When Mahmoud Abbas, president of the Palestinian National Authority, addressed the U.N. General Assembly on September 23—waving aloft his petition to admit the state of Palestine—he knew he was asking for something that his audience could not deliver and that the Obama Administration would veto in the Security Council. What, apart from a bit of political theater, did he hope to achieve? The simple answer is that theater matters, too, especially to a political leader often mocked for being weak or even a kind of collaborator. His speech hardly changed conditions on the ground (“He might as well have asked for a Palestinian empire,” a friend of mine in Ramallah quipped), and President Obama, casting a wary eye on the 2012 U.S. election, echoed what Israeli prime minister Benjamin Netanyahu insisted on: that a state can only come into being by direct negotiation with Israel; that the parties must, as Obama put it, “sit down together, to listen to each other, and to understand each other’s hopes and fears.” Still, if Israeli military forces directly control 70 percent of Palestinian land, Abbas proved he controls, if only diplomatically, two thirds of the world’s hearts and minds—that he means to change, as it were, conditions in the air.

The Israeli delegation could not hide its dismay as Abbas was interrupted by one ovation after another. Indeed, a rising anxiety can be detected among Israeli officials as they contemplate the growing isolation Abbas’s U.N. appearance seemed to confirm, isolation especially from the European Union, where even Germany’s Angela Merkel seems out of patience with Netanyahu’s settlement policies. In October, a council of European parliaments granted the Palestinian National Authority’s Legislative Council “observer” status, and the Middle East Quartet, which works with the Palestinian Authority and the Israeli government with the goal of building a future Palestinian state, endorsed terms for negotiation that essentially backed Abbas’s positions.

Israel’s American lobby (AIPAC) has long claimed that Abbas’s U.N. strategy threatens Israel’s political legitimacy, but it seems more accurate to say that it threatens Israel’s economic stability. A start-up nation cannot eat algorithms. Israeli companies rarely aim at the consumer market, instead providing roughly $40 billion in software, components, biopharmaceuticals, and security services to larger global businesses, which necessitates building relationships with management teams across Europe and Asia. These relationships are what’s threatened. Imagine the possibility of hundreds of European managers and engineers declining to work with Israeli companies or travel to Tel Aviv for meetings. Imagine more protests like the recent public demonstration by players in the London Philharmonic Orchestra over a visit by the Israel Philharmonic, or Israeli sports teams being routinely greeted in European cities with Palestinian flags. Netanyahu has focused on Arab missiles and the nightmare of an Iranian bomb wiping Israel off the map. But with the unleashing of populist Egyptian fury against Israel in the wake of Mubarak’s fallen regime, street disturbances in Jordan, and increasing tensions with Turkey—once an ally—many Israelis are feeling a palpable sense of remoteness from the world they expected to live in.

Even if Abbas’s bid for full U.N. membership is eventually rejected, he will likely win “observer-state” status in the General Assembly, a clear upgrade from the “observer-entity” status granted in 1974. This will likely give Palestine, among other prerogatives, the right to sue Israeli officials before the International Criminal Court. (It is almost universally accepted that Israeli settlements are in violation of the Geneva Conventions.) At the same time, Abbas has forced Hamas, the Islamist group that controls Gaza, to fall in line behind him. Palestinian entrepreneurs, professionals, and bankers who support Abbas’s secular state-building have been organizing a promising private sector in Ramallah. This middle class is the spine of the state Abbas wants the U.N. to recognize, which is far more attractive to ordinary Palestinians than Hamas’s Islamist state in Gaza.¹

Abbas went home to Ramallah in triumph, a leader committed to bourgeois revolution, state-building, and nonviolent resistance—in short, the best partner Israel could have. He declared that he was “ready to return immediately to the negotiating table” if Israel ceased settlement activities, including building in and around Jerusalem. (Netanyahu’s government has announced that 1,100 new housing units will be built across the Green Line—Israel’s pre-1967 border—in the Jerusalem suburb of Gilo.)² Yet it would be wrong to assume that negotiations are stuck only because of Netanyahu’s settlement policies, provocative and intransigent as these are. For one outstanding issue has never been satisfactorily addressed in past negotiations, something the settlement issue only exacerbates. This issue—the Palestinian “right of return”—cuts to the heart of the century-old conflict and has resurfaced with a vengeance in recent months. It raises, on both sides, the question of whether the two-state solution is fatally flawed in ways we are finally compelled to admit.

Talk to almost any Palestinian about the refugee right of return to Haifa, Jaffa, Ramla—territory recognized as part of Israel in 1949—and you’ll hear that this is the one principle about which no compromise is possible. Calculating for ordinary demographic growth among refugees, the right of return would seem to apply to 5 million Palestinians, 3 million of them living outside the West Bank and Gaza—2 million in Jordan alone. According to a recent poll, almost 90 percent of Palestinians under Israeli occupation do not believe they “should be obliged” to relinquish this right in exchange for a Palestinian state. And the sentiment is echoed among the 950,000 who, unlike those in Jordan, live stateless—a great many in squalid, segregated camps—in Syria and Lebanon. The Ramallah entrepreneur and activist Sam Bahour—who earned his MBA at Tel Aviv University but is increasingly skeptical of a two-state solution—told the TEDx conference in Ramallah last spring: “Peace can, must, and will come. . . . But key to peace in the Middle East is the returning home of displaced Palestinians whether they’re refugees, exiles, or [in] the diaspora.”

For most Israelis, the phrase “right of return” is code for ruin. In a 2010 poll by the Israel Democracy Institute, over 80 percent of Israeli Jews agreed with the statement “The Palestinians have not accepted the existence of the State of Israel and would destroy it if they could.” The novelist Amos Oz, an icon of Israel’s aging Peace Now movement, long ago made the connection between the destruction of Israel and the return of refugees. Writing in the Guardian in 2001, Oz argued that implementing the Palestinian right of return amounts to “abolishing the Jewish people’s right to self-determination. It will make the Jewish people a minor ethnic group at the mercy of Muslims, a ‘protected minority,’ just as fundamentalist Islam would have it. It would mean eradicating Israel.”

Abbas and Netanyahu cannot avoid expressing—or pandering to—so much popular anxiety. When negotiations finally got started for a short while last year, Netanyahu insisted that Abbas agree in advance that Israel was the “state of the Jewish people”—as if merely conceding the phrase would preclude the Palestinian claim of return, or its threatened bite. In August, following suit, forty members of the Knesset (including members of the centrist Kadima Party) proposed a law declaring that Israel is “the national home of the Jewish people,” where they “realize their aspiration for national definition according to their cultural and historical heritage,” and asserting Hebrew to be the state’s only “formal language.” Abbas was not about to condemn the one fifth of Israel’s population who are Palestinian Arabs to permanent “second-class citizenship,” he said, a statement that mirrored Oz’s apprehension while confirming the implied demographic competition. “Israel has Jews and other people, and this we are ready to recognize,” Abbas has said.

Abbas would do nothing to undermine the right of Palestinians to claim their historic homes. “Sixty-three years ago,” Abbas wrote in a New York Times op-ed last May, “a 13-year-old Palestinian boy was forced to leave his home in the Galilean city of Safed and flee with his family to Syria. He took up shelter in a canvas tent provided to all the arriving refugees. Though he and his family wished for decades to return to their home and homeland, they were denied that most basic of human rights. That child’s story, like that of so many other Palestinians, is mine.”

Curiously, the right of return did not prove so radioactive when the two sides actually sat down to outline principles for resolving it. Abu Iyad, at that time a member of Arafat’s leadership group, struck the keynote in Foreign Policy back in 1990: “We accept that a total return is not possible. . . . We recognize that Israel would not want to accept large numbers of Palestinian returnees who would tip the demographic balance against the Jewish population. Nonetheless, we believe it is essential that Israel accept the principle of the right of return or compensation with the details of such a return to be left open for negotiation. . . . We shall for our part remain flexible regarding its implementation.”

Right-wing Israelis say that such declarations were never more than a public-relations exercise, but for what public? What is to be gained by Fatah leaders committing to a give-and-take in which limits to return are bound to be severe? Diplomatic support for the Palestinian cause evaporates—not only in the U.S. and Europe but around the world—when obliterating Israel as a distinctively Jewish country seems the covert goal. Ian Smith, representative to Tony Blair’s Office of the Quartet, told me: “Europe wants a Palestinian state in the 1967 borders. . . . But Europe will stick with Israel—occupation or not—if they see Palestinians concealing a spiked fist in a velvet glove.”

Accordingly, Abbas insisted in his U.N. speech on “a just and agreed-upon solution to the Palestine refugee issue in accordance with Resolution 194, as stipulated in the Arab Peace Initiative [of 2002]”—a kind of threading of the needle, intended to placate his base in Palestine but leave things vague enough for further negotiation. U.N. Resolution 194, drafted at the end of the 1948 hostilities, stated: “[R]efugees wishing to return to their homes and live at peace with their neighbours should be permitted to do so at the earliest practicable date.” The resolution seems to leave the matter of return to the discretion of refugees, but looked at carefully, it also implies the impracticality of the vast majority of refugees realizing their wishes. And it adds that “compensation should be paid for the property of those choosing not to return.”

In the Taba talks of January 2001 (and later in the Geneva Initiative of 2003), representatives of Fatah and leaders of the Israeli peace camp agreed, in effect, to cushion the language surrounding the right of return by simply referring to U.N. Resolution 194. Ehud Olmert, who was prime minister of Israel from 2006 to 2009, suggested to Abbas in 2008 that 5,000 Palestinians return to Israel proper, 1,000 a year for five years. Olmert said in January 2011 that he told Abbas, “Israel is sensitive and is not indifferent to the suffering of Palestinians who lived in what became Israel and were forced out of their homes as a result of the conflict and then lived in misery for years.” He said all sides should work with international financial institutions to establish a fund to “generously compensate” refugees for their loss of property. Olmert further told me that, although he and Abbas never got into the details, he was well aware of the need for “constructive ambiguity” in dealing with refugees.

Abbas, to whom I also spoke in January 2011, did not reject Olmert’s formula. “I told Olmert that I have five million refugees. . . . If I ask you to accept that all five million should return to Israel, you will tell me, and you are right, that I would destroy Israel. I said, okay, let us talk about how to find a solution. But don’t tell me that no single Palestinian can return to Israel.” For Abbas, 5,000 was too small a number, not enough to constitute even a symbolic return.

The question of how many refugees would choose to return to Israel may seem hypothetical but is not. In 2003, the respected Ramallah-based pollster Khalil Shikaki surveyed 4,000 refugees and found that only about 1 percent, or what would amount to approximately 50,000 Palestinians, would choose to assume Israeli citizenship—a finding that prompted Palestinians caught up in the currents of the second Intifada to storm his office. Where, if not to Israel, might Palestinians go? Negotiators stipulated “modalities” for resolving the question of residence: refugees could choose to stay where they were, as in Jordan; or move to the Palestinian state; or move to a third country (e.g., Chile, where some 350,000 people trace their origins to Palestinian families); or, indeed, move to Israel. In all cases, compensation would ease the transition. Israel would accept—and screen—a number based on the average population of refugees other countries accepted. Israel would also have to agree to a reasonable pace of return, say, between 75,000 and 100,000 returnees over ten years; that is, less than a third of the Arab residents of East Jerusalem who would be transferred to Palestine in any foreseeable deal.

It is still far from clear whether Abbas’s strategy for unifying his people will give him the scope to continue with “constructive ambiguity,” any more than Israelis will gird themselves to evacuate settlers from colony-towns the size of Ariel, with some 18,000 people. If Israelis think, and increasingly say, that the settlement project has made a two-state solution contentious, Palestinians will tell you that refugees make this solution provisional at best. More and more will tell you that one state is the only possible fate worth fighting for, that the egg cannot be unscrambled, as former deputy mayor of Jerusalem Meron Benvenisti put it some years ago. “We can already see a single state taking shape,” Sam Bahour told me. “I don’t care if it is called Israel. Let’s get out of a stale, failed paradigm, of nation-states, that is meanwhile eating away at an entire people, and also encouraging Israel to feel put in a corner, so that it will lash out like never before. Let’s move toward a rights-based struggle.” The right of return, Bahour added, is not simply about who lives where but is a test of Israelis’ basic humanity and a confirmation of Palestinian identity. The arc of history must be bent toward justice.

The story of what the Palestinians view as their catastrophic dispossession, or Naqba, usually focuses on the months during and after the 1948–49 war, when 750,000 Arabs fled or were driven out of Israel. About 325,000 were displaced after the 1967 war, when the Golan Heights, the West Bank, and Gaza were taken over by Israel. There has been dispute about why families left their homes but no dispute about their real grievance, which is that they were not allowed back. The young Israeli government razed about 400 Arab villages; of the 370 settlements established in Israel between 1948 and 1953, 350 were on formerly Arab land. Nearly 50,000 Palestinians who had left their villages yet remained within the Green Line were considered by the new government of Israel to have abandoned their property.³ The government permitted much of the confiscated land to be sold to the Jewish National Fund, or JNF, the land bank that Zionist leader Theodor Herzl had founded at the turn of the century. Urban houses, too, especially in Jerusalem, Jaffa, Lod, and Haifa, were expropriated and soon occupied by Jewish refugees from Iraq and Yemen as well as survivors of European death camps. As the historian Howard Sachar wrote of the 1949 turmoil, “Two hundred thousand Jewish immigrants preempted 80,000 Arab rooms.”

Israel’s first prime minister, David Ben-Gurion, had envisioned a democracy encompassing an Arab minority living in “complete equality” and “ethnic autonomy.” “An Arab has also the right to be elected president of the state, should he be elected by all,” Ben-Gurion told the government in June 1948. “If in America, a Jew or a black cannot become president of the state, I do not believe in the quality of its civil rights. . . . Should we have such a regime—then we would have missed the purpose of the Jewish state. And I would add that we would have denied the most precious thing in Jewish tradition.” Nevertheless, Ben-Gurion told his ministers that same year: “We must do everything to ensure they [the Palestinian refugees] never do return!”

The story of Palestinian dispossession, however, actually begins much earlier than 1948, with reforms to Ottoman land law in 1858, when the sultanate’s retainers and loyalists—well-connected families in Beirut and Damascus—were able to appropriate vast tracts of Palestinian land, most of it farmed by traditional peasants, or fellahin. When Jewish colonists began dribbling into Palestine from Europe—beginning in 1881, in flight from tsarist pogroms—the fact that so much land was owned by absentee landlords proved crucial. Baron Edmond de Rothschild was able to acquire substantial estates, fit for his viniculture businesses, and employed and housed several thousand Jews as managers and laborers. The colonists, in turn, employed a great many Arab peasants.

The situation changed dramatically with the arrival from Russia of youthful, socialist Zionists—among them Ben-Gurion—beginning in 1905. The pioneers were intoxicated by the prospect of evolving a new Jew: Hebrew-speaking, emancipated, communitarian, self-reliant. They understood land to be an instrument of cultural reconstruction and therapeutic heartiness. They determined to put down contiguous agricultural collectives, in which the Hebrew language could be modernized and incubated, unfettered by rabbinic dictates. Zionist numbers were greatly augmented after the British army marched into Jerusalem in 1917, having defeated Ottoman forces in World War I; this victory coincided with the Bolshevik uprising, during which many young Jews the world over felt inspired by notions of Marxist justice.

Jewish land purchase was now relentless, as was Zionist self-segregation. Buttressed by a mandate from the League of Nations, British rule under the Balfour Declaration (named for Sir Arthur Balfour, Britain’s sympathetic foreign secretary) called for a Jewish “national home” in Palestine. The JNF aimed to give Zionist settlers the space to build collective farms and industries. The pattern of dispossession was established early on with the famous purchase of the Sursok family holdings in 1921 (the Sursoks lived in Beirut), putting virtually the entire Jezreel Valley in Zionist hands and thereby displacing some 5,000 peasants.

Not coincidentally, 1921 was also the year of a serious Arab riot against the British Mandate. Soon, Arab leaders began to connect Jewish land purchases with a larger threat: the Mufti of Jerusalem, Haj Amin al-Husseini, fumed that Jews at the Western Wall represented a defilement of the mosques in Jerusalem. Nevertheless, the Zionist project advanced. Between 1920 and 1938, the JNF was able to purchase about a quarter of a million acres; by 1938, nearly 30 percent of rural Arabs, about 30,000 families, were landless. Especially during the 1930s, Ben-Gurion’s Histadrut, the colonists’ labor federation, set about building a state within a state, establishing urban industries from construction to food processing, social benefits from a health-insurance fund to sporting clubs, providing Polish Jews a commercially viable refuge from European fascism.

Again, displaced Arab peasants, streaming into the cities, were mainly excluded. Histadrut leaders believed the Jewish proletarian class would evolve into a nation, but that this would shrivel up, and lose moral prestige, if colonists became nothing but Arabic-speaking overseers of Arab labor. They took for granted, as the British did, that a great majority of peasants would have lost their holdings anyway, since small farmers would have been outmaneuvered by other Arabs employing tractors and economies of scale. Disturbances continued throughout the 1920s and 1930s, leading to the Arab Revolt of 1936–39—nominally against the British Mandate but in reality the first stage of an Arab-Jewish conflict that culminated in the war of 1948.

The point is, even before the flight and expulsions of 1948, many agrarian Palestinians had begun living very much like refugees. They identified the Zionist struggle to build a Jewish national life as inherently discriminatory, abetted by Western imperialism. The greater Arab world seemed privileged and solid to Zionist settlers, a fact Palestinians could never fathom. Emulating in their own way, and for their own reasons, the closed-door policies of Western governments, Palestinian elites and Arab states rejected what one Zionist leader, Vladimir Jabotinsky, stated in 1937: that Palestinian Arab hunger had to be compared with Jewish starvation. This sentiment persists. “You jumped from a burning building and fell on me,” a Palestinian friend recently told me.

It is no wonder, then, that the right of return provides an opportunity for Palestinians and Israelis to talk past each other. Friends of mine in Ramallah speak of Jews as members of “a religion,” like Muslims, ignoring the modern nation that Zionism created and underestimating the political underpinnings of Israel’s secular culture. Those Palestinians who favor one state promise freedom of worship, as if this should be enough. Israelis, for their part, still claim that Palestinians might have prevented their displacement by accepting, as Ben-Gurion did, the state promised them by the U.N. partition resolution of 1947, which envisioned a “Jewish state” that began with 498,000 Jews and 407,000 Arabs “and others.” Given what had happened to them over the previous generation, Palestinians asked what would be their fate if an anticipated million European Jewish refugees soon arrived. (Today, right-wing Jews in Jerusalem similarly ask what would happen to them if a Palestinian state entails an Arabic-speaking city the size of Tel Aviv rising in the West Bank.) Besides, Palestinians had no movement or leadership comparable to the Zionist organizations capable of responding to the U.N., certainly not after 1948. Much of their population was seeking refuge in tents around Gaza and Bethlehem; tens of thousands of their children were in camps jostling for rations of powdered milk, while the territory designated them by the U.N. and not yet conquered by the Israeli Defense Forces was overrun by the king of Jordan, eager for sovereignty in ancient Jerusalem.

Most Israelis look back at the years after 1948 and perceive a kind of population exchange, since nearly 800,000 Jews were forced to flee such Arab countries as Morocco, Tunisia, and Libya after the 1956 Sinai war; and 120,000 had, in effect, been expelled from Iraq between 1949 and 1951. Here, too, were tents. At the same time, Palestinian dispossession coincided with the discovery of vast reserves of oil in the Gulf, where ruling Bedouin families—most of them illiterate and suddenly wealthy—needed large numbers of educated people to keep books, sell insurance, fix air conditioners. Tens of thousands of young Palestinian refugees educated in U.N.-run schools found themselves in Kuwait and the Emirates acquiring the skills and connections that have made diaspora professionals and entrepreneurs in Jordan a kind of local power. This, of course, is cold comfort for those who were forced to be free.

Historians can debate the missed opportunities, assign blame, and ignore what has been constant and asymmetrical almost from the start, the fundamental problem the right of return forces us to confront: Israelis still see their nation as a Hebrew haven in a heartless world. They, too, speak reverently of return. But even before the Holocaust this view was charged with comforting grandeur, meant to bring an end not only to exile in a metaphysical, theological sense but also to the kind of Jew who understood exile in that way. Palestinians never had a comparable desire to revolutionize the culture that shaped their lives, only to revolt against what was being done to them by invasive powers. The touchstone of their nascent nationalism was the desire to put right the specific injustices endured by families separated from their soil, before and after 1948. The occupation seems only the latest and cruelest stage in the plot.

Does the right of return mean, therefore, that a two-state peace process is doomed—that Israeli settlers are correct to charge that Palestinians will ultimately agree only to a “one-state solution” that seems less solution than invitation to a fight to the finish? I devised the hardest test I could think of to rescue some hope. Last May, during the week of Abbas’s unity deal with Hamas, I talked with a Hamas official in Jerusalem and put the question directly. Mohamed Totah is a former lecturer on business at Al-Quds University in Jerusalem who had been a Hamas sympathizer and was persuaded to stand for the movement’s political party in the 2006 parliamentary election. He was jailed the following year, after Hamas kidnapped the Israeli soldier Gilad Shalit, who on October 18 was swapped in a deal for the eventual freeing of more than a thousand Palestinian prisoners. When Totah was finally released last year, he was faced with expulsion. So he took refuge at the offices of the International Committee of the Red Cross in East Jerusalem—in effect, house arrest—where I interviewed him.

“Everybody agrees on 1967,” Totah told me, in a mild-mannered but clearly rehearsed way. “Let us have a cease-fire for fifteen years, deal with the claims of refugees, then we’ll have peace.” But how can we have peace and the return of all refugees? I asked. We could talk about compensation, but actual return? “It must be up to the refugees,” Totah insisted, stiffening. “Five million are not coming with guns. Give them the right to their lands and let them choose.” What if a family’s land is now under a Tel Aviv skyscraper? Do we take down the building and give back the land? Totah just repeated, “It is their right to choose.” Okay, then, I asked, what is the value of that land? What it was in 1948 or what it is in downtown Tel Aviv or Haifa today? And what would they move back to? I continued: “You are a business school teacher, as I am; surely we teach that land is property, and the value of property is converted to money all the time. Why should refugees not accept compensation and get on with life?”

Now Totah glared at me. “We in parliament are like lawyers for the people,” he said. “We work for them, to get them their rights. We may have our own opinions about what to do. But we cannot decide for them. Can a lawyer negotiate away a client’s rights? Clients must decide. It must be their choice.”

I suddenly realized I had been missing Totah’s point, as most Israelis are inclined to. The refugees’ formative grievance, though very publicly lamented for more than sixty years, is still seen by the Palestinian public as an aggregation of private tragedies affecting specific families. These must be redressed case by case. There is an unyielding insistence on giving refugees their due: of returning, in imagination if not in fact, to the time and place in which each dispossession occurred, so that it can be more fully investigated, recognized, and compensated.⁴

There is also a desire among Palestinians, as Totah argued later about Jerusalem, to feel freely reconnected to the entire place. “The right of return is a right,” Adam Shatz quotes a friend of his, a refugee, in the London Review of Books. “So give me my right, and then let me decide how to implement it. I have made a life for myself in Nablus, and I don’t plan to return to Haifa, but I would like to take my children there. I am not talking about throwing the Jews into the sea.” For many, perhaps most Palestinians, Shatz goes on, the right of return is now less about repatriation than about reparation. It is about Israeli acknowledgment of the injustices of the Naqba “and, just as important, about the restoration of their freedom of movement inside the entire country, regardless of whether it is called Israel or Palestine.”

Israeli peace advocates say that, since the right of refugees is such an incendiary subject, it should be left for last in any negotiation: first design a boundary with security arrangements and then, having built mutual confidence, deal with return. President Obama has outlined just such a position. But to build confidence, you must first alleviate the conviction that your negotiating partner fundamentally misunderstands you. Fail to establish good faith regarding what is most poignant, and everything becomes symbolic. (Imagine a divorcing couple who have not yet settled custody of the children but are trying to negotiate who gets what proportion of the real estate.)

My conversation with Totah, however, suggested a possible road to reconciliation. Imagine that Israel would agree in advance to help establish a commission that would acknowledge—formally—the unfolding family tragedies of generations of Palestinians; that is, acknowledge Israel’s role, however unintended, and regardless of Israelis’ own suffering. Such a commission would call on refugees to register their claims and be deposed for an archive with legal standing (the hearings might be modeled on the South African Truth and Reconciliation Commission) and would not have to await the determination of a border through negotiations. It could set out the various options refugees might choose among—return to Israel, return to the Palestinian state, or emigrate to other places while accepting some forms of compensation—and the legal and practical consequences of choosing one option over another. Israelis, after all, have lived since 1948 in a larger world that has acknowledged Jewish suffering, upheld their rights, condemned crimes against them, and offered compensation.

This does not mean a wholesale return of refugees to Israel. If, after a peace deal, a refugee family chooses this mode of return, the family would be put in a queue, and Israel would establish a yearly quota for repatriation over a reasonable number of years. As with return to a Palestinian state, the absorptive capacity of the destination would have to be taken into consideration. And the support of Western diplomacy would be crucial to make this approach work. Some estimates, though politically improbable, suggest that reparations and compensation could eventually top $250 billion in today’s dollars—about $250,000 for a family of five—which is roughly what Israel paid Israeli settlers removed from Gaza. Even just a quarter of that sum would be too much for Israel, whose annual GDP is about $270 billion. But Israel could contribute a sum large enough to have symbolic significance. It might, for example, commit sums generated by the future sale of “abandoned Arab property” held by the Israel Land Administration and for which no clear title can be determined.

Netanyahu’s government will, of course, propose no such thing. Nor does it seem likely that any currently electable government would either. Polls suggest that a great many young Israelis, apprehensive of impasse, suppressing rage over bombings and rocket attacks (and guilt over military actions and checkpoints they’d rather forget about), succumb to a kind of preemptive bigotry. Up to 80 percent of young Israeli Arabs express positive attitudes toward social integration—willingness to have a Jewish friend, for example—but only 53 percent of Jews say they would want an Arab friend. For older Israelis, even peace activists like Oz, the classic problem of reconciling liberalism with democracy means reconciling it first with demography: the growth and restiveness of the Israeli Arab population, which the right of return would only reinforce.

The question of return is of a piece with the larger question of Arab rights in the Jewish national home—the question of how the Jewish state is legally structured. Palestinians claim that Israel not only prohibits Arabs from coming back but also obstructs Arab residents from being accorded full citizenship. Presumably, this is what Zionism always did. But Israel is a great deal more than its occupation. It is a country that engenders liberal values, spiritual and sexual, which Israeli Arabs, too, have embraced so strongly that most reject integration into any hypothetical Palestinian state.

A 2010 poll conducted by a professor at Haifa University shows that 60 percent of Arabs now living in Israel believe that Jews deserve a state, an even larger proportion than those who refuse compromise on the right of return. Indeed, anyone who’s spent time in Israeli Arab cities like Nazareth or Sakhnin knows that mixing Arab culture with Hebrew commercial life produces a fertile hybrid. There is no reason to assume Israel could not be a democracy with a Jewish character, a country whose culture pivots on the Hebrew language and a consciousness of historic Jewish civilization approached through the secular freedoms such as one finds at, say, Israeli universities.

What of Israel’s official, paid rabbinate; system of orthodox public education segregated from (less well-funded) Muslim Arab schools; public-land policies that discriminate heavily in favor of Jewish residents; exclusive claims to Jerusalem; and immigration laws and housing rights that privilege J-positive blood? It is hardly clear that these things express an Israeli consensus any more than Hamas expresses the consensus in Gaza. Paradoxically, the vagueness about the Jewish nature of a Jewish state gives an opening to Abbas to reach most Israelis where their feelings are most poignant, just as the malleability of the right of return gives Israelis a chance to reach Palestinians.

Abbas may not wish to say what kind of Jewish state Israel should be; but in a way he cannot avoid doing so when he argues for the right of return and the other civil rights this entails. Palestinians certainly need not shy away from the question of what kind of national rights go along with democratic norms. Some Palestinians say, Let’s just create a common state based on individual rights. But this is because the culture they take for granted—determined by the Arabic language and the Islamic calendar—is reinforced by the entire region. It is as if Anglo-Montrealers like myself were to appeal to French-speaking Quebecers to stop putting up cultural breakwaters when we know full well that the rest of North America has only English tides. It is wrong for Abbas to elide the central concern the vast majority of Israelis will want addressed: the special need they feel to protect their Hebrew-speaking civil society, the umbilical cord to the historic civilization of the Jewish people, and an immigration law that provides refuge from anti-Semitism.

So let’s imagine that Abbas would join with distinguished Israeli writers and scholars, people like Oz, who recently backed the Palestinian U.N. bid, and propose a formula for the kind of Jewish state Palestinians could accept, one that celebrates the Israeli cultural distinction and that reciprocates, or anticipates, the realization of Palestinian refugee rights. Why not agree in advance of any negotiation that Palestine may certainly have if not Jewish settlements loaded with armed fanatics then Jewish citizens who wish to live in Palestinian cities like Hebron? Abbas has said he refuses to condemn Arab Israelis to second-class citizenship. He also told American Jewish leaders that he would “never deny Jewish right to the land of Israel.” So why should he not stipulate the kind of Jewish state that would not prejudice Arab rights—and welcome this nation to the region much as Anwar Sadat did?

There has been precedent for cooperation. From December 2006 to mid-September 2008, Abbas (by then the president of the Palestinian Authority) met with then prime minister Ehud Olmert thirty-six times. They came to an agreement on all security arrangements between Israel and Palestine. These included a non-militarized West Bank, Israeli air force overflights of Palestine, and American-led NATO forces controlling the border with Jordan: “The file on security was closed,” Abbas told me when I interviewed him in January. The two leaders also came to principles of agreement regarding the disposition of Jerusalem (including international administration for the Old City), and parameters for setting a border based on Israel’s border on the eve of the 1967 war, with “land swaps” compensating Palestine for territories annexed to Israel to accommodate large settlement blocs. The two leaders even conducted productive negotiations about the right of return. Olmert was then forced to resign, and Netanyahu was elected to replace him. When Abbas finally met with Netanyahu in 2009, the Palestinian leader suggested that he and Netanyahu pick up where he and Olmert had left off. Netanyahu refused.

Which brings us back, finally, to forward-looking Palestinians like Bahour, for whom the right of return does not so much make the two-state solution unworkable as it forces each side to consider what must immediately come along with that solution. Bahour speaks of one state, but what he really wants is a way to “interdependence” between Israeli and Palestinian territories and the egalitarian standards they will notionally share. He believes liberal freedoms are at the heart of the recent Arab Spring and suggests that both Palestinians and Israelis might be inspired by the courage of demonstrators and insurgents from Tunis to Damascus. Two states are fine so long as they are just a stepping stone. “Why—if this is the future—should we not redress the suffering of refugee families today, including allowing those who want to live in their historic homes—if these still exist—to do so, and figure out where they vote as we go along?”

Bahour is part of a large independent strategy group in Ramallah, the closest thing they have to a Palestinian political center, unaffiliated with any political party. The group’s recent report says, essentially, that two states are an option but that the ultimate goal is something more integrated. It emphasizes that “attacks on civilians should play no part in the new national liberation strategy as they are in clear breach of international law, which is what our Palestinian strategy mainly appeals to, and only serve to alienate international opinion.” The report aims to reframe the conversation around political arrangements that put individual rights at the center, ideally, of a progressive, multinational state, which Bahour believes successive Israeli governments have inadvertently laid the groundwork for.

The group is not saying this clearly enough, but they are assuming both sides would build a two-state solution on cooperative, even confederative, relations. Nothing demonstrates this need for formal collaboration more graphically than the right of return. What, for example, is a commission addressing Palestinian problems (whatever it will be called) but a third, common jurisdiction to which both Israel and Palestine would contribute some sovereign authority? This same commission could well be the place for working out dual citizenship for any Palestinian Jew who wants Israeli citizenship or Israeli Arab who wants Palestinian citizenship.

Whatever happens to the occupied territories, Israel will be a country with very many Arabs, whether Muslims or Christians or Druze. Again, Palestine will have few Jews; Palestinians will certainly not want settlements in their territory—but will eventually accept Jewish citizens. Moreover, an Arab from Tulkarm, ten miles from the Israeli Mediterranean, will not want to go to the beach on the Red Sea. America grants resident-alien status to, say, Canadian-born immigrants who want to remain, in effect, Canadian, people who can live, work, and pay taxes in America and enjoy the full benefits of citizenship, except for voting in national elections. Why can Palestinians and Israelis not set up a third authority to negotiate and preside over a similar series of reciprocal privileges? Come to think of it, could a two-state solution become imaginable without something like this?

Israel and Palestine will likely begin with a good measure of separateness, a hard boundary, to get the process of reconciliation started. Israel’s per-capita GDP is nearly $30,000; the West Bank’s, about $3,000. Israel will want to maintain a powerful military for the foreseeable future. It will always want to cultivate Hebrew culture with publicly supported primary schools, universities, and media, and an official language for the government bureaucracy. Palestine will wish to gather in its own exiles and invest in their lives with regional support and without Israeli interference. None of this precludes many confederative bodies.

Those who think of the conflict purely as a kind of psychodrama will raise an eyebrow. How can two peoples who have been at odds, and have shed each other’s blood, contemplate this kind of confederation? Presumably, I am endorsing a romantic vision of Israelis and Palestinians not just tolerating but loving each other. Actually, confederative institutions do nothing of the kind. Germans and French did not love each other when they formed a common market in the 1950s. Olmert and Abbas did not love each other when they agreed on a proposal for a third body to administer municipal Jerusalem. Israel and Palestine are interlocking city-states. The populated parts of Israel and Palestine together are about the size of greater Los Angeles. The peoples share not only a business ecosystem but everything from water sources to the telecommunications spectrum. Neither side can set up a 4G network, neither side can manage even wastewater, without the permanent cooperation of the other.

In its early years, a Palestinian state will depend on tourism, housing construction, food processing, and the development of retail. How will Palestine run tourists to the holy places, or around greater Jerusalem, without creating a common authority with Israel to welcome tourists, share taxes on buses, and certify guides? How will it not rely on Israeli companies that specialize in logistics and construction materials—a boost to sectors of the Israeli economy that have not benefited from globalization the way its tech sector has? Israeli construction companies are already helping to build the new Rawabi city north of Ramallah. How, and by whom, will their profits be taxed?

It is premature to say this, but in spite of their growing alienation from Arabs, young Israelis may well be drawn to the interdependence portended by the work of the Ramallah strategy group; I cannot see how they can believe in the reality of a two-state peace process if they do not. Anyway, young Israelis, like Ramallah’s Palestinians, are in a radical mood. In early September, more than 450,000—an astonishing number—demonstrated in Israel’s major cities, organized by young democratic activists calling for greater “social justice” and condemning “inequality.” Particularly in mixed cities like Haifa, Jews and Arabs marched together. It is doubtful that most of the protesters who showed up in the streets would endorse moving beyond two states to greater integration. Most would probably say they are tired of “leftists,” like the editors of Haaretz, who dare to publicly support Palestinian positions over those of the Israeli government.

Still, the real divide in Israel’s emerging politics may well be generational. While young Israelis are criticizing Arab aims, they are protesting the inequalities to which Israeli Arabs are subjected. They condemn economic inequality while thriving on global entrepreneurship. They have internalized the historic persecutions of Jews but have dabbled in eastern religions in Nepal or India, and enjoy Israeliness; they see connections to world Jewry as organic, not legal. They want ekhut chaim, “quality of life,” and know that almost a million Israelis now live abroad—that peace could mean the return of tens of thousands of supremely talented people. Most important, young Israelis may resent historic Christendom but, unlike their parents and grandparents, expect to be joined to European popular culture.

As their egalitarian principles sharpen, it will be impossible for young Israelis to ignore the need for a secular separation of religion and state—government support for ultra-Orthodox institutions are a big part of what brings down living standards—or the drain of the Palestine conflict. A year ago, who but daydreamers thought a populist uprising in Egypt would replace Mubarak and force a democratic election? One young leader of the Tel Aviv demonstration, Daphni Leef, told the assembled throngs: “Every heart is a revolutionary cell.”

In this context, the right of return could become a way to open Israeli hearts, not break them. For it implicitly urges Palestinians and Israelis to think beyond two states toward a more comprehensive and humane solution entailing confederative structures—one that does not try to repress the hard truths that inhibit their envisioning a future. Palestinians want a common regime of rights; Israelis, a political border around cultural ones. The ultimate challenge, as Bahour says, is to become equals and partners. Postponing ways of meeting this challenge will, I fear, invite terrible violence, a new war of ethnic cleansing that will obliterate the legacy, and memory, of 1948.