The execrable Benjamin Netanyahu and his far-right Likud party have just squeaked their way to another electoral victory. In order to motivate his base, Netanyahu made a number of radical promises, among which was a commitment to oppose, under any circumstances, the creation of a Palestinian state (discarding his 2009 vow to support a two-state solution for Israel and Palestine). This has understandably been taken as a great setback for the ailing peace process and a slap in the face for the US (which has supported a two-state solution for some time now).
From my point of view (and based upon my limited knowledge-base) foregoing a two-state solution may not be the worst possible outcome. I think the international community should be more open to a one-state solution in which Jews, Arabs, Druze, Samaritans, Armenians, Circassians, etc. all enjoy equal rights as citizens of a single, secular state. Of course, this is not really what most of the Palestinians or the Israeli Jews want. It is definitely not what anyone in Netanyahu's current government, or the government he will form, wants. Indeed, it would entail discarding Israel as a Jewish state, a sacrosanct notion for Zionism. Furthermore, it would require considerable external support since the demographically dominant and historically antagonized Palestinian and Israeli Arab populations are likely to engage in retributive violence against Jews and to use their electoral superiority to undermine the secular and ethnically-neutral orientation of the state. However, with the right mixture of constitutional safeguards and international peacekeepers, a united Israel-Palestine could avoid the current problem of Israel—the problem of the nation state.
It has been my observation that the nation state, as typified by France, has been a net negative for human wellbeing. Nation states set up an unnatural and unachievable expectation that the territory controlled by a state are drawn from a single ethnic group who speak a single language and adhere to a single idealized set of cultural values. Over and over again, the effect of state-based nationalism has been the erosion of the rights of people who fall outside of the national prototype. At its worst, nationalism has given us fascism and nazism, but even in its most benign forms, it has contributed more ill than good. I am opposed to Israel as a Jewish state in the same respect that I am opposed to Spain as a Spanish state, Denmark as a Danish State, or China as a (Han) Chinese state. In fact, one of the things that I really admire about the United States—and that I truly think we have got right—is that we have never fully degenerated into a prototypical nation state (despite temptations to do otherwise). Switzerland and Canada may have done this even better.
A two-state solution would simply perpetuate the problems of nation-statehood in Israel-Palestine. A sovereign Palestinian state will always tempt a sovereign Israel to forcibly divest itself of its Arab citizens (to ethnically cleanse itself of one fifth or more of its population). A sovereign Palestine is also unlikely to make a lasting peace with Israel and Israel is likely respond with renewed and repeated occupations. This means that the current de facto one-state scenario is unlikely to change even if a two-state agreement were made. It is better to hope for a future where ethnic and religion differences are transcended, at least in law, and a measure of equality is achieved, than to hold on to the illusion that Jewish survival can be best ensured by the existence of a Jewish state.