual rights to decide whether the disagreement is appropriately decided by the center or the units? This is one of the thorniest issues in any multilevel governance structure. In a confederation, the residual rights are reserved to the states, which then decide their own powers, whereas in a federation, the residual rights are vested in the center. Thus, the difference between a confederation and federation is not just the number of issues controlled by the center, but whether the residual rights of decision-making are lodged in the states or the center.

Confederations are, however, unstable governance structures. Historically, most confederations fail quickly, either separating into their constituent units or, more rarely, evolving into more centralized federations—which do appear more enduring. Whether confederations survive depends, at least in part, on how they design the structure of their central government.

Design Challenges

To create successful confederations requires solutions to at least four design challenges. First, and most straightforwardly, the central authority must possess sufficient power to solve the collective action problems that otherwise plague the separate units. The center, in other words, must be able to facilitate cooperation that would not occur if the units were sovereign. In practice, this means that the center must be able to tax the states sufficiently to meet the fiscal demands placed upon it, and it must be able to punish any state that does not contribute its mandated share or implement other lawful actions. This was the key issue that led to the failure of the Articles of Confederation in the United States; the 13 states refused to provide the required revenues to the Continental Congress, which in turn lacked any means of enforcing their compliance. As a result, the early United States was not able to provide adequate defense against the Indian tribes to the West and Europeans in the East. Whether Israelis would allow a decision-making body composed in part of Palestinians to make binding revenue and policy decisions is uncertain. This might be even more problematic for the Palestinians, especially given the higher security needs of the Israelis and the Palestinian’s fear of domination. In requiring some mandatory taxing and spending powers, a confederation is asking considerably more of Israel and Palestine than a two-state model in which each makes such decisions on their own. The policy outcomes in a confederation will, in theory, be more effective in addressing the joint policy problems the states face, but there should be no illusion that legislated joint actions are any easier to enact than negotiated separate actions.

Second, the units must devise some means of limiting aggrandizement by the center. In confederations with externalities large enough to justify high levels of cooperation between the constituent units, the residual rights of decision-making almost inevitably gravitate to the center, eventually flipping the union into a federation. The Articles of Confederation were ambiguous on this score, ultimately leading to the more centralized and federal Constitution. Yet, even then the Constitution was unclear on the residual rights. The tenth amendment reserved all rights not explicitly specified in the Constitution to the states, creating a presumption—but only a presumption—that the residual rights were vested in the several states. The problem of where residual authority resided was not solved until the Supreme Court in Marbury v. Madison successfully claimed this power for itself. Even then, it ultimately took the Civil War to put the question to rest.

Once residual rights are vested in the center, in turn, the center almost inevitably expands the scope of its powers at the expense of the states. Even in Switzerland, the most successful confederation in history, the center eventually became supreme, and authority gradually shifted in its direction, creating today a state that is more federal than confederal in structure. Whether Israel and Palestine can agree on a division of decision-making authority by policy area and, more importantly, specify the residual rights of authority in ways that retain their sovereignty over time is unclear. The tendency for the center to aggrandize its rights again asks more of the members of a confederation than would a two-state solution. Somehow, the two states need to devise some mechanism to promote cooperation that does not then undermine their sovereignty over time.

A third design issue is how to prevent domination of the weaker state by the stronger one. In other words, to succeed, there can be no permanent losers within a confederation. Otherwise, the dominated state would be better off exiting the confederation and bargaining with the other member(s) outside any established rules. Domination is typically prevented by giving the weaker state disproportionate influence within the central decision-making body. Indeed, the weaker unit must possess more influence over policy within the confederation than it would retain by complete independence and unrestricted bargaining, otherwise it will leave—the most common result. The stakes of the game here are high precisely because the rules adopted for the central governing body influence all policy decisions of the confederation into the indefinite future.

In the case of the United States, once again, this problem was solved in the great compromise that allocated seats in the House of Representatives by population, disadvantaging the smaller states, but gave each state two seats in the Senate, magnifying their voice. Whether Israel, as the stronger partner, would permit such disproportionate influence by a Palestinian state within any confederation is doubtful. The Palestinians, for their part, would likely consider any confederation that risked their domination by the Israelis as a merely a face-saving form of permanent occupation. Because its rules would be enduring, negotiating a confederation acceptable to both sides is far more challenging than the ad hoc bargaining that would recur between two sovereign states.

Finally, to avoid centrifugal pressures, politicians within the states must have a career path that takes them to “higher” offices at the center. If the highest offices politicians can aspire to are within the constituent states—say, as Governor—they will inevitably develop narrow support coalitions and “localist” platforms that challenge the center and its authority. Appealing to their narrow constituencies, in turn, these politicians will pull at the center through an emphasis on “states rights.” On the other hand, if the highest offices in the land are in the center, politicians will be forced to develop bases of support that span the constituent states and develop political platforms that connect local issues to the confederal level, and vice versa. “National” political parties are typical and, indeed, the most successful vehicles for integrating the local and the confederal levels. With highly fragmented parties in both Israel and Palestine, and little history of national parties in either, the task of developing parties able to overcome the localism that follows from a weak center is perhaps an overwhelming barrier to confederation. As above, at least at the moment of creation, a confederation asks more of the politicians who already have established political bases within states than does a two-state solution. A confederation with a path to central leadership positions might encourage politicians to think beyond their immediate self-interest, but if they can do that, they can also resolve the issues blocking the two-state solution.

All of these design principles become especially acute in the area of security policy, which has bedeviled all prior negotiations between Israel and Palestine. Virtually every other confederal state in history has lodged external security policy at the center, and Israel would likely insist on unilateral control over external security throughout the entire confederation territory. Indeed, one of the attractions of confederation for Israel is that it may help legitimate this control. A similar problem arises with internal security within the confederation. Would Israel insist upon a right to intervene in Palestinian areas, similar to the current rules governing Areas A, B, and C on the West Bank? If internal security were a state rather than confederation responsibility, as the Palestinians would likely demand, would Palestine have its own parallel security forces? Would “local” police forces, if they exist, be responsible for geographic areas or populations? Most important, when the inevitable disagreements arose over who has jurisdiction over what and where, how will these disagreements be resolved-- and by whom? Unless Israel were to give some control over both external and internal security forces to the center, it is not at all clear why the Palestinians would agree to a division of authority that would leave them vulnerable to permanent domination and coercion.