There are two reasons for this. The first one has to do with the Israeli demand for an end to the conflict and to Arab demands. The Palestinians make a distinction between recognizing the fact that the State of Israel exists and the recognition that it has the right to exist. The camp that supports Mahmoud Abbas has no qualms with the first definition: “Israel exists, and it’s apparently worthwhile to recognize it diplomatically; this is the way to guarantee for the Palestinians what only Israel can give. This agreement is fit for the present, but as to the future – who knows…”
The entire concept of “Hudna” (long-term ceasefire) is based on an approach that espouses compromise in an effort to elicit what can be achieved now, without abandoning the intention to fight and get much more in the future. The way to curb future demands, especially in respect to the refugee issue, is to create a Palestinian obligation to accept Israel’s right to exist as a Jewish state.
Moreover, the Arab League initiative pledges recognition of Israel by all Arab states, after it signs a peace treaty with the Palestinians (and with Syria.) What kind of recognition would it be? Israel has a clear interest in receiving full recognition – that is, recognizing our right to maintain a Jewish state here. If this cannot be achieved vis-à-vis the Palestinians, it will never be achieved with the other Arab states.
A message to Israeli Arabs
The second reason has to do with the status of Arab Israelis (or Israeli-Palestinians, as Ariel Sharon referred to them and as most of them view themselves.) In the eyes of the Palestinians, the State of Israel is a “state of all its citizens.” It does not have, and should not have, a national character. If, as a compromise, it will have a national character, it needs to equally represent the two nationalities living here, the Jews and the Palestinians.
Should the future Palestinian state not recognize the State of Israel as the Jewish people’s nation-state, there is no chance that the Palestinians residing in Israel will accept it. If we fail to insist on this now, we may find ourselves within a generation or two in a situation where Arab Israelis demand (possibly through violence) equal national rights.
The Palestinian state would support this automatically, and may even view this issue as a reason to breach the peace treaty. The way to minimize this risk, or at least to create a situation where the states of the world support us, is to clearly define (in a manner agreed upon by all sides) the State of Israel as the Jewish people’s nation-state.
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