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Democracy is a formal institutional framework that enables a process of containing peacefully conflicts within the state through consensual rules of the game: political representation of different interests and positions through periodic elections, the rule of law, and the separation of powers. The liberal version of democracy emphasizes the guarantee of human rights, civil equality, and minority rights. Although formal rules of democracy have been established in the State of Israel, a liberal democracy with equal civil and minority rights has never been established, and its formal democratic characteristics are also crumbling in the face of the oppression of Palestinians under military rule and the denial of their rights. A liberal democratic vision based on the recognition of equal rights for all the citizens in their shared homeland, and of both national communities, demands not only the establishment of two States but also designing confederative parity institutions between them to rule all the functions that cannot be divided. Such a vision is an essential condition for ending the current waves of violence to a state of reconciliation and peaceful living in a shared homeland.