As the Palestinian quest for statehood grinds on at the United Nations, those who really hold the Palestinians’ fate in their hands — the people of Israel — are more pessimistic than ever about the prospects for peace.

According to a survey published in late September, two thirds of Israelis hold no hope of ever achieving peace with the Palestinians. But the poll also revealed a striking contrast: 88 percent say that Israel is a good place to live. Israel may be more isolated diplomatically than at any time since the dark days of the 1970s, but with the Israeli economy booming and with terrorism largely under control, the vast majority of Israelis seem to believe that they can live indefinitely with the status quo.

They cannot. Israel’s future — as a democratic, Jewish and prosperous state — faces real threats, but more from within than from without. The Israeli-Palestinian conflict does threaten Israel, but not, as the Israeli right would have it, because militant and even seemingly moderate Palestinians plan to drive the Jews into the sea. Rather, the conflict threatens Israel because of the havoc it continues to wreak on the country’s internal politics.

First and foremost, the ongoing occupation has fueled an aggressive ethno-religious nationalism that has become increasingly prominent since the second intifada. This is happening mostly because Israelis have grown despondent over the prospects for peace: They believe Israel has tried everything to end the conflict and has been repaid only with terrorism, obstruction and global opprobrium. Israelis have not felt this alone and embattled for a generation.