USIP’s Lucy Kurtzer-Ellenbogen provides an update on the recent political upheaval in Israel and how that may impact the prospects for peace in the Middle East.

Secretary of State Clinton was in Jerusalem on July 16, meeting with the Israeli leadership, Palestinian Prime Minister Fayyad, and Quartet peace process representative Tony Blair. In the wake of this visit, is there cause to expect movement on the stagnant peace process?

Secretary Clinton reiterated the administration’s position that direct negotiations between Israelis and Palestinians should resume and that they remain the only route to a sustainable peace. But the state of the transition in neighboring Egypt, and the U.S.’s and Israel’s shared ongoing concern over Iran’s nuclear ambitions clearly dominated the agenda. By the following day, headlines of Clinton’s visit had been eclipsed in the Israeli media by news of its latest domestic political turmoil: the withdrawal of the Kadima party from the coalition government.

Barely two months ago, you wrote on the USIP Olive Branch blog about the forging of this historically broad coalition. What happened?

As I noted then, in Israeli politics things can always change. This is largely a function of how the political system is structured. Low thresholds for political parties to obtain a Knesset seat create reliance upon the forging of coalitions to form a government. The result is often a government of unlikely bedfellows whose diverse interests are difficult to align. The ostensible death knell to the Likud-Kadima coalition was a failure of the government to agree to the parameters of a new universal military draft law: one of the government’s stated priorities in the wake of announcing the coalition deal. The Israeli Supreme Court had ruled the so-called Tal Law, that effectively exempted full time Jewish religious students from serving in the military, unconstitutional. The country’s highest court had called for new legislation to be crafted that would lead to a more equal sharing of the burden by Israeli citizens. On Tuesday night, when all but three members of Knesset from Deputy Prime Minister Shaul Mofaz’s Kadima party voted to leave the coalition, they objected to what they characterized as a disingenuous attempt by the prime minister to meet the principle of equality. The prime minister, in turn, accused Kadima of negotiating in bad faith.

What are the political challenges to meeting the terms of universal service?

The challenges are not solely political. Debate over the Tal Law has brought to the fore fundamental questions regarding Israeli identity, and the identity of its defense forces. It is not surprising that coalitional politics would be severely tested by attempts to grapple with an issue that gets at the heart of how Israeli society defines itself. It is not only full-time Jewish religious students from the Haredi (ultraorthodox) community who are effectively exempt from military service. Israel also offers military service exemptions to Arab citizens of the state and while volunteering to serve is an option (either in the military, or via a national service alternative), very few among the country’s roughly 20 percent Arab population make this choice.

The recent attempts to require Haredi youth to serve in the military have reignited perennial discussions over mandatory military or civilian enlistment for Arab citizens. This is a contentious question in the Arab community itself. While there are community leaders who encourage Arab youth to join the national service, most of the Arab national leadership actively advocates against it. A chicken or egg conundrum infuses their debate. Those who argue against mandatory service for their community point to systemic social and economic inequality between the country’s Arab and Jewish citizens and question the principle of serving a state that they argue does not serve or represent their interests. Those who support the idea of mandatory service for their community’s youth counter that participation would go further towards addressing socioeconomic deficits in their communities: better preparing their youth to enter the workforce and making them eligible for a host of state benefits granted to those who serve.

Israel has long considered its defense forces to be the great equalizer in society and a melting pot for its citizens. This depiction has often been accepted without adequate account of the contingent implications of Haredi and Arab exemptions, but the demographic trends in the country are making it harder to ignore. Haredi and Arab citizens of the state are predicted to account for a majority of the country’s population in less than 50 years. The current system of exemptions therefore has major implications for the long-held notion of the Israeli Defense Forces as “the people’s army.” It is within this charged context that the coalition government was attempting to tackle the issue of a universal draft.

You characterize the turmoil over this issue as domestic. Does it have any bearing on the peace process?

There are two distinct but related issues to consider in answering this question. First is the immediate impact of the collapse of the coalition government. Kadima’s withdrawal from the coalition has stripped the government of a more centrist inclination that could have afforded Prime Minister Netanyahu the space to be more forward-leaning on a peace process with the Palestinians. New elections are unlikely until the beginning of 2013 and, until then, Netanyahu once again must rely on support from parties far to the right and reluctant to move when it comes to the peace process. As for the debate over universal conscription and the identity fissures that it underscores, here I reluctantly intone the all-too-oft quoted assertion by Henry Kissinger that “Israel has no foreign policy, only domestic policy.” The implication that foreign policy is shaped by domestic considerations is not unique to Israel, but certainly in Israel, the country’s identity politics cannot be divorced from its road to peace with the Palestinians. Opposition to the peace process and/or differing views as to the strategy and outcomes the Israeli government should be pursuing to that end, tend to break down along sharp and complex identity lines.

In fact, it is this assumption that guides some of USIP’s ongoing work with its Israeli partners and grantees. From initiatives to foster better relations and more constructive engagement between Israel’s Jewish and Arab citizens, to projects that promote dialogue between secular and religious Jewish Israelis, the aim is to assess and address the challenges posed by Israeli and Palestinian internal divides to efforts to reach a negotiated Israeli-Palestinian agreement.

Turning to a new topic of concern, on July 18, a tragic suicide bus bombing killed five Israeli tourists in Bulgaria…

Yes, as one can imagine, a scene that was only all too familiar to Israelis during the second intifada – bombed out buses and killed and maimed Israeli civilians – quickly replaced the domestic political upheaval in Israeli headlines and consciousness. Netanyahu has asserted that intelligence and evidence implicates Hezbollah at the behest of Iran. He has also promised “a forceful response.” It remains to be seen what this will mean in terms of Israeli action, but with debate and speculation already swirling around a possible near-term attack by Israel on Iran and its nuclear capabilities, this incident clearly keeps that question front and center.