Some consensus exists as to what a fair, peace-promoting settlement would be. Both sides reject it. Why? Some nonrational reasons are considered. Four wars are reviewed. Each side tends not to perceive the real fear and realistic anger on the other side and not to perceive its own actions that have largely created and are now sustaining the other's fear and anger. Sullivan, Freud, Heider, S-R theory, and Jones-and-Nisbett are invoked. Circular processes in the Arab-Israeli conflict-system predominate; they are unlikely to be reversed unless strong influences from outside the system are brought to bear.