For years I have been asking myself where does Israel think it is going. It is not an easy question to answer.

I have no doubt at all that in economic terms it has been doing well and there is every reason to think it will continue to do so. In 2007 it was asked to join the Organization for Economic Cooperation and Development, and this was obviously international recognition for its powerful economy, steady growth over the years and very high research and development spending. Israel has cleverly responded to the boom in global technology. Its founding fathers set it off on a socialist economic model, and it has managed to free itself and reform its impressive financial institutions.

But when one turns from this success story, and looks instead at Israel’s political fortunes, 60 years after its birth, one gets a very different and troubling picture. The present tension between the Palestinians and the Israelis has reached a very dangerous level, and beyond powerful players, who do not wish Israel well, wait and watch. This is happening at a moment in the history of the Middle East when the power and influence of the United States — Israel’s proud patron — is on the decrease and the power and influence of Iran, an implacable enemy of Israel’s, is on the increase.

I find it amazing that Prime Minister Ehud Olmert of Israel, who faces sleaze charges, has been able to remain in office. Twice he has been severely criticized by the Winograd inquiry into the war against Hezbollah that was mainly fought in Lebanon. The spark came from Gaza, after an Israeli aircraft dropped a bomb hoping to kill the head of Hamas’ military wing. The two fronts have become linked which is serious for Israel. It is also believed that Al-Qaeda is now present in Gaza and Hamas are their allies against Israel.

When the fighting against Hezbollah started Olmert wanted to prove that he could be trusted to protect Israel. He followed the by now traditional, macho and over-the-top Israeli line. The conflict was a disaster for Israel showing up numerous failings within the Israeli Defense Forces.

Today there is speculation over another round of fighting between Israel and Hezbollah, possibly also involving Syria. No doubt the tactics employed on both sides would be slightly different, but I cannot envisage the conclusions being very different. We can assume that Iran will make sure Hezbollah and Hamas are equipped, and re-equipped, with rockets of increasing range, accuracy and explosive power; Israel will be able to do little to shoot down more than a handful of them. It is not clear what major military objectives Israel might have in Syria, a weak country in military terms. Attacking Syria would increase the risks for Israel and help unite the world in its condemnation.

If Israel is to have a safe and sound future it has to accept the concept of land for peace. The world is still waiting for Israel to withdraw its forces from territory illegally occupied in 1967. Israel has the fourth strongest defense capability in the world, but I am not convinced that time is on its side. Islamic fundamentalism is an increasingly important factor in the area. Beyond the region day by day Israel is losing friends. What does Zionism mean for the younger generations? Not much.

Prime Minister Olmert has claimed he will fix Israel’s final borders by 2010. He seeks separation from the Palestinians. It is highly unlikely that his unpopular government could withdraw unilaterally from the West Bank.

The illegal settlements, which are at the heart of the Arab-Israel dispute, are expanding day by day on Palestinian territory. The government has just approved the construction of 750 housing units at the West Bank settlement of Giv’at Ze’er near Jerusalem.

Israel continues to treat the Palestinian-Israelis as second-class citizens. This is a fatal mistake. The population of Israel is 6.2 million and the Palestinian-Israelis make up over one million of that figure. Israelis tend to regard them as a demographic threat. Why have Israelis failed to give them a measure of autonomy?

Israel in 2008 is in a most curious, and I would claim dangerous, position. Israelis are prosperous and they have an excellent cultural record. But how is it that they seem to be so blind to these fundamental mistakes of their society? If they can see these mistakes why do they not take action?

In the long-term Israel’s chances of surviving as a Jewish democratic state look increasingly suspect.