If the Israeli side is unable or unwilling to go well beyond the parameters of its present approach and contemplate a bold package which offers the Palestinian side a reasonable share of its homeland, the physical sacrifices and political concessions that made Oslo possible would be deemed to have been made in vain. Even Arafat will not put his name to a capitulation which will be rejected outright by his constituency and which will tarnish his political legacy for ever. But if Arafat himself cannot sign or deliver a capitulation, his successors will have even less authority to do so. A decent deal with Arafat can be carried by his successors who will be absolved of the political costs of reasonable compromise. Without Arafat, any deal foisted in extremis on the new leadership will simply not be sustainable.
Widespread violence is certainly one possible consequence of the collapse of the two-state solution.
But other alternatives may develop in parallel with, or as an alternative to, this dire scenario. As the chances of a reasonable territorial settlement recede, a new debate is taking place on the Palestinian side which opens the door to a revival of a solution sidelined by the territorialism of the PLO and its drive for national self-expression through statehood. The new approach argues that the Palestine problem can be seen to have three possible outcomes. The first involves domination by one side of the other - and hence the condemnation of both sides to perpetual confrontation. The second is based on the territorial division of Palestine between the two sides, according to some mutually acceptable formula.