The second day of the U.N.’s Arms Trade Treaty (ATT) Conference, July 3, opened much as the first day had closed: with a very delayed start. The issue, still, was the Palestinian demand—instigated by Egypt—to be included as full participants in the conference, which continued to meet staunch resistance from the U.S.

One U.S. delegate was reported to have said that the U.S. would never countenance any Palestinian effort to do an “end run”—meaning that the Palestinians have no interest in the conference and simply want to use it to work their way by degrees into full membership of the U.N. General Assembly.

The delegate acknowledged that if it came to a vote, the U.S. would likely lose, at which point it would walk out of the conference and break consensus to prevent the adoption of a treaty. As the U.S. has acknowledged in the past, that is the “nuclear option”—but as the deadlock dragged on, it seemed the U.S. might be compelled to use it.

Just before 6 p.m., the deadlock over the question of whether, or how, the Palestinians would participate in the U.N.’s ATT conference was settled.

With much shuffling of place cards, all the national delegations moved over two places, and—accompanied by huge knot of delegates and much picture taking—the delegations from the Holy See and Palestine moved from the back of the room (where, as observers of different types, they normally sit behind the alphabetically arranged national member-state dlegations) to the front, ahead of the A-nations like Afghanistan and Albania.

Ambassador Roberto Garcia Moritán, the conference president, then launched into business, making no allusion to what had happened, but giving a notably effusive and personal thank you to the Egyptian delegate and announcing the composition of the normally irrelevant Credentials Committee, which officially admits the various delegations and significantly included Egypt, Russia, and the U.S.

When Moritán recognized the Holy See, the outlines of the deal became clear: Both the Holy See and the Palestinians had gotten better seats, but neither of them was going to be recognized as full conference participants. The difference was that the Palestinians had evidently agreed to keep quiet and treat this as a victory, whereas the Holy See had not.

Its delegate made an angry speech, arguing that it had expected to participate as a full member in the conference, that it was not being allowed to do so, that this was an “egregious” failure that had seriously damaged its intention to become a state party to the ATT, and that it demanded to be a full participant in future conferences, where its participation as a mere observer at the ATT conference would not be a precedent.

The U.S. delegation accepted this arrangement, presumably, to avoid quitting the ATT conference. The U.S. was clearly concerned that if it had walked out, the conference would have continued and resulted in a treaty that did not incorporate U.S. concerns. Moreover, the U.S. also concerned that should the treaty process be scuttled, the nations supporting it could have done what they have done in the past: broken out of the U.N. structure entirely and crafted a treaty on their own. By staying in the room, the U.S. retains maximum leverage from its ability to veto the agreement at the end.

Unfortunately, the U.S. made a significant sacrifice in order to “stay in the room.” Placing the Holy See and the Palestinians on the same level at the conference is a coup for the Palestinians.  Currently the UN recognizes the Holy See is a “non-member state” observer, while the Palestinians are an observer “entity.” The critical difference is that the Holy See is a recognized sovereign state even though it is not a UN member state, while the Palestinians are not. The Palestinians have hinted that, should their bid for full UN member state status fail, they would seek non-member state observer status. While this change would be mostly symbolic in terms of the privileges the Palestinians enjoy in Turtle Bay, it would undeniably represent General Assembly recognition of their claims of statehood and make it far easier for the Palestinians to gain membership in the UN specialized agencies.

By agreeing to treat the Holy See and the Palestinians as equivalents at the ATT conference, the U.S. has given tacit support to a future Palestinian bid for non-member state observer status. It is unlikely that maintaining a U.S. presence in the room is worth giving the Palestinians this benefit, especially since the final treaty is almost certainly to be ineffective at best, counterproductive at worst.