Yasser Arafat's rejection of the two-state solution in July and December 2000 and Mahmoud Abbas's rejection of an almost identical set of Israeli compromise proposals eight years later have now come home to roost, definitively: the Israeli Labor Party is no more.
This is the significance of Ehud Barak's abandonment, along with four other former Labor Knesset members, of the party that led the Zionist movement through the 1930s and 1940s to statehood and then governed Israel until 1977.
The demise of Labor began with the maturation of the first generation of Israeli-born sefardim, children of families who reached Israel from the Arab world in the 1950s and 1960s. With a beef against the Arab world that they had come from, which always treated them as second-class citizens, and a chip on their shoulder regarding the Ashkenazi establishment that had mal-absorbed them in the Jewish state, they vented their frustrations and anger by tilting to the hardline right, and voted the perennial outsider, the Likud's Menachem Begin, into power.
Demography and history had shared in siring Labor's first defeat. But then Labor bounced back, twice. It shared power with the Likud in the mid-1980s, and in 1992 and then again in 1999, respectively under Yitzhak Rabin and Ehud Barak, it won back the premiership with the promise of peace: Labor could make peace and end the conflict with the Palestinians.
The voters gave Labor two chances. But neither the Oslo process (in the 1990s), under Rabin and Shimon Peres, nor the Camp David summit (in 2000), under Barak, delivered the Israelis and Palestinians into the bright uplands where real political happiness is engendered.
One may argue—and many at the time did and, since then, have—about who was most to blame for the failure of the Oslo Process: Arafat, for not reining in, or perhaps even covertly encouraging, Hamas (and Fatah) suicide bombers; or Rabin and Peres, for moving too slowly and failing to meet specific deadlines.
But there can be no serious argument about what transpired in July and December 2000, when Arafat sequentially rejected comprehensive Israeli and Israeli-American proposals for a two-state solution which would have given the Palestinians ("the Clinton Parameters") sovereignty and independence in 95% of the West Bank, all of the Gaza Strip, and half of Jerusalem (including half or three-quarters of the Old City). And there can be no serious argument either about Abbas's rejection of the similar, perhaps even slightly better deal, offered by Israeli Prime Minister Ehud Olmert in 2008. (Indeed, these rejections of a two-state solution were already a tradition set in stone: The Palestinians' leaders had rejected two-state compromises in 1937 (the Peel proposals), 1947 (the UN General Assembly partition resolution) and (implicitly) in 1978 (when Arafat rejected the Sadat-Begin Camp David agreement, which provided for "autonomy" in the Palestinan territories).
In the first decade of the third millenium, the Palestinians—Arafat and Abbas (and, needless to say, the fundamentalist anti-Semitic Hamas)—had, again, rejected not so much a set of proposals as an idea, a principle, the two-state solution. They wanted all of Palestine, and not an inch for the Jews.
And it was this rejection that destroyed the Israel Labor Party, which lost, and lost big, in all the general elections that followed Camp David. In 2000, the Israeli electorate grimly came to understand that there was no "peace partner", that the Palestinians would not, would never, sign on to the existence of a Jewish state in any part of Palestine, and that what Labor stood for—a two-state solution—was a sad delusion. So the electors voted for the hard right, the soft right, God's various anti-Zionist and ultra-Zionist parties, even a pensioners' list, Ariel Sharon, Ehud Olmert, Tzipi Livni, anything and anyone but Labor and its conciliatory affiliates. The electorate had moved, perhaps irremediably, to the right.
Now Labor is left with four-five Knesset members (in a 120-seat chamber), no platform, no leader—and no future.
In the coming years, the Palestinians (and, no doubt, the Israelis too) will pay, and pay big, for the Palestinians' unwillingness to share Palestine.