This paper discusses the present Israeli-Palestinian war, with an emphasis on the destructive clash between two utopian visions: the vision of “Greater Israel” – including all Palestinian territories – of the far right in Israel, and the vision of destroying the state of Israel, fundamental in Hamas ideology. The dystopic result of this clash is explored from a psychoanalytic point of view, relying in part on Ogden’s notion of historicity as achieved only in the depressive position, and Jessica Benjamin’s notion of a “doer and done-to” mode which excludes recognition of the reciprocal interaction that is essential to that historicity. A brief review of the history of the Palestinian-Israeli conflict, lasting more than a hundred years, points to the constant reciprocal influences leading to its deterioration, and ends with the hope for a pragmatic compromise that would alleviate the suffering and traumatization on both sides.