The EconomistFebruary 1st 2020 Leaders 11
1
T
heprospectofpeacebetweenIsraelandthePalestinians
hasgrownsodim,itiseasytoforgetthatPresidentDonald
Trump’seffortstoendtheconflictbeganwithmuchpromise.
Thedealmaker-in-chiefvowedtobringfreshthinkingtothede-
cades-oldfeud.“Aswithanysuccessfulnegotiation,bothsides
willhavetomakecompromises,”hetoldBinyaminNetanyahu,
Israel’sprimeminister,in2017.MrTrump’smeetingwithMah-
moudAbbas,afewmonthslater,endedwiththePalestinian
presidentgushing:“Withyouwehavehope.”
Whatfollowed,though,wasneitherboldthinkingnorany
demandforsacrificesonbothsides.Rather,MrTrumpshowered
MrNetanyahu,a fellowpopulist,withpoliticalgifts.Herecog-
nisedthedisputedholycityofJerusalemasIsra-
el’scapital.HisStateDepartmentdeclaredthat
IsraelisettlementsintheWestBankarelawful.
(Fewlegalscholarsagree.)MrTrumpcutaidto
thePalestinians,evenforhealthandeducation,
andclosedtheirdiplomaticmissioninWash-
ington.Allthisdelightedhispro-Israelsuppor-
tersbackhome,butenragedPalestinians.
SuchisthecontextforMrTrump’sunveiling
ofhislong-awaitedpeaceplanwithMrNetanyahuonJanuary
28th(seeMiddleEast&Africasection).Itwillnotbringpeace.
Butit mayspelltheendofthetwo-statesolution—theideathata
Palestinianstateanda Jewishonemightagreetoco-exist.
Ata differenttime,undera differentpresident,theproposal
mighthavebeenthestarting-pointformoretalks.Notaneven-
handedstarting-point,mind.TheplanfavoursIsraelihardliners
asnopreviousAmericanplanhasdone.It letsIsraelformallyan-
nexthesettlements,hangontotheJordanvalley,maintaincon-
trolofholysitesandrejectPalestinianrefugees.ForthePalestin-
ians,thereareconditionalpromisesofsomethinglikea stateat
somepointinthefuture,witha capitalontheoutskirtsofJerusa-
lem,plusbillionsofdollarsofinvestmentandanIsraelipromise
tofreezesomesettlement-building.If theynegotiate,theymight
geta betterdeal,suggeststheTrumpadministration.
ThePalestiniansdonotbelieveit.IfMrTrumpwereserious
aboutpeacemaking,whydidhetrytowooonlyoneside?NoPal-
estinianleadercouldhaveacceptedthedeal,letaloneoneas
weakasMrAbbas.MrTrumpdidnoteveninvitehimtotheun-
veiling,whichanywayseemeddesignedtodistractAmericans
fromimpeachment(seeLexington),andIsraelisfromcorrup-
tionchargesagainstMrNetanyahu.Theprimeministerappears
eagertoendthePalestiniandreamofstatehood.Hehasalready
askedhiscabinettovoteonannexingpartsoftheWestBank,and
iswhippinguphawkishvotersaheadofa tough
electiononMarch2nd.
ShouldMrNetanyahuwinanotherterm,he
willundoubtedlymoveaheadwithannexation.
His main challenger, BennyGantz, will face
pressuretodothesameifheisvictorious.Far
fromeasingtheconflict,MrTrumphaspushed
itdowna perilouspath.HehasgivenIsraela
greenlighttotakesomuchterritorythata co-
herentPalestinianstateisallbutimpossible.Andheoffersnovi-
ablealternativetothetwo-statesolution.Thatmaysoonleave
Israelwitha choice:givethePalestiniansequalrightsandwatch
astheymultiplyandoutvoteJews,ortreatthemassecond-class
citizensandformallybecomeanapartheidstate.
ThebestthatcanbesaidoftheTrumpplanisthatit acknowl-
edgestheOslopeaceprocessismoribundanda newapproachis
needed.Buta successfulpeacedealmeansnotonlydiscarding
whathasnotworked,butalsocomingupwithwhatwill:a plan
thatdemandsconcessionsfrombothsidesaswellasfair-mind-
edleaderstoimplementit.Thisisnotthatplan.AndMrTrump,
MrNetanyahuandMrAbbasarenotthoseleaders. 7
Dead on arrival
A one-sided deal highlights the need for new leadership on all sides
Donald Trump’s peace plan
I
n its primeGoldman Sachs was exceptional. Fifteen years ago,
just before the global financial crisis, the bank easily outshone
its Wall Street rivals—winning the most lucrative deals and mak-
ing the most profitable trades. It printed money, both for share-
holders and employees. Although the crisis imperilled the firm
along with the rest of the banking industry, it navigated the cha-
os relatively well. Success allowed it to be haughty—while other
banks engaged in the grubby game of sucking up to investors,
Goldman remained secretive and enigmatic.
How times have changed. This week the firm held its first in-
vestor day, led by David Solomon, who took over as chief execu-
tive last year. It comes after a long period of underperformance.
A dollar invested in Goldman in 2010 would be worth just $1.
today. A dollar wagered on the s&p500 would be worth $3.60, and
on JPMorgan Chase, $4.10. Goldman has become a laggard.
Its predicament reflects two big changes in Western banking.
One is the declining profitability of capital-markets activity, in
large part the result of tighter rules, including higher capital re-
quirements for riskier activity, penalties on lenders that rely on
debt markets to fund themselves and tighter compliance re-
gimes. The second is the rising importance of technology in the
industry, as consumers and corporate borrowers shift to digital
banking. This appears to give an immediate advantage to very
large lenders that can support huge itbudgets, and to big tech
platform firms that have vast numbers of customers who can be
sold financial products, as is already the case in much of Asia.
How the mighty have fallen
Goldman Sachs’s desire for a new identity captures the changes in global banking
Goldman Sachs
