• The U.S.-led twenty-point Gaza peace plan transitions to phase two with the formation of a Board of Peace and an International Stabilization Force, following the return of the last Israeli hostage in January 2026.
  • Israel reopened the Rafah corridor on February 2, but tensions persist over Hamas demilitarization demands, with Netanyahu insisting on disarmament and Hamas rejecting it.
  • Global pledges of $5 billion in aid for Gaza reconstruction signal market confidence, but the plan risks creating economic divisions and marginalizing non-reconstructed zones.

Efforts to stabilize the Middle East have taken a concrete step forward with the operational launch of the Board of Peace, chaired by former U.S. President Donald Trump and including figures like Israeli Prime Minister Benjamin Netanyahu, U.S. Senator Marco Rubio, and former British Prime Minister Tony Blair. The board, signed into action on January 22, 2026, held its inaugural meeting on February 19, announcing a $5 billion aid pledge for Gaza reconstruction. This development follows the successful first phase of the peace plan, which saw Hamas return the last Israeli hostage on January 23, enabling the transition to phase two.

According to people familiar with the matter, the board's formation is backed by UN Security Council Resolution 2803, passed in November 2025, which endorses the plan but conditions Palestinian statehood on demilitarization and governance milestones. The resolution separates Gaza from West Bank reforms under a technocratic National Committee for the Administration of Gaza (NCAG), led by Ali Sha’ath and vetted by Israel and the U.S. This structure aims to sideline Hamas remnants in northern Gaza and the Palestinian Authority pending reforms, potentially creating what experts describe as "two Gazas": a supervised, disarmed zone and a marginalized one.

Without a deal on demilitarization, the peace process could stall, risking renewed instability. Netanyahu has publicly demanded Hamas disarmament, while Hamas officials have rejected such conditions, stating they undermine Palestinian sovereignty. The reopening of the Rafah corridor on February 2 has eased humanitarian access, but sources indicate that ongoing negotiations over security arrangements remain contentious. An International Stabilization Force (ISF), led by U.S. Major General Jasper Jeffers III and with contributions from countries like Azerbaijan and Indonesia, is set to deploy to oversee the transition, though its effectiveness hinges on Hamas cooperation.

On the economic front, the $5 billion aid pledge, announced at the board's meeting, signals growing investor confidence in regional stabilization. Reconstruction efforts prioritize "New Rafah" in Israeli-controlled areas, potentially funded by Gulf states and overseen by the Gaza Executive Board (GEB). However, this approach risks uneven development, with non-reconstructed zones facing marginalization. In parallel, Israel's security cabinet expanded West Bank authority on February 8, a move seen as de facto annexation that strains Palestinian economic ties and has prompted international economic pressure on Israel.

Stakeholders are divided, with Palestinians risking depoliticization and Israelis gaining security buffers. Arab and European leaders have called for greater intervention to ensure Palestinian rights are upheld, echoing concerns from absent allies like Canada and France. The board's mandate expires on December 31, 2027, with a planned transition to the Palestinian Authority, but experts warn that without broader Palestinian input, the plan could lead to permanent Gaza isolation and doom statehood prospects. As one analyst noted, "The short-term focus is on aid rollout by 2027, but long-term stability requires addressing these deep-seated divisions."

Correction: An earlier version misstated the date of the board's inaugural meeting; it occurred on February 19, 2026.