Recent polling suggests that Israeli attitudes toward Palestinian statehood may be more fluid than they appear. An ALLMEP survey found that a majority of Israelis were open to Palestinian statehood under certain conditions, particularly as part of a broader regional peace and normalization agreement. Other polling, however, has found substantial opposition among Jewish Israelis even when statehood is tied to security guarantees and Arab normalization. The discrepancy points to a larger question: how might Israeli public opinion respond if Palestinian statehood were presented not as a standalone concession, but as one component of a fundamentally different strategic bargain? What if Israel and Iran signed a comprehensive peace agreement, conditional on the creation of an independent Palestinian state?
At first glance, it is hard to imagine a more far-fetched proposition. Since the 1979 Islamic Revolution, hostility toward Israel has been a defining pillar of Iranian state identity. For Israel, Iran has evolved into its primary strategic threat, with confrontation extending far beyond bilateral relations to encompass Hezbollah, Hamas, Tehran-backed regional militias, and the Houthis. More than six months into the U.S.-Israeli war with Iran, renewed fighting and continuing tensions around the Strait of Hormuz have underscored how quickly a regional confrontation can threaten global energy supplies and the world economy. Stalled diplomatic efforts and the persistent threat of wider regional warfare underscore the fragility of the current order.
Yet this crisis illustrates a broader reality: the Middle East is no longer an isolated arena. The Strait of Hormuz remains a vital artery of global energy and commerce; disruption to navigation immediately reverberates through energy prices, supply chains, and the world economy. The crucial question, therefore, is not merely how to manage the next round of escalation between Washington, Jerusalem, and Tehran, but whether the current crisis can spur a fundamental rethink of the entire regional architecture.
For decades, regional diplomacy rested on the premise that the Palestinian issue was the master key: resolving the Israeli-Palestinian conflict had to precede broader regional normalization. The Abraham Accords inverted this logic, demonstrating that Israel could normalize relations with the UAE, Bahrain, and Morocco without resolving the core conflict. Yet the prospect of normalization with Saudi Arabia has exposed the limits of that model. Riyadh continues to insist that normalization with Israel requires a credible path toward Palestinian statehood, even as Washington seeks to construct a broader strategic relationship among the United States, Saudi Arabia, and Israel.
What if this logic, too, requires a paradigm shift? What if a comprehensive regional framework, initiated by a structural transformation in Israeli-Iranian relations, is precisely what could create the necessary conditions to resolve the Israeli-Palestinian conflict?
To understand why this idea should not be dismissed as mere fantasy, it helps to recall the Sinai precedent. Prior to Egyptian President Anwar Sadat's historic 1977 visit to Jerusalem, the notion of Israel relinquishing the entire Sinai Peninsula was virtually unthinkable. Sinai was viewed as a vital strategic buffer, a symbol of the 1967 victory, and a major security asset. Yet that territorial concession took on an entirely different character when embedded within a grand bargain: full withdrawal in exchange for formal peace with Egypt. Israel was willing to make a major territorial sacrifice because the return was a profound strategic realignment, ending the state of war with the most powerful Arab nation.
The trauma of October 7 reinforced a deep conviction among the Israeli public that relinquishing territorial control creates an immediate security threat. For many Israelis, a Palestinian state is viewed not as a foundation for peace, but as a potential launching pad for future conflict. However, the Sinai precedent might suggest that the strategic meaning of territorial withdrawal can change when the surrounding strategic environment changes. A territorial concession that appears reckless in isolation may appear rational when embedded within a much larger security bargain.
Consider a hypothetical scenario: an Israeli-Iranian settlement that mandates an end to Iranian support for armed non-state actors, backed by long-term security commitments and international verification mechanisms; key Arab states joining this new regional framework; and, simultaneously, the establishment of a demilitarized Palestinian state in the West Bank and Gaza within a robust regional security architecture.
In such a framework, Palestinian statehood would no longer be framed within Israel as a unilateral concession, but as an integral component of a comprehensive realignment delivering profound strategic dividends. Israel would not simply be asked to trust a future Palestinian government or assume territorial risks in exchange for promises of peace. It would be asked to consider whether Palestinian statehood, embedded within a regional security architecture and accompanied by the dismantling of Iran's network of armed proxies, might ultimately leave Israel safer than it is today.
Crucially, for such an arrangement to be viable and enduring, Palestinian statehood would have to offer Palestinians far more than a symbolic declaration. It would require functioning institutions, political legitimacy, territorial continuity, economic viability, and genuine national sovereignty. A demilitarized Palestinian state would need credible international monitoring and security mechanisms acceptable to both Israelis and Palestinians. Without this balance, even the most ambitious regional framework would remain stable only on paper.
Rather than confronting Iran and its network on multiple fronts, Israel would find itself integrated into a new regional equilibrium. Instead of perpetually preparing for the next war, it could redefine its strategic horizon for decades. Saudi normalization, deeper regional economic integration, greater freedom of navigation, and stronger American security commitments could reinforce the strategic dividend.
This represents a profound shift in political consciousness. Clearly, Israel is unwilling to assume calculated risks for a standalone bilateral arrangement with the Palestinians. It might nevertheless reconsider if the dividend were a fundamental transformation of its relationship with Iran and a complete redrawing of its threat matrix.
For Tehran, such an arrangement would not be an act of benevolence, but the result of cold strategic calculation. Regime survival, sanctions relief, foreign investment, economic recovery, and reduced costs of military confrontation could outweigh ideological commitments that have defined Iranian foreign policy for decades. Revolutionary and authoritarian regimes are not immune to sharp course corrections when the cost of confrontation directly threatens their survival.
Furthermore, the Iranian regime possesses a potential ideological exit narrative. After decades of presenting itself as the principal defender of the Palestinian cause, Tehran could frame the establishment of a Palestinian state not as a retreat, but as a historic outcome that vindicates its long-standing position. Such a narrative would not convince Iran's hardliners, but governments do not require ideological unanimity to change strategic direction. They require sufficient political authority to redefine national interests.
Nevertheless, such a settlement cannot remain strictly bilateral between Israel and Iran, nor can it be purely an American initiative. Restructuring the Middle East's strategic landscape would require a broad international framework in which major powers have tangible interests in the agreement's stability. The United States would likely provide the principal security guarantees. The European Union would have powerful incentives to contribute economic and institutional support. China would have strong interests in secure energy supplies and uninterrupted trade routes. Russia, despite its competing interests, would have an incentive to prevent a regional war that further destabilizes the Middle East.
Because their interests diverge and often compete, stability would rely not on trust among superpowers, but on overlapping self-interest and institutional incentives. In this sense, it would not merely be a regional peace treaty, but an attempt to construct an international security architecture around a shared, bounded goal: preventing the Middle East from spiraling into another catastrophic regional war.
The obstacles, to be sure, are immense. In Israel, critics would denounce the idea as dangerously naive, citing the failures of past diplomatic frameworks and the trauma of October 7. In Iran, hardline factions that thrive on perpetual confrontation would view any compromise as an existential threat. Among Palestinians, a demilitarized state could raise legitimate concerns about whether sovereignty was genuine or conditional. Among global powers, deep rivalries would persist.
Yet historic peace agreements rarely emerge when obstacles vanish; they occur when leaders realize that continuing the conflict is far costlier and more dangerous than compromise.
This is the core lesson of the 1979 Egyptian-Israeli Peace Treaty: the agreement did not require Israel to cease worrying, but to determine that a new regional order offered greater security than holding territory. Israel did not suddenly stop fearing Egypt. What changed was the strategic meaning of withdrawal. It became part of a bargain that fundamentally altered the regional balance.
For Israel, the Palestinian question remains an existential issue touching on identity, security, demography, and the future of the state. Ultimately, the decisive choice may not be whether trust exists between Israelis and Palestinians, but whether a comprehensive regional architecture that fundamentally alters Israeli-Iranian relations and the balance of risks is preferable to an endless, bloody status quo.
If the current confrontation forces key actors to rethink the regional structure, the fundamental dilemma facing all of them is this: Is Tehran willing to exchange militant ideology for economic and regime survival? Is Israel willing to pay the necessary political and territorial price, first and foremost, resolving its historic conflict with the Palestinians, in exchange for a dramatic transformation of its relations with Iran and a path toward long-term regional peace?
The answer today would almost certainly be no. But perhaps, for the first time, it is time to start asking the question.
Yehuda Lukacs is an associate professor emeritus of global affairs at George Mason University and author of the recently published, Op-Ed: Musings on War & Peace in the Middle East and Beyond.