There are two profound psychological blocks that do not allow Israel's leadership to get off its disastrous course, once again proven by the Flotilla Disaster: one is sheer fear, the other is self-righteousness.
Israel has real enemies like Iran and Hezbollah. Human psychology is such that fear often leads to freezing and hanging on to the same course of action, even if it proves disastrous time and again. As a result Israel doesn't listen to criticism - either from inside or from outside.