Palestinian refugees, Jerusalem, settlements, water and borders are all interrelated core conflict issues that have been postponed till final status negotiations between Israelis and Palestinians. Despite the current regression in the peace process, the two sides will–sooner or later–come to an agreement that will embrace the two-state solution, with Jerusalem as the shared capital of those two states. In principle, the borders of the Palestinian state will be the pre-1967 borders with minor mutual and reciprocal border changes to allow for for geographic integrity of the West Bank and Gaza, as well as consolidating some settlements to Israel. Consequently, a final agreement between Israelis and Palestinians will address the fate of the Israeli settlements in the state of Palestine.
It is assumed that the two sides will negotiate in good faith to reach an agreement for the withdrawal of Israeli settlers from Palestine according to an agreed-upon timetable. Israel may decide to dismantle and demolish the settlements and their infrastructure before its withdrawal, but this would be an unwise and costly decision.
A more realistic approach would be to transfer the settlements and their infrastructure to the Palestinian National Authority (PNA) in a phased and organized manner.
Can Israel deal with the demographic pressure resulting from settlement evacuation? During the early nineties, Israel was receiving immigrants from the former Soviet Union in the scope of more than 300,000 per year. The current Israeli budget for settlements in the Palestinian areas comes close to $4 billion, which will be enough to absorb the settlers within Israel’s borders. In addition, the current security expenditures for the settlers will no longer be necessary.
What to do with the evacuated settlements? At present, two separate and distinctly varying infrastructures exist in the Palestinian areas: one for the settlers and the other for Palestinians. Nevertheless, Palestinians should benefit from the existing settlement infrastructure and try to integrate it within the Palestinian physical planning process. This is a challenging task since the current planning process has worked to segregate Palestinian communities from settlements. The PNA will utilize the settlements to alleviate some of the housing problems for the current residents and to absorb the large number of Palestinian returnees who will come back with the creation of the state of Palestine. The Palestinian public should be prepared psychologically by the leadership to accept the idea of living in the "occupier’s home," which may be a problem for a large number of Palestinians.
The functions of each settlement, including its type (agricultural, industrial, urban or other), shall be preserved without significant alterations for the benefit of the emerging Palestinian state and Palestinian society. Issues such as urban form, fabric, settlement pattern, housing and architectural elements will all be considered in order to harmonize those settlements with Palestinian cities and villages. Additional architectural elements and new urban structures will be added to the settlements, as well as to the Palestinian built-up areas, in order to reduce the existing disparities.
The physical infrastructure of Israeli settlements, such as the roads and transportation networks, sewage and drainage systems that are currently connected by the Israeli physical infrastructure, will have to be integrated and harmonized and linked to the Palestinian infrastructure system.
Within the final status negotiations, stipulations will be made for conducting a comprehensive inventory of houses, infrastructure, industrial and agricultural facilities, as well as public utilities in the settlements. A third party may need to assist in this process. In assessing these items, consideration needs to be given to those who paid these costs, since a good portion of the budget of Israel’s so-called "civil administration" has been diverted to settlements from Palestinian taxpayers.
Palestinians may not be willing to accept certain industrial plants in the settlements, in which case, Israel will have to move them at its own expense. Once an agreement is reached on the assessment of all facilities, their official transfer to Palestinian authority will preferably take place through a third party. The handover will require the creation of a Palestinian ministry for absorption to receive the settlements and their infrastructure, as well as prepare a plan for their resettlement and operation.
One of the major tasks of this new ministry will be to allocate housing and work with the original landowners whose land was confiscated for the construction of the settlements. In principle, landowners should be given priority (under well-defined guidelines) for reacquiring their confiscated lands, as well as living in the evacuated houses, or compensated fully if they choose not to. For the rest of the settlements, well-defined criteria for occupying the evacuated settlements will have to be developed.