PROPHECY IN the Middle East is for the foolhardy or, to quote the Talmud, for fools. Nevertheless, it is reasonable to pronounce US Secretary of State John Kerry’s “last chance” peace initiative clinically dead, even if he manages to talk the parties into a life support arrangement for another few months. After Palestinian Authority President Mahmoud Abbas ruled out recognition of Israel as a Jewish State and refused to waive the right of return for Palestinian refugees, even a far more dovish Israeli government could not conscionably claim that a grand bargain is on offer.Indeed, Israel’s “peace camp” fell back on its hackneyed “interim accord” stopgap.Interim accords, however, are merely a euphemism for salami tactics, where Israel surrenders real estate and principle for nothing more than a brief respite. On the contrary, the predictable breakdown of the Kerry mission offers a chance for reassessment and reversal of the pattern of successive, unrequited concessions that still leave Israel on the defensive. Netanyahu’s recent interview conceding that some Jewish communities would not remain under Israeli sovereignty was merely the latest. Israel should be moving in the opposite direction. It should be up front about creating territorial facts on the ground and making no apologies about their inherent legitimacy.Despite their differences, Netanyahu shares US President Barack Obama’s weakness in failing to follow through on declarations and red lines. For example, when the Palestinians, in violation of their commitments made an end run to the United Nations to upgrade their diplomatic status, the government promised to pursue construction in E-1, between Jerusalem and Ma’aleh Adumim, in response, but quickly caved in. Construction in E-1 would have consolidated Israel’s control of a corridor from Jerusalem to the Jordan River. Granted, it would bisect a potential Palestinian state – which from my perspective is all to the good.However, even if such a state should emerge – to Israel’s detriment – its contiguity problem could be solved by overpasses and tunnels. After all, how is contiguity to be achieved between Gaza and Ramallah, if the twain should ever meet, other than by a route traversing Israel from above or below? Furthermore, the Palestinians are the last people who can claim to be allergic to tunnels.That will do for starters.But what about the endgame? On my side of the political fence two approaches compete. The first favors a one-state solution, in which Israel annexes Judea and Samaria and grants citizenship to the Arab inhabitants. I am skeptical, even though such an arrangement would be superior to the unworkable two-state solution. For one, it would be difficult to preserve fundamental Israeli institutions such as the Law of Return precisely at a time when beleaguered Diaspora Jewish communities may be in need of physical or spiritual rescue. I also have my doubts, fences notwithstanding, that Israel would be capable of stemming Arab infiltration into the single state, when the illegals could blend into the local population. Nor can the possibility of a temporary unholy alliance between the Arabs and the extreme left be excluded. The Arab partner to the deal would call it a binational state, while the Jewish participants would revel in Israel’s makeover into a multicultural “state of all its citizens.” I therefore favor Bayit Yehudi leader Naftali Bennett’s “Csection” approach, under which Israel would annex Area C of the West Bank, where Israel already exercises full civil and security control, and award citizenship to the relatively small number of Palestinians remaining in what would become sovereign Israel.Ramallah, presiding over Areas A and B, and circumscribed by sovereign Israeli territory, would pose less of a threat.Of course, we will encounter the Pavlovian chant of Bantustan, but we would have to face it anyway, unless we surrender totally.Whereas Israel’s first president Chaim Weizmann was willing to establish a state “the size of a tablecloth,” the Palestinians would be getting many linen closets. Some sovereign Arab territories, including Gaza, are smaller. Maybe, if the Arabs were confronted with this alternative, rather than an Israel in continual retreat, they would approach negotiations more seriously. Contributor Amiel Ungar is also a columnist for the Hebrew weekly.