I write from an Israel with a divided soul. It is not only defined by its contradictions; it is at risk of being torn apart by them. It is a country with uncertain borders and a government that ignores its own laws. Its democratic ideals, much as they have helped shape its history, or on the verge of being remembered among the false political promises of 20th-century ideologies.

What will Israel be in five years, or 20? Will it be the Second Israeli Republic, a thriving democracy within smaller borders? Or a pariah state where one ethnic group rules over another? Or a territory marked on the map, between the river and the sea, where the state has been replaced by two warring communities? Will it be the hub of the Jewish world, or a place that most Jews abroad prefer not to think about? The answers depend on what Israel does now.

For Israel to establish itself again as a liberal democracy, it must make three changes. First, it must end the settlement enterprise, end the occupation, and find a peaceful way to partition the land between the Jordan and the Mediterranean. Second, it must divorce state and synagogue—freeing the state from clericalism, and religion from the state. Third and most basically, it must graduate from being an ethnic movement to being a democratic state in which all citizens enjoy equality.

Proposing these changes provokes several reflexive objections, inside Israel and beyond. First, many Israeli Jews translate any call for full equality of all citizens as a demand that Israel cease to be a Jewish state. The supposed choice is a false one. Israel can be a liberal democracy and still fulfill the justifiable desire of Jews, as an ethnic national group, for self-determination.

The liberal meaning of self-determination begins with the rights of individuals. As Israeli political thinker Chaim Gans argues, it expresses the justifiable desire of members of an ethnic group to maintain a basic aspect of their humanity and personal identity: their culture. To live in their culture and preserve it, they need a place where that culture shapes the public sphere. The natural and must justifiable place for that to happen is their homeland, or in part of it.

But in the real world, in contrast to utopias, individual rights clash. The classic metaphor for this is the man crying fire in a crowded theater: Dogmatically preserving his right of expression robs others of their right to stay alive. Nation-states can be liberal democracies, but each faces the constant challenge of balancing the right of self-determination and other rights.

Israel does not have to give up being a Jewish state. It does need to establish a very different balance of rights. In a country with a significant Jewish majority, it is reasonable for the usual language of the public sphere to be Hebrew. It is reasonable for offices to close on Jewish holidays, because most people would not show up for work on those days anyway. It is also reasonable for the kitchens in government institutions—such as the army—to be kosher, since this preserves the right of Jews who observe religious dietary laws to participate fully in society. It is not acceptable for the government to favor Jews in allocation of jobs, land, or school buildings, or for it to prevent Muslim citizens from maintaining a mosque in a mixed Jewish-Arab neighborhood. Nor is it acceptable for the government to condition the rights of non-Jewish citizens on their swearing fealty to this particular balance of rights.
A second objection is that creating two states between the river and the sea is no longer possible. Settlements are too large, Israel and the occupied territories too entangled; the tipping point has been passed. All that is possible now is a one-state solution. Especially outside of Israel, this practical argument often hides a psychological tendency: even progressives sometimes fight the last battle, especially if it was a heroic fight for which they were born too late. One person, one vote was the answer in South Africa, they say; therefore it is the solution for Israel.

In fact, a one-state arrangement would solve little and make many things worse. Imagine that tomorrow Israel, the West Bank, and the Gaza Strip were reconstituted as the Eastern Mediterranean Republic, and elections were held. With the current population, the parliament would be split almost evenly between Jews and Palestinians. One of the first issues that the parliament and judiciary would face is the settlements that Israel built on privately owned Palestinian property, whether it was requisitioned, stolen, or declared state land over Palestinian objections. Palestinian claimants would demand return of their property. The problem of evacuating settlers wouldn’t vanish. Rather, it would divide the new state on communal lines.

Likewise for refugees. Palestinian legislators would demand that Israel's Law of Return be extended to cover Palestinians returning to their homeland. Jewish politicians would oppose the move, which would reduce their community to a threatened minority. Palestinians would demand the return of property lost in 1948 and perhaps the rebuilding of destroyed villages. Except for the drawing of borders, virtually every question that bedevils Israeli-Palestinian peace negotiations would become a domestic problem, setting the new political entity aflame.

Issues not at the center of today's diplomacy would also set the two communities at odds. Israel has a post-industrial Western economy; The West Bank and Gaza are underdeveloped. Financing development in majority-Palestinian areas and bringing Palestinians into Israel's social-welfare network would require Jews to pay higher taxes or receive fewer services. But the engine of the Israeli economy is high-tech, an entirely portable industry. Both individuals and companies would leave, crippling the new shared economy. Meanwhile, two nationalities who have desperately sought a political frame for cultural and social independence would wrestle over control of language, art, street names, and schools. Psychologically, it would be a country with two resentful minorities and no majority.

Even in the best case, the outcome would be the continued existence of separate Jewish and Palestinian political parties. And even the more liberal-leaning parties of each community would be hard-pressed to bridge the divide to form stable coalitions. Israel would become a second Belgium, perpetually incapable of forming a stable government. In the more likely case, the political tensions would ignite as violence. The transition to a single state would mark a new stage in the conflict. For a harsh example of the potential fluctuation between political stalemate and civil war, Palestinians and Jews need only look northward to Lebanon.

A single state could easily be the result of Israel failing to make any choices. It would not be a solution—even a workable arrangement, which is what politics normally offers in place of solutions. It would be a nightmare: another of the places marked on the globe as a country, in which two or more communities do battle while the most educated or well-connected members of each look for refuge elsewhere.

A third objection to a two-state solution, from the Israeli right and its overseas supporters, is that it requires Israel to sacrifice too much for peace. This reflects an old habit of thought in which territory is the coin that Israel reluctantly pays for a peace agreement.

It's true that peace is an essential end in itself. But Israel must also give up land to reestablish itself as a state and a democracy. It needs to put a border back on the map. Within that border, the government needs to rule by the consent of the governed. It needs to restore the rule of law and end the ethnic conflict.

Peace with the Palestinians is a means for achieving these goals. It provides the way for Israel to end its grip from outside on the Gaza Strip and to leave the West Bank safely. "Hold too much, and you will hold nothing," the Talmud says. If the state of Israel tries to continue holding the West Bank, there will be no state.