HIRSH GOODMAN is a senior research associate at the Institute for National Security Studies at Tel Aviv University. He is former vice president of the Jerusalem Post and founder and former editor-in-chief of the Jerusalem Report. He is the author of “The Anatomy of Israel’s Survival” (2011).

ECONOMIST: What don't most people know about modern Israel?

GOODMAN: The first thing people should know is that 72% of Israelis were born locally. Israel has gone from being a country of immigrants, each with their own culture and background, to a country that’s becoming more and more Israeli. That goes right through the entire system. The army is more Israeli, the Knesset is more Israeli, the government is far more Israeli.

ECONOMIST: Isn’t a huge proportion of the population still Russian?

GOODMAN: In the 1990s a million people came to Israel from the former Soviet Union—20% of the population—but we now have their children and grandchildren contributing to the very interesting dynamic that has changed Israel from an immigrant nation to a more indigenous one. I am talking about Israeli Arabs as well, who are an integral part of the society here, also making up 20% of the population. I think that as [Israeli Arabs] watch the Arab spring and the surrounding instability they perhaps appreciate the society they live in, though I do understand that there are major issues around identity and discrimination.

ECONOMIST: How might this be resolved?

GOODMAN: I see the solution to this in the same way as I see the solution to the very serious issue with the ultra-Orthodox who have a much, much higher birth rate than the rest of the population and just as many problems with a modern Israeli identity (tax and national service), a country which was not created by the Messiah. What I recommend is national, not necessarily military, service for all. That would be a great equaliser for Israeli society.

ECONOMIST: What about Palestine? A two-state solution or a one-state solution?

GOODMAN: We have got to make peace with the Palestinians. I firmly believe in a multi-state solution. I think a one-state solution would be a recipe for continued conflict. Ultimately, the resolution is going to look like Switzerland. I’ve been saying that for years and everybody laughed at me. There are going to be three independent sovereign nations; Gaza, governed by Hamas, until they decide otherwise; Israel, with its majority Jewish population and minority Arab population; and Palestine with its ’67 borders. There will be three sovereign states with a federal governing body to deal with issues like traffic protocol and so on. Israel has to negotiate separately with Gaza and with the PA. Gaza and Hamas want a ceasefire and the PA wants peace.

ECONOMIST: It will be just like Switzerland?

GOODMAN: Well, Switzerland suggests neutrality and hugging each other, but I’m speaking about three sovereign nations coordinating at the federal level on issues of mutual concern.

ECONOMIST: Like security?

GOODMAN: Of course security and border controls are essential ones. All these issues, like Palestinian ships leaving Israeli ports, the problems of airlines and so on, will have to be resolved constructively.

ECONOMIST: In terms of security, how do you think the sovereign states of Gaza and Palestine would respond to the current friction with Iran?

GOODMAN: Iran is a very big question, but I don’t think it’s the kind of security issue these three will have to face. The Palestinian government in the West Bank says that "violence is not in our interests". Iran is not going to drop a nuclear bomb on Palestine, so if Israel has made peace with Palestine and the Arab world supports that peace then this is not going to be a problem. Peace with the Palestinians is a cardinal Israeli interest and it has to be resolved now. There is no such thing as status quo here. There are more settlements all the time; the Palestinians are losing faith in the two-state solution. The longer we leave it the greater the potential for deep, deep civil strife. All other problems are tangential, even Iran, to the critical need for Israel for its own reasons to make a peace with Palestine.

Occupation corrupts and Israel’s occupation of the West Bank has distracted the world from Israel’s achievements. So many of the things that people use every day are a result of Israeli technologies. There is not a single serious hi-tech company that doesn’t have intellectual input from Israel. I don’t want to sound like a propagandist, but we have some of the highest crop yields in the world, not through genetic engineering but through agricultural management. Because Israel has developed so strongly in agriculture, in water management, in water desalination—all the things the modern Palestinian state will need—there is so much room for cooperation. I think this could really be a positive part of the world, frankly. The problem on both sides is that leadership is mediocre. But at least there is no major damage being caused at the moment.

ECONOMIST: It’s refreshing to hear someone sound so optimistic.

GOODMAN: Yes, optimism is considered a national crime in Israel. One can be very pessimistic about it, and the peace camp has taken a lot of knocks. But I am very hopeful in the short term. However, I’m worried about stagnation. It’s so comfortable for everyone right now, if they put it on the back burner then when they get to the problem it will be intractable.