Surrounding the call for Israel and Palestine to negotiate their way to a settlement is a sort of odd mini-game about what demands are "reasonable" for each side to make. For example, the former UN envoy for Israeli-Palestinian affairs complained in his outgoing memo to Sec. General Ban Ki-Moon that Israel was taking "an essentially rejectionist stance with respect to dealing with the Palestinians", such as the "unrealistic ... demand for recognition of Israel." It is hard for me to wrap my head around what requests are "reasonable" for Israel to make if recognition is taken off the table -- certainly, territorial concessions or demilitarization would seem to be far greater demands on the Palestinian polity than recognition would be.
I think of this because I'm beginning to wonder if we might need to shift a little in how we approach trying to restart Israeli/Palestinian peace negotiations. The refrain we keep hearing about Israel is "they want security, they want security, they want security." And so requests of the Palestinians focus on providing security guarantees, cracking down on terrorism, arresting bombmakers and militants, etc..
It's obviously true that Israel wants to be secure. But I think that it has crossed the point at which it no longer thinks that its Palestinian interlocutors can provide security, even if they wanted to. They don't believe that negotiations or withdrawals or accords will really materially affect their security standpoint in any way. The Gaza withdrawal and, more fundamentally, the Lebanon withdrawal both did tremendous damage to the classic "land for peace" formula. If Fatah signs a ceasefire, Hamas will shoot off rockets. If Hamas renounces violence, Islamic Jihad will pick up the slack. No rest for the weary.
Israelis are, at this point, willing to put their trust in tanks and F-16s to keep them safe. If they think that they can achieve peace through firepower alone, they're delusional. But I don't think that's the thought process. It is something significantly more despondent -- a resignation to continual low-grade insurgency and terrorism for the foreseeable future. The army won't put a stop to the violence, it will just keep it at manageable levels. Israelis can't see anything more than that on their horizon. And the problem with this outlook is that it takes security off the negotiating table -- Israelis no longer think there is anything worth talking about on the subject.
There is one thing I think the Israelis crave even more than security, however, and that is recognition. Israel was born out of rejection: The rejection of the Jews in Europe through the Holocaust and the expulsion of the Jewish communities in the Arab world. Israel was created in the midst of rejection, with the Arab bloc voting en masse against partition. Since then, the Arab world has maintained a consistent policy of boycott -- going as far as to make it illegal to advocate for an equal accepting relationship with the Jewish state. From a Jewish perspective, the history of Israel mimics the history of the Jews -- constant rejection, degradation, hatred, discrimination and persecution. What Israelis pine for is a reversal of this dynamic: A forthright statement that their existence is not a mistake, not an affront, not blasphemy, not colonial, not temporary, and not negotiable. Getting this would represent a huge shift in the status quo. I can't help but think it would likewise advance the cause of peace inordinately.*
Acceptance is one thing Israel can never get on its own. Israel can depend on its economy to keep it strong, its military to keep it safe, its nuclear weapons to ward off annihilation. It can't gain recognition by any means but through the negotiating table. This makes recognition, more than security guarantees, the Palestinians most powerful bargaining chip -- if they dared to use it. Indeed, this is what makes the Arab Peace Initiative so alluring.
The determinations about what requests are "reasonable" and what ones aren't are always value judgments. Even when they are predicated on political considerations, this is still the case, because we might say that a polity which refuses to accept a certain demand upon them is behaving in a morally negligent way and is thus worthy of scorn and critique. It might be worth considering putting recognition at the front-burner. If the UN took a strong stand in demanding that its member-states (and indeed, all parties who wish to be taken seriously within its halls) express their willingness to recognize the state of Israel, it could make an "unreasonable" demand into a "reasonable" one. And we might see some progress.
* I think you observe a similar dynamic on the Palestinian side. While they certainly raise the issue of their vulnerability to Israeli military incursions, and the tremendous stress it places upon their population, Palestinian political demands and behavior also seem less concerned with "security" than with recognition. The stated end goal isn't a situation in which Palestinians no longer have to worry about Israeli gunships (though hopefully that comes part and parcel). It's one where a Palestinian state is recognized and they are welcomed into the community of nations as equals. This is why, I think, Bibi Netanyahu's "economic peace" plan is going to flop so badly. It doesn't get at what the Palestinians truly want. Similarly, I've observed a strong stance people take whereby they say "we're not shooting at Jews -- what more could they possibly want?" The idea is that so long as Israel isn't in an actual state of war with a given entity, then it has exhausted any and all moral or political claims it could possibly have vis-a-vis that entity. That isn't the case. There are some things people want even more than physical security, believe it or not.