From Arab Political Partnership Within Israel to the Prospect of Palestinian–Israeli Federalism: Can We Move from Managing Conflict to Building a System of Coexistence?

By Ambassador Dr. Mohamed Hegazy

The question I raise goes far beyond the formation of Israel’s next government,  It opens the door to considering a new political and constitutional framework that could redefine the relationship between Palestinians and Israelis, not merely on the basis of ending occupation or dividing territory, but through a gradual transition from a struggle over sovereignty and identity towards the establishment of an institutional framework that guarantees the national and political rights of both sides.

One development deserves particular attention: following the Israeli elections of 27 October 2026, Arab parties within Israel have become a political force that cannot be ignored in calculations concerning the formation of the next government. They secured 19 seats in the Knesset, with 11 seats for the Joint List and eight for the United Arab List (Ra’am), at a time when neither political bloc succeeded in securing the required majority of 61 seats to form a government.

However, two distinct issues must be differentiated. The first is the recognition of Arab parties as legitimate political partners in the governance of Israel. The second is recognition of the Palestinians as a people possessing distinct national, historical and geographical rights, including the right to self-determination.

The first could begin through the current coalition negotiations, while the second requires a much deeper constitutional and strategic transformation.

First: Does Arab Political Participation Signal a Transformation in the Concept of Political Citizenship Within Israel?

Politically, the election results have created a new equation. Arab parties are no longer merely parliamentary forces representing a population minority; they have acquired the capacity to influence the formation of the executive government, whether through direct participation in a coalition or by supporting a government from outside it.

The United Arab List, led by Mansour Abbas, previously participated in the government of Naftali Bennett and Yair Lapid in 2021, establishing an important political precedent. However, the current circumstances present greater challenges, given the continuing disagreements over Gaza, the West Bank, settlements and the future of the Palestinian cause.

The significance of the present moment lies in confronting Israeli political parties with a fundamental question: Can Arab citizenship be accepted at the ballot box, yet rejected when it comes to forming a government?

Overcoming this contradiction, if it occurs, could gradually open the way towards political partnership and equality in rights and obligations. Nevertheless, it would not automatically mean that Israeli society accepts the rights of Palestinians in the West Bank and Gaza Strip or their right to establish an independent political entity.

This is where the importance of the vision I am proposing begins.

Second: From the Two-State Model to a Model of Federalism or a Shared Political Union

The proposal that could be developed here is to explore a third formula that neither abandons the two-state solution nor imposes the model of a single state. Instead, it would be based on the existence of two peoples, two identities and two political entities enjoying internal self-government, alongside a common framework for managing their interconnected interests.

This vision could be built around three levels.

The First Level: An Independent Palestinian Entity

The West Bank and Gaza Strip would constitute one unified political, geographical and constitutional entity, with its own government, parliament, independent judicial and security institutions, and general elections. Palestinians in the West Bank and Gaza would vote within a single national political framework, overcoming the present geographical and political fragmentation.

Palestinians would enjoy the right to manage their internal affairs and preserve their national identity, culture, language and institutions. East Jerusalem would serve as the capital of the Palestinian state in accordance with an agreed settlement.

The Second Level: A Joint Federal or Confederative Union

Consideration could be given to establishing a joint federal council comprising elected representatives of the Palestinian entity and Israel. It would oversee issues requiring mutual cooperation, including water, energy, the environment, transportation, trade, infrastructure, economic security and border coordination.

Specific joint institutions would be established with clearly defined responsibilities, while each side would retain its independence in domestic affairs. Safeguards would be required to prevent the demographic majority of either side from dominating the rights of the other.

Here, the experience of the Benelux countries—Belgium, the Netherlands and Luxembourg—could offer useful lessons, not as an identical federal model, but as an example of institutional and economic cooperation among countries that preserve their sovereignty and national identities while managing shared interests through coordination mechanisms and binding agreements.

The Third Level: A Shared Political and Economic Space

Over time, this framework could evolve into a regional economic and political space, allowing greater freedom of movement for trade, investment and individuals, and establishing a network of shared interests, while safeguarding the political and legal rights of each people within its national entity.

In this sense, federalism would not serve as a mechanism for absorbing Palestinian identity or transforming Palestinians into a minority within a unified Israeli state. Rather, it would provide a framework for cooperation between two equal entities, each retaining its national and political character.

Third: Can This Vision Become a Gradual Pathway Towards Coexistence?

I believe this pathway could be considered a long-term transitional process rather than a constitutional project to be introduced all at once.

The first phase would begin with recognition of the principles of political partnership and civil equality within Israel, opening the way for Arab parties to participate in the governance of the government and parliament, while committing to equality and non-discrimination.

The second phase would require a political settlement recognizing Palestinian national rights, leading to the end of occupation and the unification of the West Bank and Gaza Strip within a single Palestinian political framework, with guarantees of sovereignty, independence and the capacity to manage national institutions.

The third phase would involve establishing joint Palestinian–Israeli cooperation institutions, initially focusing on the economy, water, energy and transportation, before gradually developing more comprehensive mechanisms for political, security and economic coordination.

The fourth phase, following years of confidence-building, coexistence and the accumulation of shared interests, could allow both sides to determine the future of their relationship through their own free and equal will. Would they continue as two cooperating states, move towards a more integrated confederation, or choose a broader federal arrangement?

Any future referendum, however, must not become a mechanism for abolishing Palestinian national rights or subjecting Palestinian self-determination to an Israeli majority. It must instead be based on the independent and free consent of each people, in accordance with mutually agreed constitutional rules.

Fourth: What Are the Strategic Obstacles to This Vision?

Despite the theoretical appeal of this proposal, there are fundamental obstacles that must not be underestimated.

First, the Arab parties that secured 19 seats represent Arab citizens within Israel, not Palestinians in the West Bank and Gaza Strip. Their transition from participation in the Israeli government to representing a broader Palestinian political project cannot be taken for granted.

Second, there are divisions within the Israeli opposition itself regarding cooperation with Arab parties. Some leaders have demonstrated openness to such cooperation, while Avigdor Lieberman has rejected formulas based on Arab participation. Gadi Eisenkot has also not definitively accepted all Arab parties as potential government partners.

Third, the continuation of occupation and settlement expansion, together with the unresolved questions of Jerusalem, borders, refugees, water and security, makes discussion of a political union premature unless it is preceded by a just settlement of the Palestinian question.

Fourth, there is a constitutional challenge concerning the nature and identity of the Israeli state, in contrast with the Palestinians’ insistence on their right to self-determination and recognition of their independent national identity. These are not procedural disagreements that can be overcome simply by forming a governing coalition.

There is also the fundamental question of security and international guarantees. A stable union cannot be built if one side retains absolute military and security authority over the other, or if borders, resources and freedom of movement remain subject to unilateral decisions.

Fifth: What Role Can Egypt and the International Community Play in This Process?

This is where Egypt’s importance becomes particularly evident, not merely as a mediator in Palestinian–Israeli negotiations, but as a regional actor with a direct interest in rebuilding the political framework surrounding the Palestinian question.

Within its international and regional diplomatic engagements, Egypt could propose examining models of transition from conflict to institutional cooperation, drawing lessons from European experiences, particularly Benelux and the European Union, without mechanically transplanting them into the realities of the Middle East.

A dialogue process could also be established, bringing together representatives of Palestinian and Israeli political forces, including Arab parties and Israeli groups committed to a negotiated settlement, alongside the European Union, the United States and the United Nations, to examine the political, constitutional and economic guarantees required.

The fundamental principle must remain recognition of the inalienable rights of the Palestinian people, foremost among them self-determination and independence. The concept of joint cooperation must never become an alternative to ending occupation.

Sixth: The Deeper Strategic Question: Can Contested Geography Become a Geography of Shared Interests?

I believe the intellectual value of the proposed vision lies in moving beyond the traditional question: How can Palestinians and Israelis divide the land? Towards a broader question: How can two peoples living within an interconnected geographical space preserve their respective identities and independence while simultaneously building a common system for managing their interests and future?

This opens the door to considering a model that does not seek to eliminate either side or subordinate one to the other, but is instead founded on mutual recognition and equality in rights and obligations.

This vision could provisionally be called the Palestinian–Israeli Cooperative Union Model. In its initial form, it would be closer to a confederation between two independent states rather than a federation in which both sovereignties dissolve into a single state.

Perhaps the most important point to emphasize is that Arab participation in an Israeli government, if it materializes, would not in itself represent the beginning of this transformation. However, it could provide an opportunity to reopen the debate on the legitimacy of Arab political partnership and the possibility of gradually extending it towards mutual recognition of Palestinian national rights.

Conclusion

We are confronted with a question worthy of serious consideration by international think tanks and diplomatic circles: Could the end of the Palestinian–Israeli conflict become the beginning of a new regional order, in which two independent states coexist, linked by common institutions and shared economic and security interests, rather than remaining trapped in an endless struggle over sovereignty and geography?

Moving from two neighbouring states to two cooperating states, and eventually towards a broader voluntary union, could represent a pathway worthy of serious examination, provided that it does not come at the expense of Palestine’s independence, identity or national rights.

Coexistence does not begin by eliminating differences, but by recognizing and regulating them constitutionally and politically. A genuine union cannot be achieved by imposing geographical or demographic unity, but only through the free and equal will of two peoples choosing their own future.

Perhaps the most important question is whether the Middle East can draw inspiration from the European experience of integration, moving beyond the logic of borders and historical conflicts towards a system of independent, cooperating states, with Palestine and Israel becoming part of a new regional framework, without Palestinians losing their state or national identity.

This is a strategic question that deserves to become the subject of serious international dialogue, free from imposed solutions and political slogans, and guided by a vision extending across generations.

• Ambassador Dr. Mohamed Hegazy .. Former Assistant Minister of Foreign Affairs

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