Etatism is what you refer to, if not than you don't know the term of it. Statism or Etatism means the insistance on Government intervention in most aspects of daily lives.

Zionism, being a very, very statist ideology. If Israel castes off the shackles of Zionism, they would undoubtedly make peace with the Arabs, and Palestine would do well to either form a Nation with the Jews and move towards a free market economy. Which solves all.

Israel should do well to pay, fair reparations to the Arabs, as well. Especially for the land siezures, and property confiscations.

Your probably asking the wrong questions regarding Israel. As most people do.

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"It is the Right of the People to alter or abolish the Government"
Declaration of Independence
"Never trouble another for what you can do for yourself."
Thomas Jefferson
"If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand."
Milton Friedman