However, Netanyahu can’t make the decision solely based on Israel's policies, because they do not reflect a clear view of the territories' legal status. In fact, many policies have carefully fudged the question and cultivated an atmosphere of ambiguity about the occupation. A large body of Israeli laws, court rulings, policies and, above all, treaties (including those with Egypt, Jordan and the PLO) all either explicitly or implicitly recognize the territories as occupied. So, of course, does a veritable mountain of international law including UN Security Council resolutions and the ruling of the International Court of Justice on Israel's West Bank separation barrier.

And, as David Kretzmer, a noted Israeli legal scholar, observed, "If Israel is not an occupying force, it must immediately relinquish ownership of all private lands seized over the years for military use, taken with authority as the occupying force in an occupied territory, and restore the lands to previous owners.”

Finally, there is the obvious corollary to any formal acceptance that the occupied territories are not, in fact, occupied: that Israel views them as de facto and de jure part of its state. Full acceptance of the recommendations of the report would amount to announcing the de facto annexation of the occupied territories. That, too, has its own obvious corollary: Israel is already neither demographically Jewish nor democratic in character. Rather than administering a temporary occupation, it is presiding over a separate and unequal system that discriminates between Jews and Arabs in huge parts of its territory.

In this sense, the report might be seen as an anti-Balfour Declaration: a political statement, which, if implemented as written, would ensure that Israel can no longer continue in a meaningful sense to be a “Jewish state,” except by systematic ethnic discrimination against large parts of its population.

There's a word for such a system: Apartheid. Only by distinguishing between the occupied Palestinian territories and Israel proper can Israel sustain its objections to any application of this term to its polity. Accepting the Levy Committee's report would, in effect, dissolve any such distinction and render Israel practically defenseless against the indictment that it is an apartheid state. The long-term legal, political and diplomatic ramifications for Israel are incalculable.

When systematic ethnic discrimination is intended to be maintained rather than temporary, it is a crime under international law. Although Israel is not a signatory to the treaty, this is how the Statute of Rome, which outlines the work of the International Criminal Court, defines Apartheid. More importantly, such a formalized system would be regarded as indefensible not only by the international community but by huge numbers of Jews around the world, particularly in the United States. Long-term support for such an Israeli apartheid state by Jewish communities overseas would likely be placed in significant jeopardy.

On the other hand, if Netanyahu does not accept the Committee's report or implements it only partially, he will come under fire from significant sections of the Israeli right and the settler movement for implicitly recognizing that Israel is indeed an occupying power in the territories. That, too, has important implications, since settlement activity in occupied territories is strictly prohibited under international law, most importantly Article 49 of the Fourth Geneva Convention.

The Levy Committee attempted to bypss these prohibitions by denying that the territories are occupied at all. But it also accepted spurious assertions that Article 49 only prohibits “forced transfers” of civilians against their will into occupied territories. Such arguments are, almost unanimously, rejected by international legal scholars because in other sections the Convention already prohibits forced population transfers. Article 49, however, explicitly prohibits all “transfer" of civilians into an occupied territory, because it is meant to protect the rights of people living under occupation not to be colonized by settlers from the occupying power.