I remember a novel by Tom Clancy where the Palestinians got "smart" and started to use Gandhi tactics. That would be pretty devastating for Israels moral position, but I don't see it happening.
On the other hand, the settlements are preventing Israel from being considered the good guy instead of the lesser evil. I don't see what they expect to gain from this, but I heard that internal politic battles in Israel are pretty vicious too.
So status quo forever, or at least until it all ends in mushroom clouds.
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