This paper proposes a psychoanalytically‐informed model for the policing of memory and identity in Israel and Palestine. Borrowing from both empirically‐ and clinically‐validated insights into psychopathology, it purports to account for the increasingly frequent attempts of the Israeli government to suppress alternatives to the extant Zionist narrative using legislative and administrative means. The model explains why, counter‐intuitively, these attempts to impose an idealized Zionist narrative have markedly increased in the past several years, at a time when Israel's military power, geographical expansion and economic prosperity are arguably at an all‐time high. Supported by examples from both world history and Israeli documents, the proposed model suggests a dynamic link between trauma, annihilation anxiety, hyper‐vigilance and defensive behavior on a nation‐wide level, which runs as a leitmotiv in both Israeli government actions and in sentiments expressed by a considerable portion of Israeli society, from the foundation of the state of Israel in 1948. The model further uses psychodynamic insights to account for the cognitive‐emotional rigidity underpinning the discrepancy in the perceptions of reality between Israel's narrative and its sundry worldwide alternatives. The model posits that this growing discrepancy between worldwide public opinion and Israeli internal reasoning may underlie the growing disapproval and isolation of Israel in both diplomatic circles and world media. Finally, following psychodynamically‐oriented therapeutic practices, the explanatory power of the model is harnessed to suggest potentially effective remedial attitudes and interventions, whose mutative powers may be of use to psychodynamically‐trained mental health professionals who may be involved in future reconciliation efforts between Israel and Palestine. Copyright © 2012 John Wiley & Sons, Ltd.