When they call Israel a terrorist state...

How did things go so horribly wrong, then? Why are we in such a troubled place today?
The truth is it has been a long process.

The short version is that it began with destructive ideology.
Jerusalem’s Muslim leaders viewed the Zionists as invaders because the Jews came from outside the Ottoman Empire, as a threat to the social order which generated their prestige and wealth from the exploitation of the serfs and peasants, and they saw Zionist success as a humiliation precisely because the newcomers were Jews.
They misread Jewish aspirations as a zero-sum threat to their own pan-Arab project. Enough of them lacked tolerance or trust, and preferred violence over compromise, to block any efforts at peaceful coexistence.
Critically, after a decade of tension and occasional violence, in 1929 the Grand Mufti, Haj Amin al-Hussayni, spread false rumors that Jews planned to destroy al-Aqsa, triggering Arab riots and pogroms. Hebron’s Jews were dragged from their homes, many murdered or raped, and the survivors were evacuated; no Jews returned until decades after Israel was founded. Similar killings occurred in other towns.
This violence forced the Zionists to formalize their ad-hoc defense bands from previous incidents into paramilitary groups, feeding the spiral we live with today.
One of those groups, Irgun Zvai Leumi, though small, drew a radical minority of right-wing Zionists, some ultra-Orthodox, who adopted Arab-style terror in tit-for-tat attacks. They hoped to push Arabs out and left a legacy of bitterness.
Irgun comprised less than five percent of the mainstream movement and was openly repudiated by other Zionists. That distinction, however, meant little to Palestinian observers, and today’s anti-Zionists still elevate Irgun (and the even smaller Lehi) as the face of early Zionism.
This is a false mask they try to force onto Zionism. They ignore that Irgun was a fringe, ultra-right faction within an overwhelmingly left-leaning, secular movement; that it was denounced at the time; and that Israel’s newborn army fought Irgun in open battle and disbanded it almost immediately after independence.
Contemporaneous reporting of mainstream Zionism condemning the Jewish rightwing dissident elements in Palestine.
In historical documents from the time, the Zionists referred to the members of Irgun (and another even smaller group named Lehi) as "dissidents." Far from being "tools of the Zionists," mainstream Zionists called both groups terrorists and publicly condemned them. They were viewed as flies in the ointment. You can see one of the original newspaper reports attached to this post.
To this day, part of the tragedy in the region is that the Irgun and their ideological descendants in the settler communities have remained the face of Zionism to the Arabs. I believe Israel does not do enough to control them, for reasons I will discuss in later chapters. It is part of the problem on the Israeli side.
In fancy language, Jewish terrorism was reactive, not causative, to Arab terrorism. Under threat not everyone agreed how to respond. The chief agent of hate was the Grand Mufti and the ideology he and other Jerusalem clerics stoked among the peasantry, as I will detail in The 1920s and the Spread of Hate. Hebron and its aftermath will be covered in History and Ideology, and the History of Ideology, Matter.
This hatred found fertile soil because the Ottoman Empire had long kept Jews at the bottom of its caste system (see the earlier chapter, Refugee Immigration, Not Settler Colonialism). Palestine Jews before the Zionists arrived were subject to regular violence and humiliation at the hands of Arab Muslims, which the Zionist Jews would not accept. Yet contempt was only part of the picture. Early Zionists were also perceived as foreign because they arrived from beyond Ottoman lands, unlike most other migrants.
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