When asked to explain what made him believe the Palestinians would keep to the agreements they signed in Oslo, Shimon Peres used to trot out his corny old mantra “they are fully aware that they have what to lose”. Peres’s mantra contained a great theoretical truth, though it also contains a large number of weaknesses. Like any warring or terrorist body, the Palestinian do have what to lose. Peres was right on that count. But he never came close to understanding what would be an intolerable cost to them, just as he never saw that presenting the weak purpose throughout his and Rabin’s government failed to make an indelible impression on Israel’s partners, and certainly would not have made them believe that Israel would retaliate harshly.Now, as then, despite the fact that the Palestinians have what to lose and lots of it, they still carry on even though cost them serious and painful losses. This is an irrational and non-western way of behaving, like the scorpion that stung the frog that was doing him a favor, carrying him across the river, and caused them both to drown. Except that only Israel sees this as “scorpion behavior”. Israel and the Palestinian have fundamentally different gauges for measuring loss, breaking points, and what would be intolerable. What Israel and the west considers “unbearable loss” is very bearable to the Palestinians considering their agreements with Israel are a means of achieving their end goals. And in any case they do not think Israel will go crazy over violations.
There is an out-of-touch rationale which argues the Palestinians “have something to lose therefore they won’t break the treaties”, and it has played a key role in constructing the fictitious Middle East reality, which has flourished in our region since Oslo. In January 1996 the same make-believe reading of reality led Peres, who was then prime minister, to compare the Oslo Agreements to the creation of the universe, while declaring 2000 the year of Middle East peace and Israel’s membership of the Arab League our next goal. Needless to say it is not just the fact that the Palestinians have something to lose that will make them stick to agreements. Not every loss will prevent them from breaking their agreements—the only loss that will stop them is one that feels so terrible and so irreversible that it is not worth taking the risk.
Although Rosenfeld doesn't spell out a specific potential breaking point beyond a theoretical mass expulsion of Arabs to Jordan, I have mentioned before what I think the best and most humane way to force Palestinian Arabs to stop their violations: annexing land every single time a terror attack occurs or another agreement is broken. The symbolic value of even worthless land is incalculable, the amount taken can be small while the effect would be large, no one gets displaced or hurt (at first) and it can be directly justified, especially in the case of Gaza to build a buffer zone against attacks.
The entire conflict has been described, not too inaccurately, as a "real-estate dispute." Israel needs to add to its bargaining chips in this conflict, and real estate is the most direct and most effective means to do that.