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R. David Harden is the former assistant administrator at USAID’s bureau for democracy, conflict and humanitarian assistance, former USAID mission director to the West Bank and Gaza, and former senior adviser to president Barack Obama’s special envoy for Middle East peace.

The Israelis, Palestinians and Americans face several crucial questions as the Israel Defence Forces (IDF) launch their ground operations in southern Gaza, with the heaviest fighting of the war now taking place in Khan Younis. The grim reality is that the Palestinian people face an unmitigated humanitarian catastrophe with 2.3 million people crammed into a few small towns in southern Gaza.

Israeli Prime Minister Benjamin Netanyahu set clear objectives for the war in Gaza: destroy Hamas, secure the release of the hostages and bring the perpetrators of the Oct. 7 terror attacks to justice.

Hamas continues to retain most of its organizational capabilities. Israeli officials estimate that Hamas’s military wing remains largely intact. Its senior political leaders are able to communicate to international audiences and conduct complex negotiations with Israeli and U.S. intelligence services, albeit through the Qataris. In Gaza, Hamas has secured the release of 240 Palestinian prisoners and dramatically improved its political standing in the West Bank. Surprisingly, Hamas continues to conduct operations, including recent rocket attacks in central Israel just this week. Israel has degraded Hamas infrastructure but has not defeated its core ideology.

Mr. Netanyahu is making substantial progress toward their release, but there are an estimated 122 captives still in Gaza. Negotiations have broken down for a further hostage deal. Finally, none of the senior leaders of Hamas have been brought to justice. After two months of brutal fighting, Mr. Netanyahu appears to have fallen short of his war aims and faces the risk of a strategic defeat in Gaza.

The Palestinians need to assess their situation as well. Northern Gaza is destroyed, 2.3 million Gazans continue to suffer through a humanitarian disaster, the economy is a wreck, and Hamas has eclipsed the Palestinian Authority, which is increasingly irrelevant in the West Bank. As the war moves south into Khan Younis, the world will witness mass suffering in real time.

The images are haunting. The United Nations now estimates that 80 per cent of the Gazan population is displaced and living without adequate power, water, sanitation, health care, education, jobs or hope. Despite, or perhaps because of, these horrors, the Palestinian aspiration for statehood now has broad global support. Still, the Palestinians have not taken the necessary steps to shape a future with a new generation of leaders who can build a modern state, grow an economy and disconnect its culture from the nihilistic ambitions of Hamas.

The Biden administration deserves credit for containing the conflict. Early in this war, a regional spillover seemed inevitable. There have been, of course, serious conflagrations with Hezbollah in the north, Iranian proxies in Syria and Iraq, and emboldened Houthis out of Yemen. Mr. Biden’s intense diplomatic efforts and his decision to deploy two aircraft carrier groups to the region seems to have mitigated the threat of a wider war.

Mr. Biden, nevertheless, bears some responsibility for excessive Israeli actions and the massive displacement of the Palestinian people across the entire Gaza Strip. His administration has been slow to prioritize the humanitarian response and has only marginally leveraged its influence over Mr. Netanyahu. Mr. Biden has signalled that further operations in the south must be substantially different, conducted with much greater care to reduce civilian harm. Mr. Netanyahu, however, has implicitly rejected this guidance, thereby driving a further wedge between his government and the Biden administration.

Finally, Mr. Biden is the strongest voice for an exit that includes a pathway to Palestinian statehood. There are challenges of course. Neither the Israelis nor the Palestinians are championing a two-state solution. The Palestinian Authority seems unable to exercise control over Gaza. Israel will demand a security envelope over the entire Gaza Strip, legitimately, after Hamas built an enormous underground network to house its command-and-control centres. While a two-state solution may be the best theoretical outcome, it remains politically remote. Finally, given that the Americans will hold a presidential election in less than a year, Mr. Netanyahu may run out the clock with the hope that Mr. Biden loses to Donald Trump in 2024.

The start of southern Gaza ground operations requires Israelis and Palestinians to envision a realistic end state to this war. The Biden administration can help by crafting a careful diplomatic de-escalation strategy that would allow the parties to step down from their maximalist positions. Absent this exit ramp, Israeli and Palestinian grievances will shape the Middle East for generations. That future will be Israel’s strategic defeat.

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