When Israel’s independence was proclaimed in Tel Aviv on May 14, 1948, as leaders of the nascent state sang “Hatikva” (Hope), few could have imagined the vibrant state that exists today.

The Zionist movement was a reaction to European anti-Semitism and pogroms that climaxed with the Nazi slaughter of 6 million Jews. But Arab states and the Palestinians had rejected the 1947 U.N. partition of British mandate Palestine into two states, one Jewish, one Arab. A civil war between Palestinians and Jews had been raging for months, and the armies of Egypt, Jordan, Syria and Iraq were poised to invade.

Yet Israel survived that war and the wars that followed. On her 60th anniversary, however, a different kind of existential threat haunts the country. It is not a nuclear-armed Iran, nor a terrorist bomb, nor does it come from Israel’s Arab neighbors.

The threat can be summed up in one word: demography. Unless Israel and the Palestinians can agree on a formula for two states living side by side, the number of Palestinian Arabs under Israeli control will probably outnumber Jews within the next two decades. And that could spell the end of the Jewish state.

“If the day comes when the two-state solution collapses, and we face a South African-style struggle for equal voting rights (for Palestinians in the West Bank and Gaza Strip), then, as soon as that happens, the State of Israel is finished.” That statement was made by Israeli Prime Minister Ehud Olmert, not by Jimmy Carter, whose comparisons between Israel’s behavior and apartheid have drawn fire.

What Olmert fears is graphically illustrated by the numbers. According to Israel’s Central Bureau of Statistics, its population is 7,282,000, of whom 20.1 percent are Palestinian Arab citizens. On the West Bank and Gaza, according to 2008 figures in the CIA’s World Factbook, an additional 4.2 million Palestinians live.

Hebrew University demographer Sergio DellaPergola projects that by 2020 Jews will compose only 44 percent to 47 percent of the combined population in Israel and the occupied territories. He also projects that by 2050 “the Jewish share might diminish to 35 to 37 percent.”

If Israel keeps control of the West Bank and Gaza, the disenfranchised Palestinian majority will start demanding the right to vote inside Israel. And, as Olmert (not Carter) has said, the world will start comparing the Israel-Palestinian conflict “to a South African one.”

Yet a Palestinian majority that voted inside greater Israel would seek a Palestinian Arab state, and an end to the Jewish homeland. In the bitter, tribal politics of the Middle East, ethnic groups seek communal, not individual, rights at the expense of other communities.

Think Lebanon or Iraq, where voters cling to sectarian parties that cement ethnic and religious divisions. There is no way that both Palestinians and Israelis can pursue their national rights within one state.

That demographic reality was why the late Israeli Prime Minister Yitzhak Rabin endorsed the Oslo Accords, which aimed at creating two states. But Oslo failed, souring both sides on the peace process.

Olmert, and former Prime Minister Ariel Sharon – both hawks on the Palestinian issue – also recognized the demographic danger. That is why they endorsed a unilateral Israeli withdrawal from Gaza. But this unilateral step – which undercut Palestinian moderates who favor negotiations – only wound up making the problem worse.

So on its 60th anniversary, Israel faces a crossroads. The country is economically and militarily strong, despite the threats it faces from rockets fired by Hamas or Hezbollah. It reportedly has a second-strike nuclear capacity, which would sober any regional power that might acquire nuclear weapons, including Iran.

But Israel has yet to find a route toward a two-state solution with the Palestinians that can resolve the Israeli demographic crisis. And in this critical endeavor, the Annapolis peace process godfathered by the White House has been a flop.

Israeli and Palestinian leadership is weak and appears to have accomplished little on a final-status agreement. But the White House has been unwilling to press for the one gesture that might galvanize some progress and is required by Bush’s road map for peace: an Israeli halt to all building in Jewish settlements on the West Bank. So far, Olmert has insisted Israel has the right to continue building in some settlements, and the White House has remained passive.

Instead, Condoleezza Rice is demanding meaningless declarations of progress by the two sides before Bush’s arrival in Jerusalem next week. Such window-dressing is pointless – a sad sign of an administration that fails to grasp the urgency of the situation.

If the two-state concept is to be saved, a more active presidential role in the Annapolis process is crucial. On its 60th anniversary, Israel can stand up to external challenges. But, unresolved, the demographic challenge will eat at the country from within.