Even if by annexing the West Bank and granting citizenship to its inhabitants, Israel would keep its Jewish majority, Arabs would still make up 40% of the Israeli population. IIt would inevitably bring the left in power and the forst thing a left-wing government would do is to negociate a two-state solution with the inhabitants of the West Bank, especially if as a result of the Israeli annexation of the West Bank, a third intifada is launched. Netanyahu understands that, and this is why he knows that annexing the West Bank would be meaningless.
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from the article: The Angelina Jolie dilemma