Go back and read where he tries to convince us that Islam, Israel and the U.S. are no different in what their goals for the world are.
A rather slanted interpretation of his original thesis, which was that Zionism, Radical Islam, and American Exceptionalism (Not Israel or America or Islam) are fundamentally supremacist and exclusionary belief systems. Which is true to a very limited extent, though Islam doesn't exclude anyone based on birth, and American Exceptionalism is more of a cultural bias about the how someone was raised and views the world than a racial, religious, ethnic, or place of birth issue. But, that small kernel of commonality doesn't render them equivalent or mean they all play out the same way in practice.
Freezing out the shifting Arab demographic balance in the Israeli-occupied territories by denying them any cash flow is a purely theoretical exercise, since as an essentially Western democracy, the Israelis are as disinclined to do the shit jobs in their society as Americans and other Europeans are, so it just ain't gonna happen. Economically, it's sort of like our own illegal immigration issue, if you imagine a situation where we invaded and occupied Sonora and Chihuahua to battle the narcoterrorists and then were stuck with a problem because now we had a few million extra highly-fertile Mexicans on our hands to whom we didn't want to either give citizenship or turn the place back over to them.
The Israelis could cut loose the territory involved, which would piss off the Zionists and a lot of less-doctrinaire Israelis who have put money into investments there (And, since small radical splinter parties hold the balance of power in the Knesset, is just a political nonstarter), or annex it which would however mean making all the Arabs living there Israeli citizens (Also a political nonstarter with the Knesset). What they're doing is splitting the difference by keeping a decades-long limbo in place because they can't figure out how to get off the tiger.