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This case study considers how a minority stakeholder group of Israeli settlers blocked Prime Minister Yitzhak Rabin’s peace initiatives. Drawing on interviews with those who served in Rabin’s administration and with the settlers’ leaders, this article contends that the prime minister’s use of adversarial public rhetoric against the settlers denied the legitimacy of an influential stakeholder group, triggering a backlash of intense militancy from the right-wing minority. This, coupled with Rabin’s failure to deal with opposing coalitions, diminished his capacity to implement “land for peace” initiatives. The case illustrates a leader’s failure to maintain adequate forms of engagement with key stakeholders. The accompanying analysis demonstrates that stakeholder theories, though incomplete in their existing forms, can still illuminate the high risk and ineffectiveness of denying the legitimacy of stakeholder groups and the strategic importance of maintaining channels of flexible negotiation and cooperation with seemingly marginal groups when high-stakes rivalries are likely to ensue.