The 1967 War increased Israel’s size due to the conquest of East Jerusalem, the West Bank and the Gaza Strip. Along with those conquests came the Palestinian inhabitants. Israel could not expel them, nor absorb them and still remain “Israel”. The Israeli government has built Jewish settlements in the conquered areas and has kept the Palestinians under military occupation, tightly controlled and completely disenfranchised. This has caused widespread Palestinian resentment and hurt Israel’s reputation in the world. Some are calling for investors to stop investing in Israel, much in the same way investors were asked to avoid apartheid-era South Africa.
As Israeli settlements increase - and the Palestinians themselves are winning the demographic race, the situation in Israel will only worsen. The outlines of a permanent peace plan are visible - Israel needs to create an autonomous Palestinian state from the territory it conquered during the ‘67 War. This would result in an Israeli state made up of about three-fourths of the original British Palestine, with the Palestinians occupying the remaining one-fourth. There is little impetus for such a deal now. The leader of the Palestinian Authority, Abbas, is old and weak while in Israel, there is much prosperity and a general peace under PM Netanyahu.