Both Israel and Palestine seek recognition and legitimacy. This stems from a deep need to be recognized as part of the family of nations, after a history of rejection. The need is not merely a political one, or one vote at the United Nations Security Council could take care of it. Also, the demand for mutual recognition of historical narratives is misguided, as neither will ever be ready to accept the historical narrative of the other.The declared need for recognition is part of the bargaining and the overall negotiations.Binyamin Netanyahu demands the recognition by the Palestinians of Israel as a Jewish state. Abu Mazen (Mahmoud Abbas) sees in recognition the agreement with Israel on a Palestinian state within the 1967 borders and east Jerusalem as its capital.In reality, Israel being a Jewish state and Palestine being an independent democracy depend mainly on the decisions of each side for itself and not for the other.For Israel, to be the democratic homeland of the Jewish people does not depend on the consent of the Palestinian leadership.To be a Jewish democracy means, first of all, to have a clear Jewish majority in Israel, which necessitates the end of the occupation of the West Bank. For Jerusalem to be the center of Jewish life, its Jewish majority must be clear; this means giving up on east Jerusalem, except the Jewish Quarter and the Western Wall.More important, to be a state worthy of being the homeland of all Jews demands an adherence to Jewish values – to sanctify the principle of equality as “all mankind was created in the image of G-d”; and to live by one of the Bible’s most central verses: “Love thy neighbor.”The situation in which we find ourselves today – the occupation of 3 million Palestinians, controlling their lives and destinies – goes against the very essence of Jewish values. It is in fact undermining the universality of these values. The notion that the one supporting Greater Israel is more Jewish is false, if not blasphemous.We were promised control of our destiny, not of others. Vandalism in Arab villages, curtailing their water supply and uprooting their olive trees are anything but Jewish.As for the Palestinians, they too must espouse a greater degree of self-reliance. An independent Palestinian state has to result also from peace negotiations and recognition by the international community. Yet, to a large degree the character of the new state depends on the Palestinians. To be independent will also mean to be the homeland of the Palestinian diaspora, which necessitates a growing economy and a stable and coherent society. This can become reality by developing a free-market economy, based on the knowhow and intelligentsia of the many Palestinian universities, as well as good relations with their Israeli neighbor, especially in the field of high technology.Palestinian future relations with the world must not be based on foreign aid but on growing trade, tourism and investment. For this the Palestinians need to face the world not as victims but as a national success story.Therefore, a new Palestinian state should be, as they claim, democratic with a multi-party political system, with respect for minorities and civil rights. The Palestinian people does not want to move from Israeli occupation to Palestinian occupation. A free Palestine is mainly a democratic Palestine.The Palestinians will, in the future, have to get used to not blaming everything on the occupation. After an agreement they will have the chance to become a model Arab democracy, whose foundations need to be established now. This means to do away with political religious fundamentalism and establish modern, accountable state institutions and a moral code as a basis for a state constitution.These challenges mean that before asking for mutual recognition, Israel and Palestine must first recognize themselves for what they aspire to be and work for it. Such a self-recognition touches on the identity of each side. The recognition, so much debated these days, is of a diplomatic nature and touches on the relationships between the two sides.I was personally engaged in the only existing mutual-recognition agreement, signed in an exchange of letters between Yitzhak Rabin and Yasser Arafat on September 9, 1993. The PLO recognized Israel’s right to exist in peace and security; Israel recognized the PLO as the legitimate representative of the Palestinian people.It was secretly negotiated in Paris between Abu Ala (Ahmed Qurei) and me in the presence of Norwegian foreign minister Johan Jorgen Holst. The intense negotiations centered on one key word. The Palestinians agreed to recognize the existence of Israel; we insisted, on the instructions of Rabin and Shimon Peres, on the recognition of Israel’s right to exist in peace and security. The word “right” was in dispute.The recognition of Israel’s existence is the recognition of a fact of life. The recognition of Israel’s right to exist refers to Israel’s legitimacy.Arafat, on the phone with his negotiators, convened the PLO leadership and after 48 grueling hours finally gave in. This issue of the Jewish state did not come up. Rabin and Peres at the time did not believe that our Jewish identity needed Palestinian acceptance.This issue has now become central to the negotiations. Both sides demanding the recognition of what they aspire to be. The negotiations have faced serious obstacles, to the fault of both parties. A serious peace process can only take place when each side makes the necessary decisions in relation to what it seeks to be, answering the questions – what is Israel and what is Palestine? Israel’s political leadership is torn between its ideological leaning toward a Greater Israel that includes historical Judea and Samaria, and the need for good relations with the United States.The Palestinians are torn between the need for a domestic consensus between pragmatists and religious fundamentalists and the need to come to terms with the United States and Israel.Only if we in Israel comprehend that the continuation of the occupation of the West Bank undermines our very identity as a Jewish democracy will we be able to thrive as a democratic and prosperous society. Only when the simple respect for the dignity of our neighbors will be more important than the self-glorification of the “chosen people” can we live not just in peace with them but in peace with our Jewish legacy. Only when investing in our school system for all Israelis becomes more important than another house in Karnei Shomron in Samaria will we reestablish our national priorities. Only when the values of our Declaration of Independence override the messianic aspirations of the religious settlers will we deserve the title of a Jewish, democratic homeland.The Palestinians also have to choose. Hamas is a bigger threat to their identity than Israel.So are some of the dogmatic religious preachers in the mosques of the West Bank.An independent Palestine supported by the world will depend on its democratic institutions, on giving up the xenophobic attitudes to the West and Israel, and in adhering to universal values of civic, political, religious and sexual freedoms.Therefore the United States’ administration is right. Leaders must be leaders, and make historic choices. A choice for democratic pluralism is a choice for peace on both sides.Only with a peaceful two-state solution can both sides ensure their identity. Then they may, for the end of the process, demand recognition from the other side, for Israel as the democratic homeland of the Jewish people, and for Palestine as the democratic homeland of the Palestinian people. But first comes self-recognition and historic decisions on identity and peace.Uri Savir is the honorary president of the Peres Center for Peace and served as the chief negotiator of the Oslo Accord.Barbara Hurwitz edited this column.