IN THE RUN-UP TO the anticipated UN vote on Palestinian statehood in September, critics of government policy on both sides fear the worst.On the Israeli side, two highly respected figures outside of party politics, former Mossad chief Meir Dagan and President Shimon Peres, have both suggested apocalyptic scenarios.On the Palestinian side, Prime Minister Salam Fayyad and former Palestinian UN representative Nasser al-Qudwa, one of the favorites to succeed Mahmoud Abbas as Palestinian Authority president, warn that the UN move could lead to a crippling loss of American diplomatic support and economic aide. They also fear that a UN resolution, which fails to change anything on the ground, could spark a new cycle of violence and retaliation that could destroy years of painstaking state-building.Prime Minister Benjamin Netanyahu and Abbas, however, are unmoved. In late June, Abbas officially decided to go ahead with his September initiative, electing not to wait to see whether the Americans could get a genuine peace process going before then; and Netanyahu showed no sign of readiness to agree to a new round of talks that could preempt the Palestinian move, despite strenuous American efforts to convince him to do so. Instead, Netanyahu launched an intensive global diplomatic effort aimed at limiting the degree of Palestinian success at the UN.On the Israeli side, the warnings that resonated most came from Dagan. His bottom line was deeply disturbing: Israel faces serious existential challenges and the current political leadership is not up to the task. Although he never mentioned the name, Dagan was almost certainly comparing Netanyahu and Defense Minister Ehud Barak in his own mind to his mentor Ariel Sharon and finding them wanting. A devotee of Sharon’s out-of-the box thinking as general and politician, Dagan maintains that Israel desperately needs a diplomatic initiative to take the play away from the Palestinians.“If we don’t offer things and don’t take the initiative, we might be put in a corner. Given the choice between being put in a corner or taking the initiative, initiative is better,” he declared in an early June address at Tel Aviv University.Dagan suggests that government failure to heed the warnings could lead to a catastrophe on the scale of the 1973 Yom Kippur War. Without saying so in so many words, he implies a scenario in which to deflect attention from Palestinian achievements at the UN, Israel attacks Iran’s nuclear facilities. This is how some commentators explained Dagan’s out-of-the-blue warning against striking at Iran, which, he said, would be “a stupid idea” that could ignite a regional war. Explaining why he had chosen to speak out in this blunt fashion he remarked: “I am not prepared to have a repeat of what happened in 1973 on my conscience.” Dagan also warned that failure to reach agreement with the Palestinians could have serious strategic consequences for Israel, a theme picked up in mid-June by Peres. In what were deliberately leaked as “concerned comments to confidants,” the president was quoted as saying that the government’s do-nothing policy was endangering Israel’s future: “Economic boycotts against Israel are taking place before our eyes… I am concerned that Israel will become a binational state… We are about to crash into the wall. We’re galloping at full speed towards a situation where we will lose the State of Israel as a Jewish state,” he warned. The Palestinian critics argue that by going to the UN, Abbas could lose his greatest potential diplomatic asset – American government support. They point out that the last time Netanyahu was prime minister in the mid to late 1990s, the US administration under Bill Clinton forced him to make significant concessions to the Palestinians. By going to the UN in defiance of President Barack Obama’s express wishes, Abbas could forfeit this crucial lever, the critics insist.Worse for the Palestinians, Obama’s position has been reinforced by several Congressional initiatives. Most significantly in mid-June, the Republican Chairman of the House Foreign Affairs Middle East subcommittee, Steve Chabot, urged the Administration to withhold US contributions to the UN if it recognizes a Palestinian state. There is also a Congressional threat to cut off US funding for the Palestinian Authority worth an annual $513 million if it goes ahead with plans to bring the radical Hamas into the leadership.To placate the US and European states that are threatening to follow suit, Abbas intends to back up his approach to the UN with an accompanying letter recognizing Israel in the 1967 borders and pledging to resume negotiations on all outstanding issues immediately on a state-to-state basis.So will the Palestinian UN move trigger further erosion of Israel’s international standing in ways that could seriously compromise the Jewish state diplomatically and economically? Or will it backfire and undermine hard-won Palestinian diplomatic and economic achievements? Or will it, as more optimistic voices on both sides hope, anchor a two-state model on the ground, creating conditions for a twostate solution and state-to-state negotiations on its terms?