In a perfect world, both “greater” movement would be defeated simultaneously. But the world is far from perfect, as it always has been, and Palestinian society is more dysfunctional and corrupt than Israeli society. So the Greater Israel movement is being defeated before the Greater Palestine movement, if only because the intifada has been largely walled off from Israel proper.
Money quote from Wieseltier:
These settlers were not pioneers, they were pawns--the eager and fervid pawns of various Israeli governments acting on a grandiose geopolitical scheme whose futility has finally become apparent to a majority of the citizens of Israel. For a few decades the settlers seemed to be winning, and now, at least in Gaza, they have lost. That is all.
Unfortunately, Judaism is not devoid of the kind of "magical" thinking Wieseltier describes: If only enough Jews would keep the Sabbath, or live in the Land of Israel, or recite the right scriptural verses, then the Almighty would be compelled to bring in the Messianic Era - so the thinking goes. But there are also many devoutly religious Jews who reject these notions, and who do not believe that the mundane laws of cause and effect will be so lightly set aside. History seems to favor the Muggles.
Go read Michael's post at the link.