No more of the 'don't worry, it will be fine' approach

While in Israel recently, I met with political, religious and academic leaders from across the political spectrum. I left with two overriding impressions of Israel’s situation.
The first is that right now is a good time for Israel. (Yes, let’s give the prime minister some credit.) Israel’s recent diplomacy has been brilliant. She has improved the atmosphere with Turkey, worked with Greece to block a second flotilla, strengthened ties with the United States, and gathered support in Europe for opposing a Palestinian independence resolution at the United Nations. Her first reaction to the Arab spring was clumsy, but she has since regained her footing. True, the passage of the boycott bill was a huge mistake, but overall, her position has much improved.   
The second impression is that a year and a half from now, and perhaps sooner, things are certain to be far worse than they currently are. The people with whom I spoke all feel that some or all of the following things will happen in the next 6-18 months:
*The Palestinian Authority will collapse or whither into insignificance. In the eyes of the West Bank population, it has made promise after promise and not delivered, and will soon pay the price.
*Israel will face increased resistance in the West Bank, whether or not the PA survives. Such resistance will mean either a low-level intifada or non-violent protest of one type or another, with the latter being the most dangerous to Israel.
*While the UN deliberations in September will not be the disaster that some predict, by the late fall Israel will be subjected to increased economic pressure from Europe in the form of boycotts and sanctions.   In some cases it will come from governments, while in other cases it will come from non-governmental groups hostile to Israel.
*The Palestinian leadership will abandon its commitment to a two-state solution and call for a single state with equal rights for all. The two-state proposal is kept alive by Abu Mazen’s backing and by European aid to the PA, but Abu Mazen will soon be gone and the PA may be gone as well. With sentiment among Palestinians turning against the two-state idea, Abu Mazen’s successors will not continue down this path.
It would be foolish to blame Israel for this state of affairs; Israel has made its share of blunders, but the Palestinians, by refusing to negotiate, are the primary villains. Nonetheless, it would be equally foolish for Israeli leaders to pretend – contrary to the evidence, the lessons of history, and common sense – that the status quo can continue more or less intact. (This is the “don’t worry, it will be fine” approach.)
My advice: Let Israel anticipate these scenarios by dramatically confirming its commitment to a two-state solution. And the best way to do this is to set provisional borders, stop settlement activity on the far side of those borders, and offer incentives to those living beyond the borders to move back. And if the Palestinians fail to respond, so be it. Israel will have addressed the demographic issue, fortified her diplomatic standing, and prepared herself to confront the possible perils of the year ahead.