I think you're partially right. It is true that when there was a government in Israel more serious about compromising for peace, there was more terrorism in Israel. This did create fear in Israel. However, the issue of settlements is another matter. It is legitimate for the international community to protest Israel's settlement policy. In war, under various circumstances, one could argue that some form of limited military occupation in the territories may be legitimate. However, dispossessing the local population in favor of settlers is unacceptable at all times and in any form. It's theft. The quasi apartheid system with one set of rules for settlers and another for Arabs in the West Bank is unacceptable. The manner in which settlers are permitted to run wild and terrorize Palestinians is unacceptable. While I do question the motives of some of the boycotters (do they really apply the same standards to all countries?) the international community is allowed to register their nonviolent protests of Israeli policy. As someone who spent time in Israeli academia, I do believe that this sort of pressure can help make Israel realize that if they want to be part of the West, their policies need to change. Period.
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Turkish military says destroys PKK militant targets in air strikes (Reuters)
from the article: The prophetic lesson of Stephen Hawking's Israel boycott