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The Palestinian Intifada as Bargaining Signal
By TQ Shang

On December 6th, 1987, an Israeli businessman was stabbed to death in the Gaza Strip. Two days later, an Israeli truck crashed into several cars in Gaza, killing four Palestinians. Rumors spread that the truck driver was a relative of the dead businessman and was seeking revenge, and so from December 9th onwards, violent protests spread through the Gaza Strip and the West Bank (Occupied Territories).1 Brandishing Palestinian flags, demonstrators burned tires and threw stones and Molotov cocktails while clashing with Israeli Defense Force (IDF) troops armed with tear gas, water cannon, and live ammunition. Thus began the Intifada, a prolonged episode of low-level nationalist violence that ended with the 1993 political settlement at Oslo.

This paper examines why the Intifada occurred. The first section addresses the origins of conflicting Israeli and Palestinian nationalist preferences over the status of the Occupied Territories. Israel insisted on occupation because of the specific content of Jewish nationalism, which, like many nationalist movements, appropriated the symbols of a pre-existing social group. More specifically, Zionism adopted the symbols of ancient Judea and Samaria, which, when translated into policy, meant that since the ancient Hebrews owned Judea and Samaria, modern Israel must also possess the Territories. In addition, Zionism had started its nationalist project by settling the land without de jure annexation, which implies that Israel regarded the settlers moving into the Occupied Territories as integral to Israeli nationalism and therefore encouraged them. Furthermore, by denying the existence of a Palestinian nation, Israel came to view occupation as essential to its own survival. On the other side, Palestinian nationalism demanded self-determination and an independent state in the Territories. That "Palestinian nationalism" is typically associated with the Palestinian Liberation Organization (PLO) and its program, which persisted until 1988, of liquidating Israel entirely. However, since the Intifada is limited to the Territories, I restrict the relevant definition of "Palestinian nationalism" to self-determination within the Territories. Using Ernest Gellner’s modernization theory,2 I argue that economic dislocation, blocked social mobility, and lack of political representation precipitated this limited form of Palestinian nationalism. Israeli and Palestinian nationalist preferences over the status of the Occupied Territories thus came into conflict.

The second section addresses a minor puzzle: given conflicting preferences, why did war not break out soon after Israel occupied the Territories in 1967? Fearon3 argues that since war is costly, both sides of a dispute face incentives to avoid war and locate a negotiated settlement. In the Palestine-Israel case, a bargain was indeed located: one that relied on implicit side payments that effectively "bought off" the Palestinian nationalist movement. In addition, since nationalism takes time to spread to the masses, politically informed social organizations grew only gradually and the conflict of nationalist preferences became significant only well after 1967.

The last section deals with the major puzzle of this paper: why did the Intifada finally break out? I argue that the previous bargain became unsustainable due to three exogenous changes. First, economic recessions in Israel reduced implicit side payments. Second, Likud’s 1977 electoral victory increased Israeli encroachments into the Territories. Third, nationalism took hold among the Palestinian masses and thus their willingness to fight for independence and statehood increased. These changes did not immediately cause war, since war is costly, but created a search for a new bargained outcome. However, bargaining often necessitates sending credible signals between participants, and as Fearon argues, those signals have to be costly to be credible. I argue then that the Intifada is best understood as a costly signal sent by the Palestinians in the Territories to convey information to the Israelis, the PLO, and the United States about their true willingness to fight. Therefore the Intifada was neither a secessionist war nor the product of failed bargaining. Rather, it occurred because a credible means of conveying information was required in strategic bargaining. I conclude by applying my analysis of the first Intifada to the Al-aqsa Intifada currently underway in Israel/Palestine.


Israeli-Jewish Nationalism (Zionism)

Israel insisted on retaining the occupation of the Territories because of religious and cultural symbolism that those lands represent, and because of security concerns. First, the ancient cultural symbols and ethnic identity-markers that modern Zionism appropriated in its nationalist project created a political imperative to build the Jewish national homeland only in historic Palestine ("the Land of Israel"), the territory between the Jordan River and the Sinai Peninsula, and nowhere else. Although Zionism prided itself in being secular, a large part of Jewish ethnic identity revolved around the Hebrew Bible and its associated customs. Through its stories of Abraham’s land purchases, Moses’ leadership to the promised land, and David’s territorial conquests, the Hebrew Bible links the Jewish tribe intimately with historic Palestine. Because it used the cultural content of the ancient Hebrews, Jewish nationalism ultimately contained the desire to possess the lands of the ancient Hebrews. Theodore Herzl, known as the father of Zionism, did not insist on creating a Jewish state in Palestine: "Is Palestine or Argentina preferable? The Society will take whatever it is given [by contemporary states] and whatever Jewish public opinion favors."4 However, since the cultural symbols of Zionism stressed the links between Jews and Palestine, Jewish public opinion of course favored Palestine. Similarly, since the West Bank corresponded to ancient Judea and Samaria, Jewish nationalism dictated continued occupation of the Territories. Menachem Begin argues,

The partition of the land of Israel is an illegal act. This country, the eternal homeland of our people, is historically, geographically, and economically one unit. Is it not absurd that the administration of Judea, Samaria, and the Galilee should be in the hands of non-Jews? The very names of these territories indicate their true owners. And is it anything less than absurd that Jerusalem - the City of David - will not be the capital of our state?5

His near-tautological statement makes little sense unless one considers the cultural content of Jewish nationalism. Once Zionism appropriated the Hebrew Bible, it effectively identified modern Israel with the ancient Hebrew kingdom. This meant that retaining control of the Occupied Territories became an essential component of Israeli nationalism. The settlements in the West Bank and Gaza that exist today, whose very existence is one of the major stumbling blocks towards peace, are proof of the religious significance of the Territories for some Jews.

Second, the occupation of the Territories provided strategic depth for Israel against Jordan and Egypt.6 Israel fought the Six Day War in 1967 against its neighbors who, at that time, were calling for its ultimate destruction as a political entity. The occupation of the West Bank provided a buffer zone between Israel and Jordan, and the occupation of the Gaza strip at least pushed Egyptian forces farther away from the geographical center of Israel. Considering Israel’s extremely narrow width compared to that of these neighboring countries, any land that it could occupy along its borders provided extra security in the event that Egypt or Jordan invaded.

How did Israeli nationalism reconcile this imperative to retain occupation with the idea of equality among nations, implicit in the doctrine of nationalism? All nationalist doctrines ultimately consist of the idea that state boundaries must reflect national boundaries; given the existence of many nations, therefore, all have equal claim to self-determination. In the face of the idea of national equality, Israeli nationalism had to justify, or at least excuse, its drive to possess the Territories when most inhabitants were non-Jews. It chose the simplest path?denial. Golda Meir famously commented in 1968 that "there is no such thing as a Palestinian people."7 For Moshe Dayan, the principal architect of the occupation and administrator of the Territories, "Israel ruled over a mass of alienated, isolated individuals whose opposition to Israeli rule could only be a manifestation of personal rather than national grievances."8 In this way, Israeli nationalists could advocate continued occupation without ideologically running afoul of the implicit principle of equality among nations.

This denial of the Palestinian nation and Palestinian nationalist claims to the Territories allowed Israeli nationalists to assert that occupation was necessary for the survival of the Israeli state. If Palestinian nationalism did not exist, then any resistance to the occupation could not stem from legitimate claims to national self-determination. Rather, "Arab" resistance in the Territories must arise from personal discontent and individual Arabs’ hatred of Israel. In accordance with that rationale, Israeli nationalists argued that the best way to deal with Arab hatred was simply to force them to accept Israel’s existence by continued occupation. Arabs would have to deal with the realities of Israel’s existence in their daily lives; this would foster acceptance because their opposition was not nationalist but personal. Thus, Israel obtained security through occupying the Territories. For instance, Begin believed that:

It was the idea of Israel, not its boundaries, that was at the root of the Arab refusal to accept Israel. Once "the Arabs" realized that they could not destroy Israel and that Israel would not withdraw from the occupied territories, the need to make peace would be recognized. . . . Without Israeli control over the occupied territories there could be no peace.9

The policy of continued settlement within the Territories accomplished the same task of ensuring Israel’s long-term security:

Jewish settlement has always been understood by Zionists as an "act of peace," as continuing proof to the Arabs that Israel would never leave and that resistance against the "iron wall" of expanding Jewish settlement was futile.10

In sum, the particular content of Israeli nationalism?its ancient religious symbols and its doctrine that occupation was necessary for security?explains why Israel possessed a nationalist preference for retaining occupation of the Territories after 1967.

Palestinian Nationalism

If Israeli nationalism involves the retention of the Occupied Territories, Palestinian nationalism seeks self-determination and liberation from alien rule. I define Palestinian nationalism narrowly, to mean the search for independence within the Territories, because the aims of the Intifada were similarly limited. The PLO’s version of general Palestinian nationalism does not serve this paper’s purpose. From 1968 to 1988, the PLO’s Palestinian National Charter advocated the total liquidation of Israel:

2. Palestine, with the boundaries it had during the British mandate, is an indivisible territorial unit. . . .19. The partition of Palestine in 1947 and the establishment of the state of Israel are entirely illegal. . . . 20. Judaism, being a religion, is not an independent nationality. Nor do Jews constitute a single nation with an identity of its own; they are citizens of the states to which they belong.11

The Intifada, however, had a different, more limited aim. It sought self-determination only within the Territories, not all of historic Palestine: "the primary motivation was national: the fierce desire of the approximately 1.7 million Palestinians?900,000 in Judea-Samaria, 630,000 in the Gaza Strip, and 130,000 in East Jerusalem?to divest themselves of Israeli rule."12 In explaining the outbreak of the Intifada, therefore, I use a definition of Palestinian nationalism consistent with the Intifada’s, rather than the PLO’s, aims.

I rely on Gellner’s modernization thesis to explain the origins of a Palestinian nationalism specific to the Territories. The Palestinian case corresponds to "the classical Habsburg form of nationalism" in his typology of nationalist movements:13 an ethnic minority14 fails to share in the dominant high literate culture because it possesses certain entropy-resistant15 cultural traits, such as language, physical features, religion, or customs. Because industrialization makes culture the critical determinant of socioeconomic mobility, individuals must be conversant in the dominant literate culture to be upwardly mobile. If the minority possesses a culture different from the dominant one, it ends up in lower socioeconomic classes; individuals find that their ethnic status as a minority adversely affects their life prospects. Since entropy-resistance prevents assimilation, the desire for upward socioeconomic progress in industrial society drives the ethnic minority to seek a state of its own, especially because the minority cannot change the situation from within because it lacks political power. Nationalism arises then from persistent barriers to socioeconomic mobility.

These conditions hold true for Palestinians under occupation. Even though industrialization did not occur within the Territories, the Israeli occupation performed the same role. Before the 1970s, most Palestinians were agrarian farmers. Economic integration during the occupation turned them into a labor force for Israel’s industrial economy. The promise of higher wages lured rural Palestinians away from farms and into cities; middlemen then transported them to Israel for work. Once created, the Palestinian proletariat faced barriers to socioeconomic mobility that were entropy resistant. Palestinians consistently occupied the lowest rungs of the occupational ladder:

By official accounts, in 1986 over 94,000 Palestinian workers were crossing into Israel for work every business day; this number would increase by 25-30 percent if unofficially employed workers were included. However, as other ethnic groups (Sephardic Jews and "Israeli-Arabs") experienced upward mobility as a result of a structural upgrading of occupations, West Bank and Gaza Palestinians remained substantially overrepresented in the declining low-status ones, primarily as manual labor in construction and agriculture. They had in fact remained Israel’s "hewers of wood and drawers of water."16

The sense of ethnic discrimination mattered because agents in an industrial society seek upward mobility:

A sense of deprivation and discrimination was discernible in many of the young Palestinians who worked in Israel . . . . The majority of the young generation, those born since 1967, worked in Israel, spoke Hebrew, and tended to compare themselves not with their peers in the Territories but with Israelis. The result was an inevitable sense of discrimination, as they received lower wages than Israelis, were ineligible for tenure and were often employed in menial labor.17

As Shalev indicates, the necessary conditions for "classical Habsburg" nationalism clearly existed. The Palestinians under occupation were an ethnic group largely identified with an economic underclass; given entropy resistance in the fact that they retained their own language (Arabic), customs, and religion (Islam), assimilation could not occur. Political representation was also lacking, obviating the possibility of changes in the situation. Israel sponsored municipal elections in 1976, but the elected mayors had little power to affect the policies of the occupation authorities. Furthermore, the Israeli occupation forces deposed them in 1982. Palestinians felt frustrated enough to seek political autonomy.

For the nationalist project to be feasible at all, the Palestinian masses needed to accept that a potential Palestinian state could fulfill their demands for upward socioeconomic mobility better than the status quo could. Palestinian social organizations fulfilled this key role. Labor unions helped promote workers’ interests, women’s organizations trained clerks, promoted literacy (the critical prerequisite for social mobility in an industrial society), and provided health care, and the one Gazan and six West Bank universities, founded after 1967, trained professionals. Such organizations functioned as harbingers of a state. They convinced the masses that an independent Palestinian state would bring more such services, allowing Palestinians to fulfill their socioeconomic aspirations. Furthermore, these organizations helped spread the nationalist idea, politicizing the masses along ethnic lines. Shalev indicates that "much [labor] union activity was subversive in nature"18 and that the universities, in particular, "became hothouses for Palestinian nationalism and revolutionary ideas, and over the years students were the primary instigators of disturbances."19 Social organizations, therefore, formed a key institutional bridge between ethnic disaffection and the conviction that an independent Palestinian state would improve the socioeconomic status quo.

In sum, Palestinian nationalism in the Occupied Territories arose from blocked socioeconomic progress and the promise of improvement if an independent state existed. It claimed the Territories for a Palestinian state. Israeli nationalism, however, insisted on continuing occupation.


Given these conflicting nationalist preferences, why did war not break out in 1967 or soon thereafter? To be sure, there was some conflict in the years between occupation and Intifada. On the Palestinian side, examples include stone throwing, petrol bombs, work strikes, and tax evasion. In response, the Israelis undertook massive arrests, imprisonment without trial, deportations, punitive destruction of homes and property, beating, and the use of tear gas and live ammunition against crowds.20 Yet these incidents were insignificant compared to the scale and extent of the Intifada, which mobilized virtually all sectors of Palestinian society to sustain demonstrations and protests over six years. Why was there a twenty-year period of relative peace?

Fearon argues that if war is costly, there are incentives for both sides to locate a peaceful bargained outcome that is preferable to war. A bargaining range, a set of negotiated outcomes that both sides strictly prefer to war, always exists under very broad assumptions.21 Consider two unitary rational agents, Israel and the Palestinians, with conflicting preferences over an issue. Israel prefers a settlement closer to full control of the Territories; the Palestinians prefer an outcome closer to full statehood. Suppose that Israel and the Palestinians settle the conflict by war, and the winner gets to impose its ideal settlement. It follows that Israel’s expected utility for war is the probability of winning minus the disutility of war. By disutility I refer to both the material costs of war and how intensely the agent feels about the issue at stake. If Israel is strongly nationalistic, for instance, the costs of war relative to not fighting are low and it prefers fighting to an unfavorable bargaining outcome. Fearon shows that if both agents have risk-neutral utility functions, then there must exist a set of peaceful bargains that both sides prefer to war. As long as war imposes costs on both sides, therefore, an ex ante bargaining range exists.

Implicit bargaining between Israel and the Palestinians of the Territories did in fact successfully locate an outcome within the bargaining range. The issue of contention between the Israeli and Palestinian nationalist movements was primarily territorial: Israel and the Palestinians both wanted control of the Territories. This might seem an indivisible issue, given the particular strength of nationalist feelings on either side, and especially the content of Israeli nationalism that stressed the unity of the "Land of Israel." Indivisibility of the issue at stake implies that no bargaining range exists. Either Israel gets its favorite settlement or the Palestinians do; there is no middle way. But the territorial issue was effectively translated into a divisible one by the introduction of side payments. Economic benefits served to balance Palestinian nationalist demands, allowing an intermediate settlement within the bargaining range even if actual territorial control belonged to Israel. Although the occupation stifled Palestinian industry and agriculture, created utter dependence on the Israeli economy, and led to heavy taxation, the fact remains that from 1967-1987 real GNP increased by 119.5% in the West Bank and 86.4% in the Gaza Strip.22 This translates into a respectable average of 4% annual growth in the West Bank and 3.16% in the Gaza Strip. In fact, the Israeli leadership consciously adopted the strategy of economic side payments to avoid war. The "Open Bridges" policy allowed Palestinians under occupation to cross the Jordan River for work in the Arab states, and Israel itself employed many Palestinians:

A central feature of Dayan’s strategy was the employment in Israel of large numbers of Palestinian refugees languishing in camps in the West Bank and Gaza Strip. Dayan assumed that a rise in living standards would compensate for the loss of political freedoms suffered by Palestinians under permanent Israeli rule, while enabling the Israeli economy to exploit the advantages of a large reservoir of cheap labor. In this manner, Dayan hoped to create an economic foundation for Palestinian participation in the status quo.23

Although some did not believe in the feasibility of this strategy—"What kind of Jew believes that he can buy the national pride of an Arab at the price of a toilet with running water?"24—it proved successful. One Palestinian nationalist confirmed that Open Bridges was "a release valve for the jobless and homeless . . . which effectively decreased the resistance of the population against Israeli occupation."25 Furthermore, Arafat had infiltrated the Territories in 1967 in a five-month long attempt to foment nationalist rebellion, but without success. In effect, despite the PLO’s best efforts, Israel and the Palestinians under occupation successfully located an implicit bargain that relied on trading control of the Territories for economic benefits. This bargain avoided nationalist war.

An institutional approach modifies Fearon’s game theoretic analysis slightly, by arguing that nationalist preferences came into conflict only well after 1967. Simply put, Palestinian nationalism in the territories took time to develop. In the immediate aftermath of occupation, what Palestinian resistance existed was not nationalist; it did not call for Palestinian self-determination. Rather, it was a conservative movement that resisted the political changes that represented by Israeli occupation:

No substantial mass-based political initiative emerged in the first years of the occupation. . . . It should be pointed out that the protests, petitions, and statements emanating from the political and civic leaders of the West Banks at the start of the occupation called for the restoration of the status quo ante, that is, the return of the West Bank to Jordanian sovereignty. . . . Like the political initiative in the West Bank, the [United National] Front’s program [in the Gaza Strip] called for a return to the status quo ante, in this case the return of the Egyptian administration.26

Since the Israeli occupation delivered economic benefits in excess of what Jordanian and Egyptian rule had provided, however, the conservative resistance movement did not gather sufficient support to generate conflict. The social organizations that spread and legitimized Palestinian nationalist doctrine among the masses developed only in the late 1970s and 1980s. For instance, enrollment in Palestinian universities increased significantly only after 1980. More extensive financial aid policies, made possible by economic growth, spread nationalist doctrines among peasants, refugees, and the lower classes. Ironically, only as the economic benefits of Israeli occupation slowly became apparent did Palestinian nationalism intensify. Fatah’s Shabiba youth movement, the only Palestinian nationalist organization within the Territories to possess an entire administrative apparatus, was set up only in 1983. In Fearon’s game theoretic analysis, the late development of nationalist institutions implies that the intensity of nationalist feelings was very low initially. This means that the Palestinians were willing to accept a larger set of possible settlements and the Israelis and Palestinians could find an implicit bargain.


The Intifada finally broke out after a protracted period of relative peace because the previously located bargained outcome did not persist. Exogenous shocks, beginning in the late 1970s, upset the previous equilibrium solution (bargained outcome). These shocks fall into three categories. First, the extent of issue divisibility decreased. Implicit side payments to the Territories had sustained the previous bargain by making the issue at stake divisible, but in the late 1970s, Israel and the oil-producing Gulf states entered simultaneous economic recessions. From 1981 onwards, the West Bank economy did not grow at all. Since large numbers of Palestinians worked in Israel, and those working in the Gulf states regularly remitted money into the Territories, the recessions worsened conditions in the Territories. Additionally, the Israeli recession eroded economic side payments and the issue of territorial control became less divisible. As growth rates in the Territories shrank, so did the range of possible settlements. In effect, Israel could no longer sustain its side of the old bargain.

Second, domestic politics caused Israel to increase its demands on the Territories. Israel attempted to push the status quo closer to its favorite outcome, risking the possibility of war as the Palestinians increasingly found Israeli demands unacceptable. The crucial exogenous event occurred in 1977 within Israel: the Likud’s electoral victory over the Labor Alignment. The Likud comprised nationalist factions held together only by a vision of complete territorial unification. In its 1977 campaign, it promised tougher policies toward Arab dissidents and the eventual incorporation of the West Bank and Gaza Strip into Israel. Thus, Jewish settlement in the Territories accelerated after 1977. In the preceding ten years of Labor rule, 7000 Jews settled in the Territories; the Likud planned to bring the total to 190,000 in seven years. This would bring the Jewish population in the West Bank to 33%. Drobles27 explicitly sought to make the Territories irrevocably Jewish: "If enough Jewish settlements could be established and enough land seized and placed under Jewish control, the Palestinians would wake up one day and discover that they had lost their country."28 In August 1985, Yitzhak Rabin inaugurated the "Iron Fist" policy, which consisted of administrative detention of Palestinians and of deportation out of Israeli-controlled territory. The rest of the year saw 123 detentions and 29 deportations. Such policies moved the Israeli position closer towards complete control of the Territories and thus displaced the old bargained outcome.

Third, the intensification of Palestinian nationalism narrowed the bargaining range by increasing the Palestinians’ expected utility for war. As previously argued, Palestinian nationalist institutions developed in the late 1970s and 1980s. The spread of nationalist ideas among the masses increased the stakes of territorial control and made the Palestinians more willing to fight. These changes in the parameters of the bargaining process created disequilibrium. The previous bargain no longer held because the bargaining range shifted and shrank. Therefore, Israel and the Palestinians had to start another bargaining process in order to locate a new peaceful solution.

A New Bargaining Process

I argue that the strategic processes involved in bargaining for an outcome that both sides prefer to war explains the Intifada. Specifically, the Intifada broke out because of a strategic problem inherent in bargaining under anarchy: private information coupled with incentives to misrepresent them. In Fearon’s game theoretic model, locating a bargained outcome involves finding a solution such that its expected utility to both sides exceeds the expected utility of war. Assuming that Israeli victory in war occurs with some objective probability, the bargaining task reduces to one of communication. Each side must credibly signal the extent beyond which it is unwilling to compromise. As already indicated, Israel tried to push the settlement closer to its ideal point after 1977. If the settlement pushed the Palestinians so far as to make war attractive, the bargaining process would fail. But credible signaling under anarchy is strategically difficult, since willingness to fight is entirely private information. Non-Palestinians could not easily determine the strength of Palestinian nationalism. An Israeli leadership that consistently refused to recognize even the existence of the Palestinian nation could not estimate the intensity of its nationalism. Bargaining, therefore, might not locate a peaceful outcome.

The Palestinians could not simply declare their nationalist aspirations because doing so would not guarantee that the Israelis would believe them. Strategically, the Palestinians had incentives to make Israel believe that they were intensely nationalist. This would induce Israel to moderate its demands. The incentive to misrepresent private information implied that Israel could not readily believe declarations of nationalist fervor and so the Palestinians had to signal this information in a credible way.

The Intifada solved the strategic problem of credibly signaling private information. Fearon argues that "to be genuinely informative about a state’s actual willingness or ability to fight, a signal must be costly in such a way that a state with lesser resolve or capability might not wish to send it."29 The Intifada constituted just such a signal?sustained resistance that imposed significant costs on the Palestinians. In the first one and a half years of the Intifada, 399 Palestinians were killed and 6,543 wounded.30 Beyond mere numbers, the media images of youths armed with only a catapult facing off IDF troops powerfully conveyed the Palestinians’ determination for an independent state. Whether real or media-generated, the costs that the Palestinians bore credibly demonstrated to Israel that they were indeed very strongly committed to the principle of national self-determination within the Territories. The Intifada was in essence a bargaining strategy adopted by the Palestinians of the Territories to credibly signal their willingness to fight for nationalist principles.

For the Intifada to be convincingly interpreted as a costly bargaining signal, it must satisfy several criteria. First, the Intifada must impose significant costs. Eliyahu Tal argues that the Intifada was not in fact costly:

Actually, objective observers ought to be impressed that after nine months of riots and after so many thousands of rocks and petrol bombs hurled at innocent Jewish bus and car passengers, only 200 Arabs lost their lives. In any other country, including Britain and the U.S., such goings-on would have elicited a far greater death toll.31

However, statistics of physical casualties do not capture other costs suffered, such as the 8,077 incidents of detention in the first one and half years.32 Strikes, self-imposed school closures, curfews, and boycotts caused additional losses. All in all, the Intifada did impose significant costs. Second, statements concerning the strength of nationalist purpose, and the Palestinians’ reservation value, must accompany the Intifada. The United National Leadership of the Uprising (UNLU) did signal the Palestinians’ reservation value by insisting on nothing less than an independent state within the Territories. The UNLU’s leaflet number 34 rejected elections before the termination of Israeli occupation;33 simultaneously, it issued Call 2, which referred to the Intifada as the vehicle for realizing "complete national independence."34 These two features of the Intifada made it a costly signal of private information.

Third, the Intifada must aim primarily at a negotiated settlement rather than military victory; the latter objective makes the Intifada a war of secession rather than a bargaining signal. The fact that the required signal, the Palestinians’ reservation value, was in fact the creation of an independent state in the Territories, obscures this crucial distinction. One could easily argue that violence coupled with demands for national independence constitutes a secessionist war. However, the Intifada’s violence did not aim directly at establishing an independent state by military force. Rather, it aimed at demonstrating the Palestinians’ "willingness to endure hardships in order to achieve a political goal."35 This explains one of the most puzzling facts of the Intifada: why the Palestinians threw rocks and petrol bombs instead of using more effective military weapons such as guns and cannon. Throwing rocks at the IDF conveyed real costs (retaliation, detention) and apparent ones (Cable News Network showing retaliation) to Israel and other international actors. Conversely, if well-armed PLO guerrillas sniped at IDF troops, the signal would be lost, as others would not see the utter determination of the Palestinian nation. The Palestinians consciously chose rocks over guns: Arafat said in January 1988, "on the first day of the uprising, we decided that our brother demonstrators should not use firearms."36 This statement indicates that the Intifada was essentially a bargaining signal rather than a secessionist war of independence.

Fourth, the Intifada must precipitate a process of bargaining. Otherwise, its credibility as a bargaining strategy suffers. The analytical model I use has hitherto assumed only two principal actors. Historically, multiple international actors, primarily the U.S. and the PLO, played significant roles in the negotiating process. The model, however, easily accommodates them. Prior to the 19th Palestinian National Council (PNC) in 1988, the PLO possessed nationalist aims different from occupied Palestinians’. Subsequently, the PLO aligned its aims with the Territories’ Palestinians. After 1988, therefore, I analyze the Palestinians under occupation and the PLO together as a unitary actor. The U.S. functioned as a third party that exogenously moderated Israeli demands. A new round of negotiations did begin among Israel, the U.S., and the PLO/Palestinians as a result of the Intifada. In January 1989, Rabin proposed a four-stage plan for talks between the Palestinians and Israel. In February 1988, George Shultz proposed an international conference after two decades of U.S. neglect of Palestinian nationalism. The Intifada, by signaling the intensity of Palestinian nationalism, moved the hitherto pro-Israeli U.S. stance toward the Palestinian side. U.S. diplomatic pressure attempted to reduce Israeli demands so as not to exceed the Palestinians’ reservation value. For instance, President Bush declared on March 3, 1989 that the U.S. opposed further Israeli settlements in the Occupied Territories. The Intifada ended only with the 1993 Oslo Accords; the signaling of private information ceased when a bargain was finally located.

Recent Developments: More of the Same

The current al-Aqsa Intifada broke out on September 28, 2000. Many believe that it was triggered by Ariel Sharon, then head of the opposition Likud party and now Prime Minister of Israel, when he visited the Temple Mount, also known as Harem al-Sharif. Following his visit, Palestinian crowds stirred by inflammatory sermons at various mosques began throwing stones at Jewish targets. The violence spread, with Palestinian gunmen sniping at Israeli soldiers and settlers, and the Israeli army retaliating with helicopter gunships, tanks, and missile attacks.

Although many independent factors provoked the outbreak of the al-Aqsa Intifada, this new wave of violence can also be explained using the same logic of strategic bargaining that I have outlined above. Just like the first Intifada, the second Intifada is a costly signal that the Palestinians are sending the Israelis in order to communicate private information about the true strength of their nationalist preferences. Signaling was necessary because the Oslo peace process, which represented a peaceful interim solution to the Israeli-Palestinian bargaining problem, had broken down by July of 2000. This breakdown implied a new round of strategic bargaining for Israel and the Palestinians. Just as in 1987 when the Palestinians needed to signal their intolerance for increased Israeli demands, so too in 2000 did the Palestinians need to send a costly signal to reveal their desires and demands to Israel.

The Oslo accords of 1993, which ended the first Intifada, represented a de facto solution that both the Israelis and Palestinians preferred to war. In essence, the accords bound both sides to implementing various interim agreements according to a fixed timetable. For instance, Oslo set a timetable for withdrawal of Israeli military forces from the Territories, the transfer of control of key cities in the Territories, and the establishment of a semi-autonomous Palestinian Authority. The most contentious issues of Jewish settlements in the Occupied Territories, the status of East Jerusalem, water rights, borders, and Palestinian refugees’ right of return to Israel, were not part of the interim agreements, but were deferred to final status negotiations. In the meantime, Oslo committed both sides to preserve the status quo regarding such final status issues. Oslo was a solution to the basic bargaining problem over the Territories because it was a process that, if kept in motion, gave both sides the feeling that progress, albeit slow and incremental, was being made. It was not a final or determinate solution, but in terms of the bargaining model I use above, it was a peaceful outcome that both sides preferred to war.

The Camp David summit meeting in July 2000 put the future of the Oslo process in serious jeopardy. The Oslo II Agreement signed in September 1995 set October 1999 as the deadline for resolving final status issues between Israel and the Palestinians. However, when Benjamin Netanyahu became Prime Minister of Israel following the assassination of Yitzhak Rabin, the peace process came to a virtual stalemate. Eventually, Netanyahu and Arafat managed to restart the Oslo process in 1998 when they met at the Wye River Ranch in the United States and signed the Wye River Memorandum. This memorandum called for continued implementation of the Oslo II Agreement, including further Israeli withdrawals, cooperation on both sides to combat terrorism and promote healthy economic relations, and a deadline of May 4, 1999 for reaching an agreement on final status issues.37 When Netanyahu failed to implement the Wye Agreement he was soon replaced by Ehud Barak, who promised to abide by the accord. Barak and Arafat signed another agreement at Sharm-el Sheikh, Egypt in September of 1999 pledging to implement Wye and to decide on final status issues by September 13, 2000.38

Thus, by the summer of 2000, Barak was facing a fast-approaching deadline for resolving final status issues. He and President Clinton called for the Camp David summit as a final effort to skip the rest of Oslo’s interim steps and move straight to final negotiations. The Camp David agenda concerned only final status issues, and aimed at a comprehensive, permanent peace.

When the talks at Camp David failed, one Palestinian architect of the Oslo accords remarked that "There will have to be a new formula, a new structure. . . . The old formula cannot be accepted anymore and doesn’t lead to a permanent deal. There is no more trust between the Israelis and the Palestinians."39 Israeli Prime Minister Barak had offered the Palestinians extensive concessions; Arafat had rejected them; both sides went home without a solution. Worse, the Oslo accords said nothing about what would happen if negotiations over final status issues failed. The failure of Camp David thus spelled the end of the old Oslo interim solution.

There are many arguments as to why Camp David failed. One argument pins the blame on Barak, accusing him of being politically inexperienced and attempting to push through a commando’s solution that would resolve all issues with a single bold masterstroke. Barak also worked alone, and thereby alienated much of his political coalition. In fact, "two major reasons for [Barak’s] failure at Camp David [were] (1) that he did not consult with members of his coalition and (2) that he did not level with the Israeli electorate about his intention to cross the supposedly red lines that he established by putting the Jerusalem issue on the bargaining table."40 Another argument pins the blame on Arafat. Some contend that the corruption inherent in the Palestinian Authority41 made the Peace Process itself profitable for Arafat and his cronies, and that he had no incentive to settle on a permanent solution. Arafat stood firm on his principle of full control of East Jerusalem; his "behavior at Camp David was dictated not by fear but by his desire to appear in the Arab and Moslem world as a brave warrior for Jerusalem."42

Ultimately, it is extremely difficult to delineate exactly which factors caused the Camp David negotiations to collapse. My argument, however focuses more on the fact that they did collapse, and the implication that that had on Palestinian attitudes towards the Peace Process in general. I emphasize the problem of credible commitments in the Camp David negotiations. Arafat rationally rejected Barak’s extensive concessions partly because the Palestinians could not be sure that Israel would actually implement those concessions after Camp David. Many, including Arafat, assumed that Barak could not credibly commit to carrying out what he promised because of the tremendous domestic political resistance he faced even before Camp David started. "Right before [Barak] left, he lost three right-leanng parties from his broad coalition,"43 and "ten of [Barak’s] twenty-two cabinet ministers resigned before he departed for Camp David, expressing reservations or outright opposition to his plans for making concessions to the Palestinians."44 The political opposition to Barak’s bargaining position was sufficient to raise doubts about whether Barak’s government would survive long enough to implement whatever agreements were reached at Camp David. In addition to opposition within the Israeli government, the Israeli public was not expected to fully support Barak’s offers at Camp David. Barak had promised a referendum on any Camp David agreements with the Palestinians,45 and the Palestinians could rationally expect such referendum to fail.

The Palestinians’ lack of confidence in Barak caused them to reject his offer at Camp David and played a large role in the outbreak of violence in September 2000. The fixed timetables which defined Oslo focused expectations on both sides. Israelis and Palestinians knew what was supposed to happen next, even if, in fact, many delays occurred.46 The existence of Oslo meant that it was not necessary to re-negotiate the entire set of issues pertaining to the Israeli-Palestinian conflict. Israel and the Palestinians could haggle over specific issues as each arose according to the Oslo timetable. In contrast, the end of the Oslo peace process meant that neither Israel nor the Palestinians knew what was supposed to happen next. Re-negotiation became necessary. Thus it became important for the Palestinians to communicate private information?the true strength of their nationalist preferences?to Israel once again. In terms of a strategic bargaining process, the failure of Camp David "wiped the slate clean" for both sides. Skepticism about Barak’s ability to implement his promises meant that even if he did clearly state what he was willing to offer at Camp David, the Palestinians could not take that as a guaranteed negotiating position. Thus, both sides now lacked information about what the other would concede, and so they had to send a credible message to the other player about what their demands were and how far they were willing to go to achieve their objectives. The al-Aqsa Intifada is precisely that: another costly signal from the Palestinians to overcome this strategic problem.

This Intifada also satisfies the criteria for it to be interpreted as a costly bargaining signal. First, it has imposed huge costs upon the Palestinians. Over 500 people have died in the fighting so far, most of them Palestinians,47 and the Palestinian economy has suffered as a result of Israel’s economic blockade of the Territories.48 Second, the Palestinians have made numerous statements of nationalist purpose during this Intifada. For example, their insistence on having at least part of Jerusalem as the capital of a future Palestinian state is symbolic of the Palestinian desire for a solid national identity. During the first Intifada the Palestinians were signaling their demand for a state; now that the eventual creation of a Palestinian state is virtually inevitable, the Palestinians are instead signaling their demands as to what the nature of that state will be. Third, although the level of violence since September might indicate otherwise, the Palestinians are still aiming at a negotiated settlement rather than an extremely costly war against Israel. Though the Palestinian side is using more than just the rocks they used in the first Intifada, it is clear that they will not win a de facto war against Israel. Thus, the only alternative for the Palestinians is a negotiated settlement, even if it comes only after a prolonged period of violent confrontation. The Palestinian side would prefer a negotiated settlement to a unilateral Israeli withdrawal from the Territories because only through negotiations will it obtain concessions on Jerusalem, refugees, and other key determinants of the nature of a Palestinian state.

The fourth condition, that of the Intifada resulting in a bargaining process, has yet to materialize. Low-level talks have taken place between Israeli and Palestinian officials, but so far have been fruitless. Thus, the ultimate success of this Intifada in achieving the Palestinians’ goal of a state defined on their terms remains to be seen.


I have argued that a strategic problem in bargaining over disputes, private information coupled with the incentives to misrepresent them, can help explain the outbreak of the first and current Intifadas. In both cases, the Palestinians needed to send a costly signal to Israel that conveyed the intensity of their nationalism, so as to avoid an all-out nationalist war. Intifada was exactly such a costly signal. Empirical evidence supports the three main implications of this thesis?that Intifada was costly; that it occurred together with public declarations of the Palestinians’ limit of tolerance; that it aimed at finding a bargained outcome rather than carry out secessionist war. The first Intifada precipitated a process of bargaining that ended with a peaceful settlement at Oslo; the second Intifada continues now. It will most likely end in a negotiated settlement, but hopefully, for the sake of all those in Israel, the West Bank, and Gaza, that settlement will come sooner rather than later.


1 I exclude the Golan Heights when referring to the "Occupied Territories," since the Intifada did not spread there.

2 Ernest Gellner, Nations and Nationalism, (Ithaca: Cornell University Press, 1983)

3 James Fearon, "Rationalist Explanations of War" International Organizations 49(3): 379-414, 1995

4 Herzl, p.222

5 Geoffrey Aronson, Israel, Palestinians, and the Intifada: Creating Facts on the West Bank (London: Kegan Paul International Limited) p.62

6 Louis Rene Beres, "Why the Oslo Accords should be Abrogated by Israel" (American university Journal of law and Policy, 1997, LEXIS-NEXIS)

7 Gold Meir, quote found at

8 Aronson, p.23

9 ibid., p.63. Emphasis added

10 ibid., p.267

11 Helena Cobban, The Palestinian Liberation Organization: People, Power and Politics (Cambridge: Cambridge University Press, 1992) p.267-268

12 Aryeh Shalev, The Intifada: Causes and Effects (Jerusalem: Jerusalem Post Press, 1991) p.14

13 Gellner, p.97

14 I employ Fearon’s suggestion that ethnicity is defined by the criterion of descent.

15 Entropy-resistance is commonly understood as traits that are difficult to change and which therefore pose barriers to assimilation

16 Samih K. Farsoun and Jean M. Landis, "The Sociology of an Uprising: The Roots of the Intifada" in Intifada: Palestine at the Crossroads ed. Jamal R. Nassar and Roger Heacock (New York: Greenwood Press, 1990) p.24

17 Shalev, p.17

18 Shalev, p.21

19 ibid., p.24

20 Don Peretz, Intifada: The Palestinian Uprising (Boulder: westview Press, 1990) p.4

21 Fearon, p.386-387

22 Samir Abdallah Saleh, "The Effects of Israeli Occupation on the Economy of the West Bank and Gaza Strip" in Intifada: Palestine at the Crossroads ed. Jamal R. Nassar and Roger Heacock (New York: Greenwood Press, 1990) p.46

23 Aronson, p.24

24 ibid., p.25

25 ibid., p.28

26 Lisa Taraki, "The Development of Political Consciousness Among Palestinians in the Occupied Territories, 1967-1987" in Intifada: Palestine at the Crossroads ed. Jamal R. Nassar and Roger Heacock (New York: Greenwood Press, 1990) p.57

27 Co-chairman of the Settlement Department, Jewish Agency

28 Aronson, p.97

29 Fearon, p.397

30 Shalev, p.212

31 Peretz, p.126

32 Shalev, p.73

33 Peretz, p.152

34 Aronson, p.332

35 Shalev, p.69

36 Shalev, p.76

37 The Wye River Memorandum, October 23, 1998, found online at /mfa/go.asp?MFAH07o10

38 John K. Cooley "In the Mideast Peace Process, Another Deadline Is About To Be Missed," found online at 20000211.html

39 New York Times, 10/26/00 "The great Unraveling: End of Oslo Era, with a Bang"

40 Washington Times, "Why Camp David II Failed," August 7, 2000

41 Palestinians await report on corruption, 7/22/97, found online at WORLD/9707/22/palestinian.corrupt/

42 Moshe Zak, "Deception in a Continued Dialogue," (Jerusalem Post, July 28, 2000), p. 8a

43 Joel Greenberg, "Impasse at Camp David," (New York Times, July 26, 2000), p. A12

44 Lee Hockstader, "Mixed Homecomings in Mideast," (Washington Post, July 27, 2000), p. A1

45 "Last Best Chance," (Newsday July 9, 2000), p. B1

46 For instance, final status negotiations were supposed to have been started by 1999.

47 Menahem Kahana, "Sharon calls murder of two Israelis boys in West Bank ‘new escalation’," (Agence France Presse, May 9, 2001) LEXIS NEXIS

48 Michael Jansen, "Tensions rise as war planes overfly Gaza" (Irish Times, April 30, 2001) LEXIS NEXIS