Re: If it were Palestine, yes . . .
Israel will never become "isolated." The global Jewish community (and it is huge) will not allow it to close its doors to the world. Walling off Palestine, on the other hand, would keep Palestine in Israel's sights. Not a good thing for Palestine, but then, from the Israeli perspective, what is? Giving up lands that are rightfully theirs, won after being assaulted by combat troops?
Yes, Israel will give up the Occupied Territories, but it's gonna cost.
Building the proposed spite-fence will only harm Palestine (politically, and therefore economically), not Israel,
Dan