It was an Arab legislator who made the most telling comment to the Israeli parliament last week as it passed the boycott law, which outlaws calls to boycott Israel or its settlements in the occupied territories. Ahmed Tibi asked: "What is a peace activist or Palestinian allowed to do to oppose the occupation? Is there anything you agree to?"

The boycott law is the latest in a series of ever-more draconian laws being introduced by the far-right. The legislation's goal is to intimidate those Israelis who have yet to bow down before the majority-rule mob.

Look out in coming days for a bill to block the work of Israeli organisations trying to protect Palestinian rights; and another draft law investing a parliamentary committee, headed by the far-right, with the power to appoint supreme court judges. The court is the only, and already enfeebled, bulwark against the right's ascendancy.

The boycott law, backed by Benjamin Netanyahu's government, marks a watershed in this legislative assault in two respects.

First, it knocks out the keystone of any democratic system: the right to free speech. The new law makes it illegal for Israelis and Palestinians to advocate a non-violent political programme - boycott - to counter the ever-growing power of the half a million Jewish settlers living on stolen Palestinian land.

As the Israeli commentator Gideon Levy observed, the floodgates are now open: "Tomorrow it will be forbidden to call for an end to the occupation [or] brotherhood between Jews and Arabs."

Equally of concern is that the law creates a new type of civil, rather than criminal, offence. The state will not be initiating prosecutions. Instead, the job of enforcing the boycott law is being outsourced to the settlers and their lawyers. Anyone backing a boycott can be sued for compensation by the settlers themselves, who - again uniquely - need not prove they suffered actual harm.

Under this law, opponents of the occupation will not even be dignified with jail sentences and the chance to become prisoners of conscience. Rather, they will be quietly bankrupted in private actions, their assets seized either to cover legal costs or as punitive damages.

Human rights lawyers point out that there is no law like this anywhere in the democratic world. But more than half of Israelis back it, with only 31 per cent opposed.

The delusional, self-pitying worldview that spawned the boycott law was neatly illustrated this month in a short video "ad" that is supported, and possibly financed, by Israel's hasbara, or propaganda, ministry. Fittingly, it is set in a psychiatrist's office.

A young woman, clearly traumatised, deciphers the images concealed in the famous Rorschach test. As she is shown the ink-splodges, her panic and anger grow. Gradually, we come to realise, she represents vulnerable modern Israel, abandoned by friends and still in profound shock at the attack on her navy's commandos by the "terrorist" passengers aboard last year's aid flotilla to Gaza.

Immune to reality - that the ships were trying to break Israel's punitive siege of Gaza, that the commandos illegally boarded the ships in international waters, and that they shot dead nine activists execution-style - Miss Israel tearfully recounts that the world is "forever trying to torment and harm [us] for no reason". Finally she storms out, saying: "What do you want - for [Israel] to disappear off the map?"

The video - released under the banner "Stop the provocation against Israel" - was part of a campaign to discredit the recent follow-up flotilla from Greece. The aid mission was abandoned after Greek authorities, under Israeli pressure, refused to let them sail.

Israel's siege mentality asserted itself again days later as international activists staged another show of solidarity - this one nicknamed the "flytilla". Hundreds tried to fly to Israel on the same day, declaring their intention to travel to the West Bank.

Israel threatened airlines with retaliation if they carried the activists and it massed hundreds of soldiers at Ben Gurion Airport to greet arrivals. About 150 peaceful protesters who reached Israel were arrested moments after landing.

Echoing the hysterical sentiments of the woman in the video, Israel's prime minister, Benjamin Netanyahu, denounced the various flotillas as "denying Israel's right to exist" and a threat to its security.

Although Mr Netanyahu's comments sound delusional, there may be a method to the madness of measures like the boycott law and the massive overreaction to the flotillas.

These initiatives, as Mr Tibi points out, leave no room for non-violent opposition to the occupation. Arundhati Roy, the award-winning Indian writer, has noted that non-violence is essentially "a piece of theatre. [It] needs an audience. What can you do when you have no audience?"

Mr Netanyahu and the Israeli right appear to understand this point. They are carefully dismantling every platform on which dissident Israelis, Palestinians and solidarity activists hope to stage their protests. They are making it impossible to organise joint peaceful and non-violent resistance, whether in the form of boycotts or solidarity visits. The only way being left open is violence.

Is this what the Israeli right wants, believing it offers a justification for entrenching the occupation? By generating the very terror he claims to be trying to defeat, does Mr Netanyahu hope he can safeguard the legitimacy of the Jewish state and destroy hopes for a Palestinian state?