The negotiations with the Palestinians are taking place under a shroud from which, from time to time, conflicting reports emerge: optimism on the part of John Kerry and pessimism expressed by Benjamin Netanyahu and Mahmoud Abbas. A recent story in the New York Times might clarify these contradictions. According to this report, the squabbling over the Jordan Valley indicates that on the issue of borders and security arrangements the two sides are closer to an agreement. The real dispute is over the demand to recognize Israel as a Jewish state. At first glance, this appears strange. If agreement can be reached on practical issues such as borders, why should there be a confrontation over a historical narrative that is connected to a philosophical debate of nation versus religion as the defining core of Judaism?

However, Netanyahu’s insistence has its merits. First of all it shows that he’s serious. Previous prime ministers agreed to a two-state solution since their affinity to the settlements was linked to political and security considerations. When demographic considerations and political distress overshadowed the benefits of the settlements, they agreed to divide the disputed land. For Netanyahu, territorial compromise is not just a tactical maneuver. It’s an ideological sea change. Abiding by classic Revisionist Zionist teachings, the fulfilment of modern Jewish identity for Netanyahu means sovereignty over the entire Land of Israel. He can justify an ideological turnover only by showing it to be the realization of what Revisionist leader Ze’ev Jabotinsky termed “The Iron Wall.” In that 1923 essay he stated that the Palestinians would only recognize the right of Jews to their land after they realized that they cannot defeat them by force of arms. Now the time has come for the second phase of the “Iron Wall” - compromise.

The Palestinians raise three objections to recognition of Israel as a Jewish state. First of all, such recognition would be perceived as acquiescence in the discrimination against Israel’s Arab citizens. However Israel defines itself as a Jewish state in any case and Israeli Arabs are officially not affected by this. The second objection is that Israel did not make this demand of Egypt or Jordan, and it is not the Palestinians’ place to define Israel’s identity. This is a disingenuous argument, since the conflict with both those countries was mainly territorial and political. In contrast to Egypt and Jordan, as long as the Palestinian national movement does not recognize the right of Jews over at least part of the Land of Israel, the conflict will, in principle, continue to simmer even after the signing of an agreement. The crux of the issue emerges in the third objection: defining Israel as Jewish compels the Palestinians to contradict their historical narrative. This is a worrisome issue since it demonstrates that even in the eyes of moderate Palestinians, Jews are not perceived as a nation but as a religious community. Thus, they have no authentic claim for sovereignty over any part of the land.

The numerous Israelis who claim that they have no need for Palestinian recognition of Israel’s Jewish character and essence are right. What they don’t understand is that Netanyahu needs such recognition not as a testimony to the character of his country but as proof that the Palestinians are serious about ending the conflict. This is the key to understanding his approach to the conflict.

If indeed the recognition of Israel as a Jewish state is a landmine on the road to an agreement, its dismantling may require that the Palestinians adopt the favorite tactic of right-wing Israeli politicians and call for a referendum. According to public opinion polls most Palestinians would support such recognition, contrary to their leaders. A large-scale referendum, taking place in the context of a generous deal, could be a historic event that would gain the confidence of Israelis and allow Netanyahu to persuade the right, without the Palestinians making any concrete concessions. Recognizing Israel as a Jewish state is thus of great importance to the Palestinians as well.