The Palestinian leadership seems to have given up on negotiations with the Netanyahu government and is obviously moving towards seeking recognition for a Palestinian state within the 1967 borders, possibly in September this year. Most pundits believe that they will muster a substantial majority in the UN General Assembly.

Israel's foreign ministry has now informed the members of the Security Council as well as a number of European countries that it will react to this Palestinian move with a series of unilateral steps. There are indications that these might include the annexation of some major settlement blocs in the West Bank.

What on earth is this move supposed to achieve? Is it intended to frighten the Palestinians, the UN, or the EU? Does the foreign minister expect the international community to meekly accept Israel's annexation and immediately to stop the process of recognizing the Palestinian state?

This is a dangerous misreading of the international climate. Since the breakup of former Yugoslavia, international institutions have consistently supported demands for independence, from Kosovo to East Timor. As Aluf Benn has pointed out in a recent analytical piece, the world is likely to support many other national movements: it will probably accept the Kurdish demand for independence at some point, and it has, of course, made clear for decades that it accepts the Palestinian demand for a viable state within the 1967 borders.

Israel's situation becomes particularly sensitive on the background of recent developments in the Arab world. After some brief hesitations, the international community has decided to take a clear pro-democracy stance, first vis-à-vis Tunisia, then Egypt. In the case of Libya it has decided on the use of force to protect its population from Qaddafi's brutality.

Of course Israel is different in many respects: despite its shortcomings, it is a somewhat chaotic, but functioning representative democracy; and while international opinion has condemned the extent of destruction and killing Israel inflicted on Gaza in operation Cast Lead, the free world recognizes Israel's right to self-defense and does not suggest military intervention against Israel.

But Israel's occupation of the West Bank - and the continued construction of settlements and the expropriation of Palestinian buildings in Jerusalem - is widely seen as a human rights violation. This arrangement is not sustainable and pressure from public opinion worldwide is likely to rise: the Arab world will insist on parity of the free world's approach to Israel and Arabs, and many Europeans are bound to agree. The argument might be put forward that the free world cannot adhere to double standards. If Arab regimes are pressured into conforming to international law and respect for human rights, the same must be done with Israel. 

Public opinion in Europe towards Israel is becoming ever more negative, and the young generation in the U.S. is seeing Israel ever more negatively. While most EU governments would probably prefer not to impose sanctions on Israel, they may come to the point where public opinion would leave them no choice. Unilateral steps by Israel like annexation of West Bank territory might tip the balance to the point at which they will feel that such sanctions are becoming inevitable.

Obviously it is in Israel's vital interest to avoid a situation in which the world, primarily the EU, Israel's largest trading partner, would impose sanctions or even a boycott on Israel.

What, then, can Israel do to avoid this scenario?

Here is a radical, yet simple, proposal that requires some thinking out of the box: UN recognition of a Palestinian state within the 1967 borders actually should appease Israel's deepest existential fears. Netanyahu has been warning constantly that the world does not accept Israel's legitimacy. He seems not to notice that recognition of a Palestinian state on the 1967 borders would put an end to the doubts of many Israelis that the world does not want Israel to exist.

A Palestinian state along the 1967 boundaries means that Israel, for the first time in its history, would have internationally recognized borders. It would be clear that the Palestinians have no more legitimate demands on Israeli territory west of today's Green Line. This would silence the radical voices in the free world that do not accept Israel's existence.

The mainstream of the international community would now have a very clear case against any group like Hamas that doesn't accept Israel's right to exist. Israel could then count on a unified international front against Iran, Hezbollah, and other radical Islamist movements, and would no longer have to rely on unpalatable Islamophobic right-wing groups for support.

An Israeli government capable of thinking out of the box would welcome and sponsor UN recognition of the Palestinian state along the 1967 borders. Instead of trying to prevent this outcome, Israel would cooperate with the Palestinians and the UN to include the following provisos: one-on-one land-swaps need to be determined by negotiations between the two parties; implementation of the agreement needs to be gradual, taking into account Israel's security concerns. From the Al Jazeera leaks - the Palestine Papers - we know that the leadership of the Palestinian Authority is quite close to accepting these positions. Hence such a plan is quite realistic.

Israelis could finally breathe more freely: they would know that the country is no longer under diplomatic barrage, that neither sanctions nor boycott need to be expected, and that the international community would fully support Israel's right to self-defense if it were attacked from the State of Palestine.

Such a step could be expected by many observers who marvel at the daring of Israeli business entrepreneurs and the creativity of its scientists and artists. Quite unfortunately there is a huge gap between the mindsets of Israel's entrepreneurial and cultural elite and its political leadership. The foreign ministry's current threat to implement unilateral steps to counteract Palestinian UN recognition indicates that Israel's current leadership is very far from thinking out of the box; instead it is locked into a bunker with no connection to the outside world.

Carlo Strenger is a professor of psychology at Tel Aviv University and serves on the Terrorism Panel of the World Federation of Scientists. He is the author of numerous books, most recently The Fear of Insignificance: Searching for Meaning in the Twenty-first Century. He blogs at Strenger than Fiction on Haaretz.com.