Most books on Israel are polemics, designed to attack or defend the actions of what is seen as an exceptional state. Isabel Kershner’s compelling insider’s analysis of populism, polarisation and a retreat from idealism under Benjamin Netanyahu has many uncomfortable echoes of Trump’s America and even Johnson’s Britain.

Born in Manchester and now a correspondent for the New York Times, Kershner has been based in Jerusalem since 1990. She therefore lived through the second intifada at the start of this century, when “the deadly booms of familiar neighbourhood cafes and bars blowing up reverberated through the living room”, and shared the anguish of other parents when her sons served in the Israel Defence Forces (IDF).

Broadly speaking, Kershner is sympathetic to the values that she believes underlay the young state of Israel, where the socialist parties that later merged into the Labor party were firmly in control. She is inspired by the fast-disappearing “generation of titans, the vital men and women who had fought to establish the Jewish homeland... from the uprooted Holocaust survivors who escaped Hitler’s ovens to the warrior-poets who shaped modern Hebrew culture”. She admires the pragmatic romanticism of the early kibbutz movement; the “hardy pioneers” who “made the desert bloom”; and “the modesty and ideological purity” of politicians such as Israel’s first prime minister, David Ben-Gurion, who lived out his retirement in a remote and spartan cabin. And she looks back to a time when the IDF was “the glue of a fragmented nation”, where (Jewish) Israelis of all backgrounds served alongside one another and reserve duty helped “preserve the citizen’s sense of camaraderie over decades”.

Kershner is obviously aware of the dark side of all these high ideals and includes a disturbing chapter on “the outpost millennials, the yuppie pioneering elite of the religious Zionist movement” who are expanding settlements in the West Bank and, in one case, even listed a “mountain villa” there on Airbnb. But she clearly sees this as only one aspect of the way the Jewish state has lost its “inner soul”.

For the first three decades of its existence, politics was dominated by the Labor party and “a clear secular Zionist majority”. Both were seen as very European and often condescending to Mizrahi Jews from Middle Eastern backgrounds. A commentator at a Labor rally once ruined his party’s electoral chances by speaking of the country being taken over by “those toting talismans [or] prostrating themselves in supplication on the tombs of the saints” – a clear allusion to stereotypes about superstitious Mizrahi Jews. But the latter got their revenge with the election of Menachem Begin’s rightwing Likud party in 1977, which has retained the upper hand ever since.

The Land of Hope and Fear includes some striking examples of how this divide remains a live issue. One is the case of a kibbutz that has restricted access to a picturesque stream on the grounds that they had “clear[ed] the malarial swamps around it”, channelled the waters and so now deserved to enjoy the fruits of “a lucrative tourist enterprise” renting out “waterside holiday chalets”. This is bitterly resented by the residents of “the neighbouring, working-class town of Beit Shean... with [its] distinctly traditional, Mizrahi population”.

Yet this is far from the only form of polarisation. Israel’s former “secular Zionist majority”, writes Kershner, has now been challenged demographically by the “national-religious, ultra-Orthodox and Arab minorities”, groups that often live in separate enclaves, attend their own schools and even use different calendars. The country has been notably successful in creating hi-tech startups, but the relatively poor levels of both Arab and ultra-Orthodox education mean that the supply of people with the right skills is now drying up. Since Arab-Israelis are not required to serve in the IDF and the ultra-Orthodox have always enjoyed exemptions, demographics also spell the end of “the cherished, sacrosanct ideal of the People’s Army”. Kershner even reports a clumsy attempt by the military to use a teen model and pop star to sell itself to the YouTube and TikTok generation – although two days after being photographed at her induction she headed off to holiday in Thailand.

And then there is Benjamin Netanyahu, a man notorious for his expensive tastes, who has faced many corruption charges – and, like Trump and Johnson, is surely symptomatic of a wider national malaise. Kershner is unsparing: his extraordinary “staying power” has largely relied on “divide and rule and fear-mongering... He and his supporters accused an elitist deep state of carrying out a witch hunt against him”, while “far-right extremists” who had previously been considered beyond the pale have become coalition partners. Only last month reforms to the judicial system, which removes the courts’ right to strike down “unreasonable” government decisions, led to mass protests and strikes.

Furthermore, given that “the Labor party has dwindled into near oblivion” and “any prospect of peace with the Palestinians remains elusive”, Kershner argues soberly, Israeli politics has ceased to be about substantive issues and has “split into two main blocs that were generally labelled the ‘Only Bibi’ and ‘Anyone but Bibi’ camps”. Despite its title, this is a book where “hope” is in very short supply.

• .This article was amended on 9 August 2023. An earlier version had said that Arab-Israelis don’t serve in the IDF. To clarify: they are not required to serve.

• The Land of Hope and Fear: Israel’s Battle for Its Inner Soul by Isabel Kershner is published by Scribe (£25). To support the Guardian and Observer order your copy at guardianbookshop.com. Delivery charges may apply