Is Netanyahu's Israel drifting toward disaster?

Nathan Thrall: I assume you're basically asking about whether we're heading toward a one-state scenario [of Israel absorbing the West Bank permanently], in which we don't have equal rights and Israel is ostracized and so forth.

Yes, those trends are alarming. Outsiders look at it and they say, "Wow, this is really crazy; how can they be willfully driving themselves toward this kind of future?" But the thing is that it's not so irrational for the Israeli voters.

That threat of a one-state scenario, even if it enfranchised everyone, and even if you didn't have conflict, armed or otherwise, among the different ethnic groups, would still dramatically lower Israel's GDP per capita. But the numbers who desire one state, in both societies, is well below 50 percent. You don't really have a looming threat of a mass movement for one state in Palestinian society.

And the attitude of an Israeli voter could easily be, "Sure, I don't want a one state, but I don't see that it's imminent, and if it becomes a serious threat, then we can unilaterally withdraw to, let's say, the separation barrier, which would mean de facto annexation of 9 percent of the West Bank. And then we'll have a border dispute like so many other countries have, and no one can demand we give the vote to the people on the other side of the wall. And we have a perfectly plausible backup plan in the worst-case scenario."

So all of these doom-and-gloom predictions that it's gonna be apartheid and a pariah state or what have you are actually wrong.

Nathan Thrall: Yes, that's the best counter-argument to what I just said, and it's been made. There's a former Israeli ambassador and director general of the Foreign Ministry, Alon Liel, who is very much on the left. When I presented him with this counter-argument, he said, "I'm not worried about the imminence of a mass movement on the Palestinian side; I'm worried about our own society and how the people in favor of two states are steadily losing ground, year by year."

Definitely everything you said is accurate. The settler lobby is extremely effective. It's taken hold of the levers of power within the state bureaucracy and within the Likud Party. It's almost impossible to become a member of the Likud without appeasing them in some way.

When I've looked at internal polls, the support in Israel for annexation is very low. But annexation is really a formality — why do you even need it if you're effectively controlling everything anyway? Why antagonize the world, why are we making a big fuss over whether Israel takes this formal step anyway?

If you look at the numbers of those who are essentially in favor of maintaining the status quo, though, those numbers are huge. But again, it's a totally rational position for Israelis. No one can deny that moving toward two states does entail risk.

They know what the costs are of the status quo. They're experiencing them now. And they're pretty minor.

This is something the Palestinians had been saying for a long time: it's actually irrational for the Israelis to change anything right now, because they're more or less sitting pretty, and the costs of the occupation are very low. Since 1993, It's been financed by other people, in the sense that the self-administration of the Palestinian Authority is funded by others. Israel has a captive market for its goods; it collects several percent from all of the taxes it collects for the PA. And the levels of violence since the end of the Second Intifada have been very low.

Israeli Prime Minister Benjamin Netanyahu (GALI TIBBON/AFP/Getty)

Nathan Thrall: First of all, I agree with everything you just said, but there's one caveat I would throw out.

Any party that is running on a platform of unilateral withdrawal would get no votes. At the same time, if you ask people whether they want to be back in Gaza — and if there's another war with Gaza, one thing out on the table is reoccupying Gaza — most people don't want to be there. In effect, even though the right [campaigns against] the consequences of the Gaza withdrawal, the vast majority, I think, actually prefer not to be in Gaza and certainly prefer not to be in southern Lebanon. So part of that is just an issue of marketing, I think.

But, yes, I think extending the status quo is in many ways the scariest outcome. The status quo isn't stasis — it's steadily making it more difficult to withdraw in the future, and certainly making it more costly to withdraw in the future. Many Palestinians and many on the Israeli left felt during these elections that the worst possible outcome is to have the national unity government formed [in which center-left parties join with Netanyahu's right-wing Likud].

A national unity government would probably have, let's say, [center-left political leaders] Tzipi Livni and Isaac Herzog demanding as a condition of joining that there be a renewed peace process. Then pressure on Israel would have been reduced in the world, and yet the policy changes would not likely have been very great.

[Palestinians and members of the Israeli left] feel that would actually be the best recipe for perpetuating the status quo, whereas now that we have this right-wing government, here you are writing an article about where the hell is Israel heading, and Obama's making these very strong statements even after Bibi's retraction.

So, that's a circuitous way of saying yes, I do agree that perpetuating the status quo is the most frightening of the possibilities. Because the status quo is perceived by the Israeli electorate as the least costly of the options. In a way, Bibi Netanyahu was the perfect candidate for that Israeli majority that doesn't want to change anything, and knows that the world disapproves of Israel not changing anything.

Who better to wink at the world and say, "I'm in favor of two states with many, many asterisks," while actually doing nothing to bring that about on the ground, than Bibi?

Nathan Thrall: What is changing is that to some extent people in the US and Europe are no longer accepting the notion that this is temporary. That, for many Palestinians, was always the biggest fiction. Among Palestinians, the legitimacy of the Palestinian Authority is at a real nadir, and there are many, many more Palestinians questioning the entire Oslo structure [of partial Palestinian self-rule under the Israeli occupation, as established in 1990s peace accords] and whether its costs outweigh its benefits.

More are arguing that it's not worth it, that Palestinians are worse off under the Oslo framework. Their voices are getting louder, not just among the intelligentsia but also among normal middle and lower classes. If there's a chance for real, significant change, it's going to come from Palestinian society pushing their leadership to find a new arrangement.

Nathan Thrall: You're already seeing the Palestinian Authority taking the steps of going to the [International Criminal Court for steps toward membership] and threatening to suspend security cooperation [with the Israeli government in policing the West Bank].

Those are responses to the popular sentiment that I'm describing. The leadership understands it's in very poor standing among the public. That's something that was greatly aggravated by the Gaza war, where Hamas got a huge boost in popularity. The big Gilad Shalit prisoner exchange [between Israeli and Hamas], as well. These have greatly strengthened the political adversaries of the [Palestinian] leadership.

Nathan Thrall: What the leaders in Likud have said is that they would increase their presence in the West Bank, and take over whatever it is that they needed to take over, and would begin to work with "local leaders." So it would become an even more — what's the word I'm looking for?

Nathan Thrall: Sure, yes, but it would also be an even more variegated and ad-hoc administration of the West Bank, where we deal with this local mayor or that tribal leader. This was attempted in the past; it was something called the Village Leagues, in the late '70s and early '80s. It eventually failed, in large part because Palestinians regarded those leaders as traitors.

But the vision of many on the right is that that's how they would respond to it. And they pooh-pooh the extent to which that would actually be very costly for Israel, because they say, "Look, the security coordination isn't doing much for us, we're doing 85 percent of the work in the West Bank anyway, so let them stop, and if they want chaos in their own streets, they can have chaos in their own streets."

They already have a regime in place to protect settlers in the West Bank. There's a regime in place to prevent West Bankers from entering Israel itself. I think they don't actually think it would be all that costly; it's easy for them to imagine that the security coordination ends and Palestinians still continue to administer health and education in the West Bank.

Nathan Thrall: As far as the erosion of democracy with the '67 borders [not including Gaza or the West Bank], that conversation was accelerated by the nationality bill that was going through the Knesset last year. [The bill would have legally declared Israel a Jewish state, which critics saw as undermining the citizenship of the roughly quarter of the population that is not Jewish, and thus as privileging Israel's Jewish identity over its democracy.] That general idea of prioritizing Jewish nationality, Jewish nationalism over democracy — that is what many on the left are worried about.

There is almost total consensus among Israeli Jews that there shouldn't, strictly speaking, be all the same rights accorded to non-Jewish citizens that there are accorded to Jewish citizens. There is a law of return, which allows basically any person claiming Jewish ancestry to come to Israel and get full citizenship. Of course non-Jews have a difficult time bringing family members over who are not Jews or marrying non-Jews who reside in Arab countries or in the West Bank or in Gaza. Nobody disputes that those are unequal.

The debate that's taking place is more broadly about how much priority to give to Judaism and Jewish nationalism within the Israeli state, within the Israeli education system, and how we ought to feel about being inclusive and what kinds of steps we're willing to take and not willing to take.

Nathan Thrall: As Israel becomes more isolated, I think there will be two effects: One is strengthening of the kind of trends of right nationalism and sense that the world treats us with a double standard, that we've gotta persist and Europe was lost anyway and maybe the US, too. There has already been all this talk of increased isolation for Israel, and ordinary Israelis haven't felt it at all.

But if it reaches a point where that isolation affects the average Israeli, it could also have a counter-effect. If, say, an average Israeli can no longer travel to Europe without a visa, that's a significant impact, or if they're no longer able to watch their favorite soccer teams playing in the league they're used to playing in because they got booted out of, say, FIFA. If and when we reach that point, then you can potentially have an election with what we'll say is a course correction. That there is a price to our actions and a price to the status quo. It didn't make sense for us to do anything when we didn't feel it, but now actually we do feel something and we can get rid of these costs by doing X, Y, and Z. Then it becomes a very rational calculation.

Nathan Thrall: Yes. And many young Israelis on the left are hoping that the Obama administration will go much further than it has considered going before. One Israeli told me the other day that the root of all this is this government believes it can do whatever it wants without any consequences. And if there are consequences, then those who argue for changing the status quo will have a leg to stand on, but they don't right now.

Nathan Thrall: There is just no denying that any such approach, in the view that it's gotta get worse before it gets better, will be unpleasant for Israelis and Palestinian alike. What's not guaranteed is that it would ever result in a better outcome, but what is guaranteed is in the short term, it would result in a worse one. That's why people are understandably reluctant to take that step.