Just two months after Prime Minister Benjamin Netanyahu nominally traded West Bank annexation for normalization with the United Arab Emirates, Israel is getting the closest thing to explicit American recognition of sovereignty over the occupied territories.

Earlier today, U.S. Ambassador to Israel David Friedman joined Netanyahu at a ceremony in the West Bank settlement of Ariel to sign an agreement on scientific research collaboration. The extension of bilateral cooperation with a major strategic partner like Israel is fairly routine. What’s significant about the deal is that it removes “geographic restrictions” from the functioning of three joint quasi-governmental U.S.-Israel entities: the Binational Industrial Research and Development Foundation (BIRD), the Binational Science Foundation (BSF), and the Binational Agricultural Research and Development Foundation (BARD).

BSF, BIRD, and BARD were established in 1972, 1977, and 1978 respectively, set up by agreement between the governments of Israel and the United States to support cooperation on scientific and technical projects between the two countries. The foundations provide research grants, (until now) with one major caveat: funding could not be used by institutions in the territories Israel occupied during the Six-Day War, meaning the West Bank, Gaza Strip, East Jerusalem, and Golan Heights.

The U.S. previously enforced a number of other restrictions to create a distinction between Israel and the occupied territories. A State Department legal opinion issued under the Carter administration designated Jewish settlements as contravening international law, a position every subsequent president until Donald Trump sustained. The provision of American loan guarantees for resettling Soviet Jewish refugees in Israel was predicated on those funds being used within the 1949 armistice lines, famously leading to a standoff between Prime Minister Yitzhak Shamir and the first Bush administration. With all of these standards in place, holding a signing ceremony for a diplomatic agreement with Israel in a settlement in the occupied territories would have been completely unthinkable. Yet this is precisely what happened today.

Differentiating between Israel and these areas allowed the United States to maintain a consistent position on territorial integrity, formally leaving the territories’ status up to future negotiations with the Palestinians, all while permitting robust ties between the U.S. and Israel and avoiding thornier issues like the democratic and demographic implications of the occupation. Many Israeli leaders would likely have preferred fewer restrictions, but Israel nevertheless accepted these terms of cooperation with the United States, just as it has tolerated similar rules enforced by the European Union.

The Trump administration set forth a new stance late last year, which was that the settlements are in fact consistent with international law. Trump also recognized Jerusalem as Israel’s capital without demarcating what part of Jerusalem he meant, while the U.S. gave its blessing to Israel’s heretofore unsanctioned control over the Golan Heights.

According to a statement from the U.S. Embassy in Jerusalem, the lifting of geographic restrictions under the new scientific agreement follows from many of these positions, as well as a further rejection of United Nations Security Council resolution 2334, which reaffirmed the settlements’ illegality.

This latest agreement is not quite the green light Israel’s most hardline annexationists might have hoped for, but it comes fairly close by formally according settlements the same status as Tel Aviv, Haifa, or Beersheva. It also reinforces what several senior Israeli and American officials have repeatedly affirmed in recent months, that annexation is merely suspended and remains on the table. 

The Emirati Foreign Ministry issued a press release today invoking its support for a two-state solution based on the June 1967 lines. The statement is not directly tied to the agreement inked in Ariel, but it does clash directly with the Trump plan, which envisions the annexation of all settlements. Nevertheless, the statement is just that, a statement, and we should not expect more proactive steps from the Arab states now normalizing relations with Israel. If anything, the muted response from Arab governments gives us a sense of how they will react (or not react) to future American and Israeli actions that, in substance, violate the spirit of understandings reached on annexation. Indeed, Israel’s ties with its closest neighbors, Egypt and Jordan, have weathered crises in the Palestinian conflict, and the same is likely to be true of countries further afield.

Perhaps most significantly, arrangements like the one struck today bring the two opposing poles of the Israel-Palestine debate into awkward agreement. Both proponents of annexation and supporters of a democratic one-state Palestine understand Israel to be the only sovereign power from the Jordan River to the Mediterranean Sea. The Trump administration’s de facto recognition of annexation effectively means that the official United States government view of Israel is of an undemocratic state with more rights for some of its subjects than for others, rather than holding some territory in a situation of temporary occupation pending the outcome of peace talks or a future withdrawal. The only real question is whether one sees this reality as problematic, and in the case of the incumbent administration, the answer is almost certainly “no.”

My colleague Michael Koplow recently wrote that we may now be witnessing the Trump administration’s closing sale on political freebies to the Israeli right, given the distinct possibility that Israel may face a Democratic White House come January. Today’s agreement certainly tracks with that assessment, and may offer a taste of what is yet to come should Trump lose, leading his administration to take an all-bets-off approach in the transition period and making as much of a mess on Israeli-Palestinian policy as possible before Joe Biden takes office. It also sets the trajectory for a second Trump term, when the administration will have more time to leverage in reshaping the American approach to the Israeli-Palestinian conflict. In the meantime, the new U.S. position may encourage Israel to be more aggressive in opposing differentiation policies maintained by other governments, including the EU.

If Joe Biden does win next Tuesday, there is also no guarantee that this new policy will be undone. The Israeli-Palestinian conflict is unlikely to be the first priority for a newly elected president facing domestic public health and economic emergencies, along with the distinct possibility of political violence and a crisis of legitimacy. And even when a Biden administration eventually comes around to the Israel-Palestine file, there are other policies with a more immediate bearing on the daily lives of Palestinians and Israelis, such as the restoration of U.S. assistance to the West Bank and Gaza, that will need addressing first. That doesn’t make the long-term ramifications of today’s scientific research agreement any less consequential.