Britain is urging the Palestinian leadership to delay its bid for upgraded status at the United Nations general assembly, warning that the move is likely to be detrimental to US re-engagement with the peace process following next month's presidential election.
Palestinian sources expressed anger at the British move, saying the UK had been recruited to US opposition to their bid. But they insisted they would press for a vote on their UN status by 15 November and were confident of winning a majority. At least 115 countries, and possibly as many as 150, out of a total of 193, are forecast to vote in favour of upgraded "non-member state" status.
British diplomats have told Palestinian officials that a vote in the weeks following the US election would significantly decrease the chances of the next US administration taking steps to get peace negotiations re-started. They are also warning of potentially serious financial consequences for the Palestinian Authority if it goes ahead.
They say they understand the Palestinians' frustration after at least a year of stagnation in the peace process while Israeli settlements in the West Bank and East Jerusalem have continued to expand, threatening the viability of a Palestinian state. "There is a lack of a political horizon, lack of hope for their people and continued economic uncertainty. It's very bleak at the moment," said a diplomatic source.
However, they added that a UN vote on upgrading the Palestinians' status would seriously complicate US re-engagement in the peace process, which British and other European countries are urging in the coming months. "We want to see the US take a lead once the presidential elections are out of the way. The US role is key and we stand ready to help them," the source said.
The US has clearly stated its opposition to the Palestinians' UN move. Its envoy, Susan Rice, said on Monday it would "jeopardise the peace process". The Palestinians counter that there is no viable peace process and they are pursuing an alternative peaceful and diplomatic international strategy.
Last month, a US memorandum warned European governments against supporting the Palestinian bid, saying such a move "would be extremely counterproductive" and threatening "significant negative consequences" for the Palestinian Authority, including financial sanctions.
After last year's failed attempt to win full recognition for the state of Palestine, the US Congress froze $200m (£123m) in aid to the authority. The decision was later overturned, but diplomats say the money has yet to be dispersed while the US waits to see the outcome of this year's UN move.
According to Palestinian sources, the US is also trying to raise the threshold for a successful vote at the general assembly from a simple majority to two-thirds. "They are playing every card they can. But even if they do get it changed to two-thirds, we are still going to win," said a Palestinian official.
Israel is also vehemently opposed to the Palestinian move. An upgrade from "observer entity" to "non-member observer state" would give the Palestinians access to bodies such as the international criminal court, in which they could seek to pursue legal cases against Israel over settlements, the occupation of the West Bank and the blockade of Gaza.
Britain views 2013 as a critical year for the future of the Israeli-Palestinian peace process, warning that continued settlement expansion in East Jerusalem and the West Bank is jeopardising the prospects of a Palestinian state being created alongside Israel.
"We're trying to think creatively about how we move forward. But it's difficult if, in the same breath, we're having to think tactically about how to handle a UN bid. So our message to the Palestinians is that going to the UN straightaway could be counterproductive and that a bit more time will help us to help them," said a diplomatic source.
Palestinian chief negotiator, Saeb Erekat, has been invited to London before the end of the month to discuss the UN bid with UK government officials.
Hanan Ashrawi, a member of the Palestine Liberation Organisation executive committee, said: "We are trying to do our best to rescue the two-state solution, prevent violence and bring international law to bear.
"The Americans are perfectly capable of doing Israel's work without recruiting the UK to help. The UK has a long history in this region and should be the first to recognise the damage it caused to the Palestinians in the past. They owe us at least the minimum of even-handedness."
A spokesperson for the UK foreign office said: "We have been clear that we see negotiations toward a two-state solution as the best way to meet the national aspirations of both Israelis and Palestinians. Along with EU and international partners we are urging both sides to focus on dialogue, to avoid steps that could undermine the prospects for peace and to work towards the resumption of direct negotiations without preconditions.
"If a [general assembly] resolution were to be put to a vote, we would need to consider our position. The UK would want to use its vote in a way that makes a return to talks more, rather than less, likely."
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