One of Noam Chomsky's favorite debating points regarding Israel is to allege that Israel has had a longstanding policy of intentionally destroying Palestinian society rather than attempting to make peace. He backs this up with a quote attributed to Moshe Dayan. Here, for example, is Chomsky in a 2005 debate with Alan Dershowitz:
One choice is to support Washington's continued dedication to the road to catastrophe that's outlined by Israel's four former security chiefs, namely watching in silence as Washington funds the cantonization of the West Bank, the breaking of its organic links to Jerusalem, and the disintegration of the remnants of Palestinian society. That choice adopts the advice of Moshe Dayan to his cabinet colleagues in the early 1970s. Dayan was in charge of the occupation. He advised them that "we must tell the Palestinians, that we have no solution, you shall continue to live like dogs, and whoever wishes, may leave." That's the solution that is now being implemented. Don't take my word for it. Go check the sources I cited, very easy, all English.
A while back, a VC reader asked me whether I could confirm the accuracy of the quote attributed to Chomsky. The answer is, yes, but.
First, I've located the original source cited by Chomsky. It's Yossi Beilin, Mehiro shel Ihud 42-43 (Revivim, 1985), a Hebrew book, never translated to English, written by Israeli dove Beilin. It's a secondary source that provides only the barest context for Dayan's remark--all the book tells us is that Dayan's comment illustrates an extreme attitude toward Palestinian refugees, and was made during a meeting with other leaders of the small RAFI party, which was composed of hawkish defectors from the dominant Labor Party. Apparently, Chomsky couldn't be bothered to look up the original transcripts, which are footnoted by Beilin.
Second, Dayan didn't make this remark in the "early 1970s," he made it in September 1967, just three months after the Six Day War.
Third, he didn't say it to his "cabinet colleagues," or in any official government capacity, but at meeting of the leaders of his small party, and his statement on that particular day may or may not have reflected his more general, or his longer-term, views regarding the Palestinians.
Fourth, according the book, Dayan was addressing the situation of Palestinian refugees in the West Bank, not all Palestinians, or even all Palestinians in the West Bank.
Fifth, and by far most significant, Chomsky leaves out the next few sentences uttered by Dayan: "For now, it works out. Let's say the truth. We want peace. If there is no peace, we will maintain military rule and we will have four to five military compounds on the hills, and they will sit ten years under the Israeli military regime." Thus, rather than this quote reflecting a long-term "plan" by Israel, it reflected Dayan's view of the alternative if a peace deal with Jordan (Beilin notes on the same page that Dayan was willing "to divide authority on the West Bank with Jordan"), could not be reached. Moreover, even in the absence of an immediate peace deal, Dayan was not speaking of a permanent occupation, but of a ten-year Israeli presence.
Nevertheless, the quotes in the book don't make Dayan look good. Shimon Peres objects that the occupation proposed by Dayan would make Israel act immorally like Rhodesia, and Dayan responds that moral considerations should be irrelevant.
So, if you want to claim, as Beilin does, that Dayan was prone to adopting extreme views regarding the Palestinian refugees in September 1967, this certainly provides strong supporting evidence. You could argue, moreover, that this suggests a moral blind spot on Dayan's part, as Shimon Peres (whom Chomsky also despises, and also claims was not interested in peace) did at the time. But if you want to argue, as Chomsky does, that the relevant quotation shows that in the early 1970s the man in charge of the Israeli occupation of the West Bank was lecturing his cabinet colleagues (without apparent dissent) that they should reject peace, and mistreat the Palestinian population so badly that they will all want to leave, you are stretching the truth beyond recognition.
For those who are interested, I've posted a translation of the relevant part of the book in the comments.
UPDATE: Commenter "Stu" makes a very salient point:
Assuming the statement was made to someone, I find it interesting that the statement was most likely made after the Khartoum Arab summit. After the June '67 war, representatives of eight Arab states met in Khartoum, Sudan and announced a resolution on September 1, 1967 calling for a continued struggle against Israel and reportedly adopting the position of infamous "Three NOs" with respect to Israel: 1. NO peace with Israel; 2. NO recognition of Israel; 3. NO negotiations with Israel. If Israel had no Arab state with which to negotiate, presumably including Jordan, which had previously occupied the West Bank until the '67 war, Israel had only a newly occupied population with which to deal. I don't recall ever reading that that population had any kind of any kind of representative government with which to negotiate or to whom to turn over possession of that territory.
I think that it gives some context to Dayan's alleged remark. Jordan won't negotiate peace and now Israel's stuck as an occupying power. If anything, it was probably said out of exasperation over the situation.
Putting aside speculation as to Dayan's motives, the fact that the relevant RAFI meeting occurred very soon after the Khartoum summit does provide some very important context.