It sounds like Prime Minister Olmert gets it.
AP Story:
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In unusually frank comments, Prime Minister Ehud Olmert warned in an interview published Thursday that "the state of Israel is finished" if a Palestinian state is not created, saying the alternative is a South Africa-style apartheid struggle.
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Comparing the current situation to Apartheid is of course accurate: the white newcomers are segregating and oppressing the local population. But Olmert takes the comparison a step farther, pointing out that the Demographic Bomb is working against Israel and that giving the Palestinians concessions actually improves Israel's long term security.
He says that one of these days, the Palestinians are going to stop pressing for a two-state solution and start pressing for a one-state solution: granting the Palestinians the right to vote in Israel. He's looking 50 to 100 years down the road and accurately predicting that without action, they are going to get it and on that day, Jewish rule of Israel will be finished.