It's the 60th anniversary of the proclamation of Israel's statehood, and the local media are hyperventilating. The occasion is also attracting an inordinate amount of interest outside - especially in the West, which behaves as if it is joined at the hip with the Jewish State.

Yet, as the veteran columnist and historian Tom Segev pointed out in the daily Haaretz the day before the anniversary, Israel did not pop into being from Ben-Gurion's brow when he made the famous declaration in Tel Aviv on 14 May, 1948. Israel was right here, though a much smaller entity - with a little over 600,000 Jews it was a mini-state, with self-administration, a multi-party parliament, cities and towns and villages, schools, theatres, shops, publishing-houses, galleries and museums, as well as a lively cafe scene, sports and newspapers. That same Haaretz was the senior Hebrew daily (founded in 1918), and there were several other broadsheets, as well as a couple of evening tabloids which are still going strong, Yediot Aharonot and Maariv. The Yishuv (as the Jewish community of Palestine called itself) thought of itself as a fledgling Hebrew - rather than Jewish - state.

I was twelve years old and clearly remember the occasion - Ben-Gurion's rather raucous voice coming over the radio, the tension in the air, the expectation of conflict... That night the attack began. The Arab states, which had rejected the previous year's UN resolution on the partition of Palestine into two states, Arab and Jewish, launched a more-or-less concerted assault. Jerusalem, perched on the mountain range between the Judean Desert and the green lowlands, was encircled by the Arab Legion and the Jewish part of the city was besieged for several months. In the first part of that war, until the ceasefire, things went badly for the Israelis, but during the lull it received a good deal of help - much of it from the USSR, by way of Czechoslovakia - and volunteer fighters, and when the battle resumed, Israel had a clear advantage and managed to seize large bits of the country which the UN had assigned to the Arab state of Palestine. The story of that war - the first in a series of six or seven, depending on definition - has nourished the Zionist narrative ever since. Israel is still depicted as fighting for survival against great odds, even as it rejects repeated peace proposals from the Arab League.

This year, for the first time, the Arab word Nakba made it into the mainstream of the Hebrew media and even into some Western media. It means catastrophe, and it designates the same occasion that Israeli Jews celebrate - the creation of Israel and the disaster that it meant for the Palestinian-Arab population. It began while the British were still in Palestine, with the massacre of the Arab village of Deir Yassin on the outskirts of Jerusalem, carried out on 9 April by the Jewish terrorist underground known as the Stern Gang. Some two hundred peaceable villagers, including women and children and the old, were murdered in their homes, and the horror it spread through the country prompted thousands of Palestinians to flee; thousands more were driven out by force. More than 300 Arab villages were emptied of their inhabitants and in short order razed and obliterated. At least 700,000 Palestinian Arabs became refugees - some fled to Lebanon, some to the West Bank (held by the Jordanians), some to the Gaza Strip (held by Egypt), and many others scattered throughout the Middle East. For the next 18 years the small number of Palestinians who clung to their doorposts and could not be driven out lived tightly controlled lives under military government. That was the Nakba, which lately has found its way into the general narrative, having been suppressed - both in Israel and in the Western media and mind - for most of the past six decades.

Zionism, declared its leaders in the 1930s and 1940s, had to be ruthless if it was to succeed. After World War II the Jewish leaders felt that the genocide perpetrated on the Jews of Europe absolved them from having to show consideration for others. By comparison with what came to be known as the Holocaust, and the unimaginable devastation wrought by the world war, the massacre of a few dozen villagers, the mass expulsion of a hostile population of a few hundred thousand civilians across a newly-created border, were almost overlooked. The Zionist narrative, with its combination of biblical symbols - David and Goliath, Exodus, the return of the Israelites to the Holy Land etc - dominated the imagery throughout the West. And it was the West that embraced the State of Israel and granted it all kinds of privileges. The massive "reparations" from West Germany helped Israel build a solid infrastructure, while its population multiplied rapidly with the influx of Jewish immigrants from Europe and the Arab world.

Fast-forward to the 21st century.

It is a Jewish characteristic that you cannot rejoice without doing some wailing on the side. The late Egyptian president Anwar Sadat, who made peace with Israel, is believed to have said that when the Jews reach heaven they will be sure to hang pictures of hell on the walls. At a Jewish wedding the bridegroom crushes a glass underfoot - "to commemorate the fall of the Temple". Accordingly, the day before the Day of Independence is Memorial Day, which commemorates all those who fell in the wars fought by Israel since 1948. It is a day drenched in tears, pierced by sirens wailing at a given hour when all the vehicles and all the pedestrians stand still and remember the dead. All forms of entertainment are prohibited for 24 hours - until 8 pm, when the signal is given to stop mourning and start rejoicing. Fireworks crackle, bands begin to play in public places, grandiose ceremonies open with VIPs intoning pompous phrases, and youngsters wander down the streets spraying shop windows with a sticky foam. The formal occasions are garnished with troupe dancing of the kind still seen in China and North Korea and speeches extolling the achievements of the state.

This is an occasion for swelling smugness, and whatever modesty and self-awareness exists in the crevices of this society is drowned in the noise of chest-thumping self-congratulation. This year, however, even the gullible citizens, who dutifully hung the blue-and-white flags from their windows and car aerials, reacted ironically to the statements made by Prime Minister Ehud Olmert - "There is a moral gulf between us and our enemies" - and the Speaker of the Knesset (Israel's parliament) Dalia Itzik - "We deserve a peaceful life" - amid the malodorous scandals enveloping much of the leadership. The former Minister of Finance has just been convicted of grand theft, former President Katsav is accused of rape and sexual assault, questions hang in the air about the wealth acquired by former Prime Minister and current Defence Minister Ehud Barak, and a major scandal is brewing around the present Prime Minister Olmert. The Attorney General, concerned for the tender feelings of Israeli citizens, imposed a gag order on the latter story till after the celebrations. It erupted in headlines the following morning - Olmert is under investigation on suspicion of receiving huge bribes during his tenure as mayor of Jerusalem (1993-2003). Details are still emerging, and since this is merely the latest financial scandal associated with him, there are almost unanimous calls for him to resign. If elections are held, he is most likely to be succeeded by Benjamin ("Bibi") Netanyahu, a total hawk and bosom-buddy of America's neo-cons.

Older Israelis keep looking back with nostalgia on the early days of the State, remembering the simple life, when cabinet ministers went to work by bus, the naive faith in the moral fibre of the society, the satisfaction of saving the remnants of Europe Jewry and receiving the immigrants from the Arab countries - whose position was made difficult by the Arab-Israeli conflict - and the boundless belief in our just cause and radiant future. Israeli songs - "Hava Nagila", "Laila laila" - were popular in Western guitar-playing youth hangouts - and every summer that excellent Israeli invention (now defunct), the kibbutzim, attracted thousands of volunteers. (Yes, even from India.) The image of the plucky little state was still undented, though mostly in the West. Though the Bandung conference in 1955 exposed a different image, the quiet grief and misery of the Palestinian Arab population was generally hidden behind the standard phraseology, while a handful of Arab collaborators in the Knesset and other public bodies created a false image of democracy and equality.

But the seeds of today's horrors were already there, burgeoning in the dark. They erupted in 1956, when Israel went to war against Egypt, arm in arm with Britain and France, hoping to topple President Nasser and seize the nationalised Suez Canal. While this was going on, Israeli soldiers massacred Arab villagers in Kafr Kassem, in the heart of Israel, when they returned from their fields after curfew. A court-martial found the killers guilty, but the penalty they paid was risible and underlined the fact that Arab lives were without value.

Fast-forward again to 2008. In order to celebrate in peace and security - whether the occasion is a Jewish holiday like Passover or an Israeli national one - the occupied territories are locked down. Not that they enjoy much mobility at the best of time - with scores of checkpoints everywhere, walls and fences cutting across their lands, roads for the exclusive use of Israelis, etc. As Naomi Klein put it in her recent book, "The Shock Doctrine", Israel itself is a gated community. Enjoying a high standard of living, though with a large and growing income gap (GINI Index 39.2 - worse than Japan [25], better than Brazil [57]), it prides itself on being a "Western" nation, and would like nothing better than to be admitted as a member of the European Union. Indeed, it already enjoys a privileged status in European sports and takes part in the Eurovision contest, but it dreams of complete acceptance. Aside from the awkward fact that it is physically in West Asia and not in Europe, there are other, no less problematic, obstacles to this ambition. The European Union could not possibly accept a state which classifies its citizens according to their ethnicity and/or religion, lacks civil marriage, divorce and burial, and is by definition a religious community as much as a state. But these facts do not impinge on the Israeli imagination, as expressed by most of its leading intellectuals and writers.

Protected militarily by the strongest armed forces in the Middle East, with a variety of weapons of mass destruction; protected politically by the world's number one superpower, which uses its veto power in the UN Security Council time after time (39 to date) to shelter its protege from the consequences of its actions; protected by a powerful lobby in the United States and similar, if less potent, pressure groups in most Western countries; rejoicing in a wave of anti-Muslim sentiment sweeping many parts of the world – Israel is still riding high. It is unembarrassed by the fact that neo-Nazi and other far-right racist-nationalist groups are eagerly courting it, just as it shrugs off the awkward fact that Christian Zionism - its great ally in the United States - expects all non-converted Jews to perish in the Second Coming.

Zionism has come a long, long way since the days when it took its first modest paces in Palestine, still under Ottoman rule. It has come a long way since it achieved its goal of establishing a state that would be a safe haven for persecuted Jews, and claimed it had no other ambitions. Today, this gated community on the eastern shore of the Mediterranean is a cross between Club Med and an American base, with a thick admixture of Jewish self-righteousness - a form of moral blindness.

End