Israel has been sliding into ever greater isolation in the few last years and this process has accelerated since Binyamin Netanyahu came to power in 2009. The international community is put off by his tactics: whenever the question of Israel's settlement policy comes up, he diverts attention to the Iranian nuclear threat. He argues that the world is facing a situation similar to 1938, and that its reaction is that of Neville Chamberlain, trying to appease Adolf Hitler. The world doesn't buy Netanyahu's rhetoric; his policy of stalling the peace process is perceived as a cynical ploy hiding Israel's true intent of holding on to the territories.
This explanation fails to take into account that Netanyahu's rhetoric reflects a paradoxical state of mind of the Israeli electorate. Polls show that a consistent 70% majority of Israelis favouring the two-state solution. So why has Israel's electorate been moving consistently to the right in the last decade? Why is Netanyahu's popularity in Israel so high? And why is Israel's public less willing than ever to listen to criticism of Israeli policies?
This development can be elucidated by a universal tendency of the human psyche uncovered by existential psychology in the last two decades. When under threat, particularly mortal threat, humans tend to defend psychologically by entrenching in their world views. These world views, which include identity narratives of righteousness, become ever more rigid under these circumstances, leading to growing distrust, hatred and negative prejudice against out-groups. Criticism of the in-group and its world view is rejected categorically.
This theory predicts that Israel's move to the right reflects a sense of existential threat. To outside observers this may seem absurd, given that Israel is a regional superpower generally assumed to have a substantial nuclear arsenal, whereas the Palestinians don't even have a standing army. Nevertheless all polls show that Israel suffers from deep anxiety about its viability.
http://www.guardian.co.uk/commentisfree/2010/jul/19/why-israel-keeps-moving-right