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The occupation is dead. Over. No, not in the territories: The Palestinians in the West Bank still hope to be free of Israeli control, demonstrate at the roadblocks and fight with their settler neighbors over every hilltop and every olive grove.

But on this side of the separation fence, only a few are interested in what is happening on the other side. The debate over the territories still troubles the extremists on the left and right who bother to meet and shout at each other at Sheikh Jarrah, but it no longer defines the political debate in Israel.

The key issue in public debate today centers on Israel's national identity: how to strike the right balance between the components of "a Jewish and democratic state," and the past and future. The battle is over the soul of the mainstream, the shrinking majority of secular and traditionalist Israelis.

The demographic changes are increasing the power of the ultra-Orthodox and the Arabs, but because of the cultural and political differences between these two communities, the Israeli Jews who drive on Shabbat and do not put on phylacteries will continue to rule the country.

Since he returned to power, Prime Minister Benjamin Netanyahu has focused on presenting the Likud Party as the party of the contemporary Zionist ideal. Netanyahu considers himself as a continuation of the legacy begun by Theodor Herzl, or at least an updated interpretation, and often quotes the early Zionist leader.

His main demand of the Palestinians, which he reiterated at the start of the indirect negotiations on Monday, is that they recognize Israel as "a Jewish state." The Palestinian refusal serves Netanyahu in the domestic debate: I am defending fundamental principles and our historical rights, compared to governments on the left who gave up on them.

Netanyahu's approach is at the root of the national heritage plan, which he announced last month, and the pedagogical initiative of Education Minister Gideon Sa'ar.

Inviting Israel Defense Forces officers into schools, commemorating Jews executed by the British, presenting the leftist organizations as collaborators with the international "delegitimacy campaign" against Israel, the demand that the Palestinians alter their narrative and recognize the Jewish right to the Land of Israel, all have combined into the same effort. Netanyahu is trying to revive symbols of Ben-Gurionism: the Bible, the IDF, archaeology, Trumpeldor and Tel Hai.

"A nation needs to know its past in order to ensure its future," Netanyahu, the son of a historian, has said.

Netanyahu's ideology, which can be described as "national capitalism," brings into the same tent the immigrants from Russia, who identify with the governmental theme of a powerful state, and the Haredim, who identify with the Jewish message.

In the eyes of the prime minister, members of the rival camp suffer from cultural shallowness, "a hollowness of knowledge and spirit," overly focused on themselves and mistakenly believe that they are cosmopolitans.

These expressions from Netanyahu's address at the last Herzliya Conference sound like a laundered version of "these leftists forgot what it means to be Jewish," circa his previous tenure as prime minister.

Against Netanyahu's nationalism stands a shapeless camp, which wants to bolster the democratic element in the identity equation and create an "Israeli state." Its ideology is focused on openness to the world; its efforts aim to develop Israel into a Western, liberal country, and not a fortified, aggressive ghetto.

They adopted social elements from Ben-Gurion's heritage, all the way to neo-socialism, with concern for the weak and the refugees and the environment, but also by copying models of worldly success, such as Shai Agassi and Bar Refaeli.

Tzipi Livni symbolizes these values and, even if she does not realize she is like that, her constituents pushed her that way during the election campaign. The question of whether she will continue leading the camp in the future, and to which direction, remains open.

Netanyahu is aiming for the mainstream that loves the army and associates with national symbols. The left is divided between political interest, which requires that it link up with the Arabs and incorporate them in Jewish society, and its wish for legitimacy, which leads it to a more security-based and less democratic position. This dilemma serves the right, and ensures it remains in power, for the time being.

A state, Jewish or Israeli, facing the past or the future, isolation or openness - these are the characteristics of the contemporary debate on the character of Israel. The dispute over the future of the territories, to the extent that it even exists, is only an extension of the contemporary debate. After all, where is Yitzhar?