From The Australian May 22, 2009, by Abraham Rabinovich, Jerusalem:
US President Barack Obama is expected to outline a far-reaching proposal for a Palestinian-Israeli peace agreement in Cairo next month that will flesh out the Saudi-initiated Arab Peace Plan proposed in 2002 in a way that makes it more palatable to Jerusalem but also requires the Jewish state to make major concessions.
Under the Obama proposal, Palestinian refugees would not be permitted to return to Israel, but they would be permitted to return to the Palestinian state that would arise on the West Bank and Gaza Strip. Those who continue to reside in Arab countries where they have been largely confined to refugee camps for 60 years would be given citizenship of those countries, ending their refugee status.
On the critical question of Jerusalem, Mr Obama will support the Arab demand that Palestinians be permitted to establish their capital in East Jerusalem, which was captured by Israel in the Six Day War in 1967. However, the walled Old City at the heart of Jerusalem, where the principal holy sites of Christianity, Judaism and Islam are located, would become an international enclave and fly the UN flag.
The Palestinian state would be demilitarised, maintaining a significant police force to keep order but not an army that might pose a security threat to Israel.
The pre-Six Day War borders between Israel and the Palestinian territories would be modified, but only by mutually agreed territorial exchanges, not unilateral annexation.
The proposal was reported by the prestigious Arab-language newspaper Al Quds Al Arabi, which is published in London. The paper said the plan would be unveiled by Mr Obama when he gives his much-touted address to the Muslim world in Cairo next month.
According to the newspaper, Mr Obama's plan was drawn up in consultation with Jordan's King Abdullah, who was the first Arab leader to be invited by the President to Washington. The two had first met in Amman last year during Mr Obama's tour of the Middle East as part of his presidential campaign.
After returning from Washington three weeks ago, the king spoke to other Arab leaders in the region, including Palestinian President Mahmoud Abbas, in a rapid shuttle.
He then gave an interview to The Times of London in which he said Israel was in a position to win recognition from all 57 Muslim countries if it came to terms with the Palestinians.
He said that a peace deal to be brokered by the Americans would be the most comprehensive since the Madrid peace conference in 1991. To sweeten the deal, Israel would be offered immediate benefits such as entry visas to all Arab countries and the right of El Al, Israel's national carrier, to overfly Arab territory.
Acceptance of Israel by all Arab states would, the thinking goes, give Israel the confidence to make concessions to the Palestinians, something more difficult to do when it faces a sea of hostile faces around it.
Should Israel choose, however, to procrastinate instead of accepting a two-state solution, it would be likely to find itself at war within 12 to 18 months, the king said.
Israeli officials said yesterday that the details of the Obama plan outlined in Al Quds Al Arabi had not been given to Prime Minister Benjamin Netanyahu when he met Mr Obama on Monday.
But they did not deny the report's plausibility. It is a measure of the new relationship between Washington and Jerusalem since Mr Obama assumed office that such a far-reaching plan would be run by an Arab leader before it was shared with an Israeli leader.
No less noteworthy is Mr Obama's decision to visit Cairo on his first presidential trip to the Middle East, without visiting adjacent Israel.
Mr Obama has put more distance between himself and Israel than previous US leaders. But his moves are perceived in Israel as understandable - many would even say praiseworthy - attempts to restore US credibility in the Arab world.
A US administration acceptable to the Arab world has a far greater chance of using its good offices to bring about peace in the region.
Mr Obama's speech in Cairo on June 4 will be a major address to the entire Muslim world, and will not focus exclusively on the Israeli-Palestinian issue. It will aim to rebuild US relations with the Muslim world that were knocked askew following the attacks on September 11, 2001.