In a message passed to Israel from the U.S., the Persian Gulf states of Qatar and Oman are willing to re-establish ties with Israel is Israel "...agrees to a moratorium on construction in the West Bank." What Israel is being asked by Qatar and Oman (and by the U.S. as well) is to freeze all future--ongoing construction is exempt--construction in settlements indefinitely (no precise time line is given but 12 months has been mentioned.)
Qatar was one of very few Arab states to have any relations with Israel at all and there was a time when there was a great deal of optimism around these relations. Indeed, the uniqueness of Qatar's relations with Israel has attracted attention as it stands as an example of a small state pursuing very original foreign policies. Part of the interest in these relations for Qatar is to sell much needed natural gas to Israel and to help keep Qatar in the good books of the U.S. Part of the interest for Qatar also seems to be a nationalistic desire to "stick-it" to Saudi Arabia, a regional rival.
The benefits to Israel are trade, access to natural gas and someone else in the Arab world who will talk to and deal with them. These relations, which were ostensibly fruitful ended in January 2009 when Qatar broke relations with Israel during the war against Hamas.
Now the question must be, should Israel do it?
The settlements are not the obstacle to peace, but an obstacle and certainly a thorn in the side of the peace process as a whole. That being said, the current Israeli government has a domestic constituency that supports the settlements and is probably also using the ability to freeze and unfreeze construction as a bargaining chip. It also happens to be a big bargaining chip, one that everyone seems to want.
Israel needs to decide if re-establishing relations with two countries with whom it had--at least somewhat--beneficial relations in the past is worth one of the most valuable bargaining chips it seems to have. A "give" that has been inflated in importance by an almost singular U.S. interest in the subject and that could see the Israeli government fall.
From a purely realist perspective, this just doesn't seem worth it. Israel is now being asked to give something that it could probably exchange for larger concessions from Palestinians, other Arab states or the U.S. for something that it already had just 8 months ago. The deal just doesn't seem that good; except for maybe Qatar and Oman, who come out looking like heroes for forcing an Israeli concession and then get to keep selling their natural gas. Moreover, if the analysis that Qatar really wants to stick it to Saudi Arabia is accurate, then would making this concession to Qatar have the effect of encouraging Saudi Arabia to "one-up" Qatar in demanding an even greater concession from Israel? Perhaps.
From a hopeful, optimistic perspective, the contrary could be argued. Re-establishing ties with Qatar and Oman would perhaps be risky to the Israeli government, but beyond this myopic concern is the possibility of a better relationship with the U.S., with Qatar and Oman, potentially with other Arab states who may choose to believe that Israel is serious about peace and may generally have a snowball effect.
Israelis, however, tend not to like to bet the farm. It would therefore be unsurprising if the realist approach were the one chosen. A case could be made that either decision were the right one.
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