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As the Palestinians press for recognition of statehood at the United Nations, Israelis fear that their own national legitimacy is under growing assault. When Palestinian leader Mahmoud Abbas recently addressed the General Assembly, he blamed the origins of the conflict and the absence of peace entirely on Israel, and noted the attachment of Christians and Muslims to the Holy Land but omitted the Jews. He received a standing ovation.

In the current atmosphere, the Israeli demand that Palestinians recognize the legitimacy of a Jewish state has assumed a new urgency. On the face of it, that expectation should hardly pose a dilemma for Palestinian leaders committed to peace. A two-state solution, after all, means that each state has the right to define itself by its majority culture.

Yet Mr. Abbas, along with other Palestinian leaders, insists he will never accept a Jewish state. In opposing the right of the Jewish people to self-determination, Palestinian leaders have exposed the real obstacle to Middle East peace: not the creation of a Palestinian state, which most Israelis support, but the existence of a Jewish state, which most Palestinians reject.

The root of Palestinian rejectionism is the perception – widespread in the Arab world – that the Jews are not a nation at all but a religion. After all, many Arabs argue, the Jews lived for centuries as a religious minority under Islamic rule. Only in the 20th century did they reinvent themselves as a nation.

In fact, the Jews perceived their exile as a temporary aberration, and never stopped dreaming of renewed sovereignty in their homeland. Since ancient times, Jews have identified themselves as a people practising a particular faith. The centrality of peoplehood in Judaism even allows the seeming anomaly of Jewish atheists, so long as they identify with Jewish history and values.

The Arab world's insistence on defining the Jews out of their own national identity isn't only insulting: It prolongs the conflict by encouraging rejection of Israel's legitimacy.

If the Jews have contrived their national identity, what, then, is the meaning of their history and attachment to their homeland? The Palestinian solution is to turn Jewish history, too, into a lie. Palestinian media routinely dismiss the Jewish narrative: There was no ancient Jewish presence in the land of Israel, there was no temple on the Temple Mount, and the Holocaust has been exaggerated or entirely invented.

The denial of Jewish history and identity – widespread in the Arab world – is ultimately the greatest threat to peace. Settlements can be dismantled, as Israel proved during its withdrawal from Gaza in 2005. But an insidious educational process of delegitimizing the other can't so easily be uprooted.

Palestinian leaders argue that accepting Israel as a Jewish state would mean jeopardizing the status of the country's Arab minority. In fact, there is no conceptual contradiction between Israel as a Jewish state and as a democracy – the two essential elements of its identity as defined by its Declaration of Independence.

Still, Israeli Jews need to take that Palestinian challenge seriously. The ongoing Middle East conflict, and Jewish fears of Arab disloyalty, impedes efforts to achieve Arab equality in the Jewish state. The Jewish majority must do far more to reassure Arabs that they can play a full role in Israeli society.

One way of reassuring Arabs that "Jewish state" is not a code word for their exclusion is to adopt the formula suggested at the UN by Spanish Foreign Minister Trinidad Jimenez – to recognize Israel as "the homeland of the Jewish people." The state created by the Jews in their homeland should be equally responsible for all of its citizens, Jews and non-Jews, even while maintaining intimate connections with Diaspora Jews.

But Israeli Jews, a besieged minority in the Middle East, also need reassurance – that Palestinian statehood won't threaten their national existence.

Israeli Jews see Palestinian rejection of their legitimacy as proof that Palestinian leaders have no intention of honouring the spirit of a peace agreement. Israeli Jews fear that a Palestinian state would become a terrorist base, from which missile attacks would be launched against Israel's population centres. That fear is hardly unfounded: Thousands of missiles were fired at Israeli towns in the south after the withdrawal from Gaza.

A majority of Israelis want to save the Jewish state from the moral and demographic dangers of occupation. For centrist Israelis, a Palestinian state is an existential necessity. But it is also, potentially, an existential threat.

Achieving Palestinian statehood, then, requires reassuring anxious Israelis that Palestinian empowerment will not lead to Israeli vulnerability.

Tragically for both peoples, historical revisionism remains normative in Palestinian discourse. When Palestinian leaders acknowledge that the Jews are a people and that their state is called Israel, the way will be open for the creation of a state called Palestine.

Yossi Klein Halevi is a fellow at the Shalom Hartman Institute in Jerusalem, and a contributing editor of The New Republic.

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