When asked to assess Israel's geopolitical standing on its 60th birthday, lawmaker Yuval Steinitz crowed. By nearly every measure — military, economic, demographic — Israel's position has improved exponentially.

But on one crucial count, Israel has fallen short, said the former chairman of the parliamentary foreign affairs and defense committee. With Iranian missiles aimed at the Jewish state and Islamic militants gathering strength in Gaza and Lebanon, Israel has not extracted itself from the existential dangers that have faced the country since its troubled birth in 1948.

"We thought that we would be able to get rid of this threat and achieve peace and security," he said, "but we failed."

Therein lies the catch in Israeli success as the nation moves into its seventh decade: Although Israelis have built a regional military and economic powerhouse with a nuclear deterrent and a firm alliance with the United States, many consider the country trapped in the same life-or-death struggle it faced during the 1948 war for independence.

Struggle and tension with Arab neighbors have never ceased, so goes the argument, and Israel is still fighting for regional acceptance just as it did the day after the proclamation of independence in Tel Aviv.

President Bush is among the international dignitaries slated to arrive in Israel today to mark the 60th anniversary. As he visits, Mr. Bush is confronting major challenges in Iran, Iraq and Lebanon, while his host, Israeli Prime Minister Ehud Olmert, is struggling to keep his job amid a corruption investigation.

Many here trace the national mixed mood of achievement and anxiety back to the seminal founding days, when military success and the birth of a Jewish state never translated into full acceptance of Israel by the Arab Middle East.

Palestinian Authority Prime Minister Salam Fayyad criticized Israel yesterday for triumphantly celebrating its birthday while still ruling over Palestinians.

"I direct my speech ... to the people of Israel, to say, 'How can you?' " Mr. Fayyad said, according the Associated Press. "How can you celebrate and the Palestinian people are suffering from your settlements and the crimes of your settlers and the siege of your state and the conduct of your occupying army?"

But for many Israelis, the shadow of history makes it difficult to understand Palestinian anger.

Benjamin Netanyahu, the leader of the right-wing Likud Party, to which Mr. Steinitz belongs, often compares the threat that Iran will obtain a nuclear weapon to the danger posed by Nazi Germany in the late 1930s.

Gershom Gorenberg, an Israeli historian and journalist, said Mr. Netanyahu "has not yet absorbed the fact that the Jewish situation is different. If in 1938 the Jews had a nuclear deterrent, I presume that the history of the 1940s would have looked different."

The Zionists who pushed for the founding of Israel believed that only the formation of a Jewish state could insulate Jews from the threat of persecution and give them a chance to lead a normal existence in their own homeland.

Indeed, the Jewish state has made up for its population disadvantage compared with its Arab neighbors with a technologically superior military, an economy that increasingly rivals advanced European states, a software industry that attracts venture capital and a body of literature read around the world.

Mr. Steinitz, who calls himself an optimist, said these achievements are evidence of the "miracle" of Israel's success. But the focus on the steady spread of Iran's influence to the outer reaches of Israel has left Mr. Steinitz and many other Israelis unnerved.

"Public opinion polls are assailing the public, mainly the youth, with such inspiring questions as: 'Do you expect the destruction of the state?' and ... "When, in your opinion, will the Holocaust reoccur?" wrote Doron Rosenblum, a columnist from the Ha'aretz newspaper. "No doubt, this is a unique, and very Jewish, way to celebrate" the country's independence.

During the 1980s, Mr. Steinitz was a philosophy professor and an active member of Peace Now, which advocated negotiating with the Palestine Liberation Organization even when it was defined as a terrorist group. Just as Israel and Egypt successfully swapped territory conquered during the Six-Day War in a peace deal, Mr. Steinitz thought that "even though those territories, are our historical homeland, we can give it a try."

It was the failure of a string of peace efforts in the 1990s to put an end to terrorist attacks that prompted Mr. Steinitz's conversion.

"It immediately became evident for me that instead of land for peace, we are giving land for incitement, and land for war. ... Then I realized that this was a terrible mistake, and we were putting our children at risk."

Today, Mr. Steinitz and other right-wing colleagues warn about the dangers of withdrawal of Israeli forces from the Palestinian territories. Such a move is likely to create a power vacuum that will be filled by militant Islamist groups such as Hamas, he said.

According to the Israeli Foreign Ministry, since Israel was founded about 3,055 residents have been killed in terrorist attacks, averaging about 51 a year. Those numbers pale compared with the 6 million Jews killed by the Nazis during World War II.

"I think fear has been in the Jewish narrative from the day the Jew was created. Not in the national sense, but in the religious sense, the Jew is someone who is persecuted," said Rabbi Benny Perl, the principal of a Tel Aviv yeshiva.

"Jews still live in fear, and that is what prevents us from making peace. One who lives in fear can't make peace," he said.

Mr. Steinitz also sees a culture disconnect, but said Israel likely will remain mired in conflict for at least another generation.

What of Mr. Steinitz's optimism?

"By optimism, I don't mean we will necessarily be able to achieve peace in the near future, but we'll be able to survive in good conditions," he said. "From the historical Jewish point of view, to survive in good shape is very optimistic."