When I published my book Blood and Religion last year, I sought not only to explain what lay behind Israeli policies since the failed Camp David negotiations nearly seven years ago, including the disengagement from Gaza and the building of a wall across the West Bank, but I also offered a few suggestions about where Israel might head next.

Making predictions in the Israeli-Palestinian conflict might be considered a particularly dangerous form of hubris, but I could hardly have guessed how soon my fears would be realized.

One of the main forecasts of my book was that Palestinians on both sides of the Green Line  those who currently enjoy Israeli citizenship and those who live as oppressed subjects of Israel’s occupation  would soon find common cause as Israel tries to seal itself off from what it calls the Palestinian “demographic threat”: that is, the moment when Palestinians outnumber Jews in the land between the Mediterranean Sea and the Jordan River.

I suggested that Israel’s greatest fear was ruling over a majority of Palestinians and being compared to apartheid South Africa, a fate that has possibly befallen it faster than I expected with the recent publication of Jimmy Carter’s book, Palestine: Peace Not Apartheid. To avoid such a comparison, I argued, Israel was creating a “Jewish fortress,” separating  at least demographically  from Palestinians in the occupied territories by sealing off Gaza through a disengagement of its settler population and by building a 750km wall to annex large areas of the West Bank.

It was also closing off the last remaining avenue of a Right of Return for Palestinians by changing the law to make it all but impossible for Palestinians living in Israel to marry Palestinians in the occupied territories and thereby gain them citizenship.

The corollary of this Jewish fortress, I suggested, would be a sham Palestinian state, a series of disconnected ghettos that would prevent Palestinians from organizing effective resistance, non-violent or otherwise, but which would give the Israeli army an excuse to attack or invade whenever they chose, claiming that they were facing an “enemy state” in a conventional war.

Another benefit for Israel in imposing this arrangement would be that it could say all Palestinians who identified themselves as such  whether in the occupied territories or inside Israel  must now exercise their sovereign rights in the Palestinian state and renounce any claim on the Jewish state. The apartheid threat would be nullified.

I sketched out possible routes by which Israel could achieve this end:

* by redrawing the borders, using the wall, so that an area densely populated with Palestinian citizens of Israel known as the Little Triangle, which hugs the northern West Bank, would be sealed into the new pseudo-state;

* by continuing the process of corralling the Negev’s Bedouin farmers into urban reservations and then treating them as guest workers;

* by forcing Palestinian citizens living in the Galilee to pledge an oath of loyalty to Israel as a “Jewish and democratic state” or have their citizenship revoked;

* and by stripping Arab Knesset members of their right to stand for election.

When I made these forecasts, I suspected that many observers, even in the Palestinian solidarity movement, would find my ideas improbable. I could not have realized how fast events would overtake prediction.

The first sign came in October with the addition to the cabinet of Avigdor Lieberman, leader of a party that espouses the ethnic cleansing not only of Palestinians in the occupied territories (an unremarkable platform for an Israeli party) but of Palestinian citizens too, through land swaps that would exchange their areas for the illegal Jewish settlements in the West Bank.

Lieberman is not just any cabinet minister; he has been appointed deputy prime minister with responsibility for the “strategic threats” that face Israel. In that role, he will be able to determine what issues are to be considered threats and thereby shape the public agenda for next few years. The “problem” of Israel’s Palestinian citizens is certain to be high on his list.

Lieberman has been widely presented as a political maverick, akin to the notorious racist Rabbi Meir Kahane, whose Kach party was outlawed in the late 1980s. That is a gross misunderstanding: Lieberman is at the very heart of the country’s rightwing establishment and will almost certainly be a candidate for prime minister in future elections, as Israelis drift ever further to the right.

Unlike Kahane, Lieberman has cleverly remained within the Israeli political mainstream while pushing its agenda to the very limits of what it is currently possible to say. Kadima and Labor urgently want unilateral separation from the Palestinians but are shy to spell out, both to their own domestic constituency and the international community, what separation will entail.

Lieberman has no such qualms. He is unequivocal: if Israel is separating from the Palestinians in parts of the occupied territories, why not also separate from the 1.2 million Palestinians who through oversight rather than design ended up as citizens of a Jewish state in 1948? If Israel is to be a Jewish fortress, then, as he points out, it is illogical to leave Palestinians within the fortifications.

These arguments express the common mood among the Israeli public, one that has been cultivated since the eruption of the intifada in 2000 by endless talk among Israel’s political and military elites about “demographic separation.” Regular opinion polls show that about two-thirds of Israelis support transfer, either voluntary or forced, of Palestinian citizens from the state.

Recent polls also reveal how fashionable racism has become in Israel. A survey conducted last year showed that 68 per cent of Israeli Jews do not want to live next to a Palestinian citizen (and rarely have to, as segregation is largely enforced by the authorities), and 46 per cent would not want an Arab to visit their home.

A poll of students that was published last week suggests that racism is even stronger among young Jews. Three-quarters believed Palestinian citizens are uneducated, uncivilized and unclean, and a third are frightened of them. Richard Kupermintz of Haifa University, who conducted the survey more than two years ago, believes the responses would be even more extreme today.

Lieberman is simply riding the wave of such racism and pointing out the inevitable path separation must follow if it is to satisfy these kinds of prejudices. He may speak his mind more than his cabinet colleagues, but they too share his vision of the future. That is why only one minister, the dovish and principled Ophir Pines Paz of Labor, resigned over Ehud Olmert’s inclusion of Lieberman in the cabinet.

Contrast that response with the uproar caused by the Labor leader Amir Peretz’s appointment of the first Arab cabinet minister in Israel’s history. (A member of the small Druze community, which serves in the Israeli army, Salah Tarif, was briefly a minister without portfolio in Sharon’s first government.)

Raleb Majadele, a Muslim, is a senior member of the Labor party and a Zionist (what might be termed, in different circumstances, a self-hating Arab or an Uncle Tom), and yet his appointment has broken an Israeli taboo: Arabs are not supposed to get too close to the centers of power.

Peretz’s decision was entirely cynical. He is under threat on all fronts  from his coalition partners in Kadima and in Lieberman’s Yisrael Beitenu, and from within his own party  and desperately needs the backing of Labor’s Arab party members. Majadele is the key, and that is why Peretz gave him a cabinet post, even if a marginal one: Minister of Science, Culture and Sport.

But the right is deeply unhappy at Majadele’s inclusion in the cabinet. Lieberman called Peretz unfit to be defense minister for making the appointment and demanded that Majadele pledge loyalty to Israel as a Jewish and democratic state. Lieberman’s party colleagues referred to the appointment as a “lethal blow to Zionism.”

A few Labor and Meretz MKs denounced these comments as racist. But more telling was the silence of Olmert and his Kadima party, as well as Binyamin Netanyhu’s Likud, at Lieberman’s outburst. The center and right understand that Lieberman’s views about Majadele, and Palestinian citizens more generally, mirror those of most Israeli Jews and that it would be foolhardy to criticize him for expressing them  let alone sack him.

In this game of “who is the truer Zionist,” Lieberman can only grow stronger against his former colleagues in Kadima and Likud. Because he is free to speak his and their minds, while they must keep quiet for appearance’s sake, he, not they, will win ever greater respect from the Israeli public.

Meanwhile, all the evidence suggests that Olmert and the current government will implement the policies being promoted by Lieberman, even if they are too timid to openly admit that is what they are doing.

Some of those policies are of the by-now familiar variety, such as the destruction of 21 Bedouin homes, half the village of Twayil, in the northern Negev last week. It was the second time in a month that the village had been razed by the Israeli security forces.

These kind of official attacks against the indigenous Bedouin  who have been classified by the government as “squatters” on state lands  are a regular occurence, an attempt to force 70,000 Bedouin to leave their ancestral homes and relocate to deprived townships.

A more revealing development came this month, however, when it was reported in the Israeli media that the government is for the first time backing “loyalty” legislation that has been introduced privately by a Likud MK. Gilad Erdan’s bill would revoke the citizenship of Israelis who take part in “an act that constitutes a breach of loyalty to the state,” the latest in a string of proposals by Jewish MKs conditioning citizenship on loyalty to the Israeli state, defined in all these schemes very narrowly as a “Jewish and democratic” state.

Arab MKs, who reject an ethnic definition of Israel and demand instead that the country be reformed into a “state of all its citizens,” or a liberal democracy, are typically denounced as traitors.

Lieberman himself suggested just such a loyalty scheme for Palestinian citizens last month during a trip to Washington. He told American Jewish leaders: “He who is not ready to recognize Israel as a Jewish and Zionist state cannot be a citizen in the country.”

Erdan’s bill specifies acts of disloyalty that include visiting an “enemy state”  which, in practice, means just about any Arab state. Most observers believe that, after Erdan’s bill has been redrafted by the Justice Ministry, it will be used primarily against the Arab MKs, who are looking increasingly beleaguered. Most have been repeatedly investigated by the Attorney-General for any comment in support of the Palestinians in the occupied territories or for visiting neighboring Arab states. One, Azmi Bishara, has been put on trial twice for these offenses.

Meanwhile, Jewish MKs have been allowed to make the most outrageous racist statements against Palestinian citizens, mostly unchallenged.

Former cabinet minister Effi Eitam, for example, said back in September: “The vast majority of West Bank Arabs must be deported … We will have to make an additional decision, banning Israeli Arabs from the political system We have cultivated a fifth column, a group of traitors of the first degree.” He was “warned” by the Attorney-General over his comments (though he has expressed similar views several times before), but remained unrepetant, calling the warning an attempt to “silence” him.

The leader of the opposition and former prime minister, Binyamin Netanyahu, the most popular politician in Israel according to polls, gave voice to equally racist sentiments this month when he stated that child allowance cuts he imposed as finance minister in 2002 had had a “positive” demographic effect by reducing the birth rate of Palestinian citizens.

Arab MKs, of course, do not enjoy such indulgence when they speak out, much more legitimately, in supporting their kin, the Palestinians of the West Bank and Gaza, who are suffering under Israel’s illegal occupation. Arab MK Ahmed Tibi, for example, was roundly condemned last week by the Jewish parties, including the most leftwing, Meretz, when he called on Fatah to “continue the struggle” to establish a Palestinian state.

However, the campaign of intimidation by the government and Jewish members of the Knesset has failed to silence the Arab MKs or stop them visiting neighboring states, which is why the pressure is being ramped up. If Erdan’s bill becomes law  which seems possible with government backing  then the Arab MKs and the minority they represent will either be cut off from the rest of the Arab world once again (as they were for the first two decades of Israel’s existence, when a military government was imposed on them) or threatened with the revocation of their citizenship for disloyalty (a move, it should be noted, that is illegal under international law).

It may not be too fanciful to see the current legislation eventually being extended to cover other “breaches of loyalty,” such as demanding democratic reforms of Israel or denying that a Jewish state is democratic. Technically, this is already the position as Israel’s election law makes it illegal for political parties, including Arab ones, to promote a platform that denies Israel’s existence as a “Jewish and democratic” state.

Soon Arab MKs and their constituents may also be liable to having their citizenship revoked for campaigning, as many currently do, for a state of all its citizens. That certainly is the view of the eminent Israeli historian Tom Segev, who argued in the wake of the government’s adoption of the bill: “In practice, the proposed law is liable to turn all Arabs into conditional citizens, after they have already become, in many respects, second-class citizens. Any attempt to formulate an alternative to the Zionist reality is liable to be interpreted as a ‘breach of faith’ and a pretext for stripping them of their citizenship.”

But it is unlikely to end there. I hesitate to make another prediction but, given the rapidity with which the others have been realized, it may be time to hazard yet another guess about where Israel is going next.

The other day I was at a checkpoint near Nablus, one of several that are being converted by Israel into what look suspiciously like international border crossings, even though they fall deep inside Palestinian territory.

I had heard that Palestinian citizens of Israel were being allowed to pass these checkpoints unhindered to enter cities like Nablus to see relatives. (These familial connections are a legacy of the 1948 war, when separated Palestinian refugees ended up on different sides of the Green Line, and also of marriages that were possible after 1967, when Israel occupied the West Bank and Gaza, making social and business contacts possible again.) But, when Palestinian citizens try to leave these cities via the checkpoints, they are invariably detained and issued letters by the Israeli authorities warning them that they will be tried if caught again visiting “enemy” areas.

In April last year, at a cabinet meeting at which the Israeli government agreed to expel Hamas MPs from Jerusalem to the West Bank, ministers discussed changing the classification of the Palestinian Authority from a “hostile entity” to the harsher category of an “enemy entity.” The move was rejected for the time being because, as one official told the Israeli media: “There are international legal implications in such a declaration, including closing off the border crossings, that we don’t want to do yet.”

Is it too much to suspect that before long, after Israel has completed the West Bank wall and its “border” terminals, the Jewish state will classify visits by Palestinian citizens to relatives as “visiting an enemy state”? And will such visits be grounds for revoking citizenship, as they could be under Erdan’s bill if Palestinian citizens visit relatives in Syria or Lebanon?

Lieberman doubtless knows the answer already.