The Israeli-Palestinian conflict seems more stuck than ever. In the present stalemate, recent efforts by several foreign governments – including South Africa and Denmark – to insist on a clear distinction between products originating in Israel and those from settlements in the occupied Palestinian territories are significant. These efforts can help pave the way to peace.

Last month, South African and Danish governments announced their intention to prevent goods produced in settlements from being labeled as 'Made in Israel', following the United Kingdom, which has requested its supermarkets to label settlement goods differently since 2009. The Swiss retail chain Migros has now also decided to do so.

These actions should be applauded and other governments and companies should follow suit. Why? Because the settlements are not Israel. They are built on occupied land outside Israel's internationally recognised borders and are illegal under international law. Labelling produce from settlements as Made in Israel misleads the consumer, and implicitly condones the expansionist policy of Israel's rightwing government led by Binyamin Netanyahu.

Right now, the Palestinian West Bank is being gobbled up by growing settlements, erasing the Green Line – the internationally recognised pre-1967 line, which is the only viable basis for peace. At the time of the signing of Oslo peace accord in 1993, we had around 250,000 Israeli settlers in the occupied territories. By 2000, when I was director-general of the Israeli Ministry of Foreign Affairs, the number stood at 390,000. Today it is over 550,000.Following Prime Minister Netanyahu's rejection of US President Barack Obama's plea to freeze settlement growth, we have seen a major acceleration in settlement construction. Only this month, Netanyahu announced plans to build another 851 settler homes, many of them deep inside Palestinian territory.

It seems that we Israelis have come to the conclusion that we no longer need peace. Behind the separation wall and with the army's might, we are more or less safe without peace. The economy is growing, and Tel Aviv is booming. The occupation is not a source of great moral discomfort to us. Except for the minority which does combat military service, the military oppression of Palestinians is out of sight and out of mind for the average Israeli. Many of us tend to believe that the conflict can be managed for everand Israel no longer has a "Palestinian problem".

However, this is pure self-deception. The continuing settlement expansion threatens to make a two-state solution to the conflict impossible. Israel is sliding into a situation where, short of apartheid or expulsion of the Palestinians, a one-state solution with equal rights for all could become the only possible way out of the conflict. This is the South African model.

As Israel's past ambassador to South Africa I feel able to venture a view on the applicability of that model to Israel-Palestine. Unlike in South Africa, where urbanisation brought black people to the cities in such numbers that they eventually became the majority, in Israel there is substantial territorial separation and significant replacement of Palestinian labour by foreign workers, especially from Asia. Whereas in South Africa almost every white child was cared for in infancy by a black "nanny", there is little contact between Israelis and Palestinians at all.

Despite my deep admiration for the way South Africa brokered its own peace, a "South African-style" solution for Israel-Palestine would be the end of the Jewish state. The two-state model remains the only way to fulfil this dream of at least the last four Jewish generations.

So, if we want to stick to the two-state solution, then we must begin to seriously tackle the settlement expansion which poses an existential threat to it. Here lies the relevance of the symbolic act of preventing settlement products from being marked as Made in Israel. By denying this label to settlement products, international governments protect and reinforce the pre-1967 border. Moreover, they give their own consumers the free choice of whether to buy products from settlements.

This simple act reminds us that settlements are a grave violation of international law and an instrument in a dangerous project of de facto annexation. By defining and promoting the conflict's solution along the pre-1967 line, the international community confirms that the goal is two states, not an Israeli apartheid state.