There are several reasons that account for this contradiction and compel so many Israelis to put the demographic issue aside.
First, Israel pulled out of the tiny but crowded Gaza Strip in 2005, removing all settlers and soldiers and cutting off its almost 2 million people from Israel with a fence. Thus many Israelis feel they won some "demographic time" and dumped the troublesome territory — yet the Palestinians see Gaza as linked to the West Bank and they consider it still occupied because Israel controls air and sea access to it.
Second, the vast majority of West Bank Palestinians live in autonomous zones set up in negotiations during the 1990s. There the Palestinian Authority enjoys a measure of self-rule, with its own services to citizens, its own police and various trappings of quasi-statehood — enabling Israelis to view this population as not exactly under occupation and already somewhat separated from Israel. They note that Israel has not formally annexed the West Bank, the implication being that even though the territory has Jewish settlers who can vote in Israeli elections — it is not Israel.
But the reality is messy: dozens of islands of autonomy surrounded on all sides by the 60 percent of the West Bank still fully controlled by Israel, with Jewish settlements dotting the territory and Israel controlling Palestinians' movements between the zones and into and out of the West Bank. With the settlements in place, a reasonable-looking map is already difficult to envision.
Perhaps most damaging for the left, Israelis appear to have lost faith that the lands can be traded for peace, because even when their leaders proposed what they considered far-reaching offers no deal was reached. That happened under Prime Minister Ehud Barak in 2001, and again when the government of Ehud Olmert proposed a state on almost all the Palestinian territories in 2008.
One poll conducted several weeks ago showed 60 percent of Israeli Jews support a two-state peace agreement with the Palestinians — but 67 percent believe that "no matter which parties prevail, the peace process with the Palestinians will remain at a standstill for reasons not connected to Israel." The poll of 601 people had a 4.5 percent margin of error.
Some — like columnist Elia Leibowitz — argue for a unilateral pullout from at least part of the territory, if a deal is unattainable. "The fateful question now facing Israel is Hamlet's: To be or not to be," Leibowitz wrote in Haaretz. "The option of Israel 'being' exists only if it withdraws from all the occupied territories."
But the unilateral model has been discredited in the eyes of many by the example of Gaza where the Israeli handover was followed by a takeover by the Islamic militant group Hamas and years of cross-border rocket barrages.
"As opposed to the voices that I have heard recently urging me to run forward, make concessions (and) withdraw, I think that the diplomatic process must be managed responsibly and sagaciously and not in undue haste," Netanyahu said last week. He notes that he has offered peace talks but the Palestinians insist on a settlement freeze, which is politically difficult for a right-wing government.
The sense that they have run out of options — and yet that something has to give — has some on the left predicting the world will step in.
"Maybe we need to hit rock bottom, to be on the verge of international sanctions or a (foreign) military intervention before change can happen," said Liora Norwich, a 30-year-old in a Tel Aviv cafe, concluding that in this sense a Netanyahu victory could be for the best.
And critically, the demographic argument alienates the Israeli Arabs who are crucial to any hopes of assembling a majority in the electorate against the right. Unlike the Palestinians of the West Bank and Gaza, they are citizens of Israel who can vote. But about half don't bother — a much lower participation level than that of the Jews — greatly diminishing the chances of the left to prevail.
Among that group as well, the idea that a separation is no longer possible is increasingly heard.
"Every day that passes, with the expansion of settlements ... closes the window of opportunity and sends people thinking about another option: the one-state solution," prominent Arab legislator Ahmed Tibi said.
Contemplating such as Arab-majority state, Tibi added: "That's probably the only option in which I will be prime minister."
Dan Perry has reported on the Middle East for two decades and currently leads AP's coverage in the region. Follow him on www.twitter.com/perry_dan . Associated Press writer Ariel David in Tel Aviv contributed to this report.