This existential struggle plays itself out every day in the Holy Land, whether in the furious construction of Israeli homes on disputed territory, or the touch-and-go attempts to make peace with moderate Palestinians while clashing daily with the militants in the Gaza Strip.
Geut Aragon has a piece of shrapnel permanently lodged in her brain from a rocket that struck her home in Sderot, the southern town near Gaza, three months ago. She keeps her two young sons indoors.
"Since they were born they know nothing else," Aragon says. "Sirens, sheltered rooms - they don't play like regular children." Although she still suffers from headaches and dizziness, she vows to stay in Sderot and even plans to celebrate on independence day, May 8, the Jewish calendar date for Israel's declaration of statehood on May 14, 1948.
Just a 90-minute drive away, in a Jerusalem studio, cutting-edge technology is putting together "Wild Bunch," Israel's first feature-length 3-D animated film for Hollywood. It has nothing to do with rockets, religion or revenge. It's a family comedy about a flower meadow taken over by genetically modified corn.
Erel Margalit, the Israeli venture capitalist behind the film, says he wants to make the ancient city of Jerusalem a modern day "hub of creativity."
The plight of Sderot and the innovation at Jerusalem's Animation Lab illustrate the central struggle of Israel at 60: its quest for normalcy in a neighborhood that's anything but normal.
Rising from the ashes of the Nazi genocide of 6 million Jews, Israel finds itself unable to resolve the contradictions at the core of its existence. European or Middle Eastern? Religious or secular? A specifically Jewish state or a multicultural state for all its citizens, 20 percent of whom are Arab?
Israel has given the world Natalie Portman of "Star Wars" fame, an annual gay parade in the streets of Jerusalem, and microscopic cameras that can be swallowed in a pill. It also has Ovadiah Yosef, a politically powerful rabbi who says Hurricane Katrina was "God's retribution" to the U.S. for supporting Israel's 2005 withdrawal from Gaza.
It's a vibrant democracy where untrammeled free speech fills the airwaves 24/7 and where Arabs serve in Parliament and government. But it has occupied another nation for 41 years, and has suffered constant censure from the U.N. and human rights monitors.
Israelis from the country's founding generation are now well into their twilight years, and many miss the selflessness of bygone times when "nobody was jealous of somebody else," says 88-year-old Tamar Eshel, a former member of the Haganah, the pre-state Jewish army.
In 1948, Britain still ruled Palestine and was blocking Jewish immigration. Eshel was then in France, forging passports for Holocaust survivors and matching up complete strangers to look like families and stand a better chance of getting past the British restrictions. One cold night there was sudden singing and dancing. It turned out that by pure chance she had matched up a boy with his real parents.
Her voice still shakes with emotion at the memory. "Everybody there who lost their nearest people suddenly had hope that some miracle would happen to them, too."
Days later Israel declared statehood, and hundreds of thousands of Jews began pouring in freely.
Yet for all they have achieved since, this independence day finds Israelis in a grumpy mood, at least where politics are concerned. The sabras, or native-born Israelis who followed the founding generation into power, have generally fared badly, and the present prime minister, Ehud Olmert, is no exception, badly tarnished by the shortcomings revealed in Israel's 2006 war against Hezbollah and his failure to stop Hamas' rockets.
For an Israeli prime minister to be judged soft on security is politically crippling. Yet many Israelis would agree with Arnold Roth's stoic assessment of the risks of living in Israel.
"No one ever promised us an easy life, and as much as we want our children to be happy and productive and safe, history tells us this does not come easily," said Roth, an immigrant from Australia who moved here with his wife and four children, and then had three more kids.
He and his wife "sort of kidded with one another that if the conflict with the Arabs continued up until the times when our sons reached army age we'd hide them in the closet. We never for a moment imagined that the real danger would be to our daughter," he said.
His teenage daughter, Malki, was killed seven years ago by a Palestinian suicide bombing at a Jerusalem pizzeria.
More than 1,100 Israelis and 4,800 Palestinians have been killed since the outbreak of the second Palestinian intefadeh - or uprising - eight years ago. This helps explain Israel's construction of a massive barrier of steel, barbed wire and concrete to keep out West Bank militants. The barrier and other measures severely restrict the movement of Palestinians, and draw accusations that they amount to a land grab.
But while more and more Israelis reach the realization that the occupation is a long-term millstone around their necks, they manage to block out the conflict most of the time and concentrate on making their lives better.
Tel Aviv, celebrating its centenary next year as the world's first city founded by Jews for Jews, has renovated its old sea port with a new boardwalk, shops and restaurants. Israel, once famous for the Uzi assault rifle, may now be just as famous for exporting supermodel Bar Refaeli and "In Treatment," an Israeli TV show about a psychotherapist and his patients that was remade into an HBO hit.
Even more ambitious are its green-technology dreams, notably a government plan, in partnership with Renault-Nissan and Israeli-American entrepreneur Shai Agassi, to install the world's first electric car network here by 2011, with a half million recharging stations crisscrossing the New Jersey-sized country.
Dispirited though they may be about their political predicament, Israelis don't lose sight of the astonishing fact that nearly 2,000 years after the Romans extinguished Jewish sovereignty in the Holy Land, their reborn republic is still standing tall again, peopled by Jews from dozens of countries as disparate as Russia and Ethiopia, Chile and Denmark, Australia and Azerbaijan.
Robert Aumann, a Nobel-prizewinning economist, recalls moving to Israel from the United States five decades ago, feeling "I was coming home" to live the Jewish people's biblical connection to the Promised Land.
Today, he says, "We're here, we've accomplished great things and we're here to stay."
For Holocaust survivors, with the gas chambers, ghettoes and death marches to look back on, Israel is their own private miracle.
"For many, many years we Jewish people did not have any homeland. Finally after 2,000 years we have our own. Nobody else will tell us that you are a Jew and you should get out," says Jack Handeli, a Greek Jew who was sent to Auschwitz when he was 15.
But conflict is never far away. Every mall has metal detector, bus stops in southern Israel have rocket-proof shelters, every school has armed guards, and military service is mandatory for both men and women.
Israel feels its enemies both near and far - less than a mile from Sderot, and 1,000 miles away in Iran, with its nuclear ambitions, its support for anti-Israel militants and its president's calls for Israel's destruction.
Israel's conflict with the Palestinians is the biggest obstacle to its quest for normalcy. The fighting has only intensified since the Jewish state's creation resulted in the displacement of hundreds of thousands of Arabs, and has become a rallying point for Muslims throughout the world.
Israelis argue that the Palestinians have had ample opportunity to reach peace, most notably at the end of the Clinton administration when Israel offered most of the West Bank for a Palestinian state.
But even as negotiations have gone on, Israel has continued to build in settlements in the West Bank - and refused to take down small settlement outposts built without its permission - and this has seriously deepened Palestinians' distrust of Israel's professed willingness to share the land.
The West Bank road system is designed to keep Jewish and Arab motorists apart, and hundreds of checkpoints keep Palestinians from moving about freely. Olmert recognizes that settlements are binding the West Bank so closely to Israel that at some point the Palestinians - 3.7 million in the West Bank and Gaza plus 1.6 million in Israel proper and Israeli-controlled east Jerusalem - will simply wait until they can outvote the Jewish population, now 5.4 million.
"The day will come when the two-state solution collapses, and we face a South African-style struggle for equal voting rights," Olmert told the Israeli newspaper Haaretz in November. "As soon as that happens, the state of Israel is finished."
Olmert's comment caused a stir in Israel, where many people wince at any comparison to apartheid, even as it gains currency among Israel's critics.
Although Israeli public opinion has turned in favor of a Palestinian state, Olmert's attempt to wrap up a peace deal by year's end appears hopelessly optimistic. The Hamas takeover of the Gaza Strip following Israel's withdrawal from the territory has many Israelis wary of ceding more territory to a Palestinian leadership that can't control its militants. Their fear: today Sderot, tomorrow Tel Aviv.
At the same time, Olmert's hands are tied by his coalition with the hard-line Shas party and by the settlers, armed, politically connected and determined to resist expulsion.
Years of peace summits, secret negotiations and shuttle diplomacy have already produced the parameters for what most agree is the only solution: a Palestinian state in the West Bank and Gaza; land swaps to make up for Israeli sovereignty over major West Bank settlements; Jerusalem as a shared capital and compensation for Palestinian refugees.
All this will require excruciating compromises that neither Israelis nor Palestinians, with their shared sense of victimhood, might be prepared to make. The Palestinians still refer to Israel's creation as the "naqba," or catastrophe, and it guides their national ethos, just as the Holocaust dominates Israeli thinking.
Israel's 84-year-old president, Shimon Peres, whose life has mirrored the history of Israel, says his country must do everything to strengthen the Palestinians who are willing to make a deal.
"Their weakness is our weakness," he told The Associated Press in his Jerusalem office, which features his Nobel peace Prize certificate and a picture of him seated beside Israel's founding father, David Ben-Gurion. "And we shouldn't use the weakness as an excuse. We should help to overcome it."