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Why is Israel afraid of the establishment of a Palestinian state?

The decision by Norway, Ireland, and Spain to officially recognize Palestine has sparked debates in Israel. The Israeli public sees this development as a significant shock, unprecedented for Tel Aviv, while it is known that many other countries are preparing to take similar steps. So why is Israel anxious? Why is it afraid of a two-state solution?

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In November 1967, the UN Security Council adopted Resolution 242, calling for Israel's withdrawal from the occupied territories. Despite the years that have passed since the adoption of this decision, Israel has yet to withdraw from these territories; the occupation in the West Bank and the blockade in Gaza continue. The Israeli occupation in Jerusalem and the Golan Heights also persists.