"You know, I don't get this at all. What bloody guilt? How did that guilt suddenly kick in in 67?"
It's a good question. There is a growing literature on guilt as a factor in international relations. Elazar Barkan's 'Guilt of Nations' (last year), Ian Buruma's 'Wages of Guilt'.
On Israel specifically, Barkan has good chapters and Norman Finkelstein, The Holocaust Industry, is very good, as is the book Finkelstein took much of his argument from (though I can't remember the author). -- James Heartfield Sustaining Architecture in the Anti-Machine Age is available at GBP19.99, plus GBP5.01 p&p from Publications, audacity.org, 8 College Close, Hackney, London, E9 6ER. Make cheques payable to 'Audacity Ltd'. www.audacity.org