I think Labor has been led astray by its two dominant foreign policy figures, Kevin Rudd and Bob Carr. It's no secret I admire Rudd and Carr. Both get far more right than wrong on foreign policy. But they are wrong on this.

Let's start with Zygier. He was an Israeli with an Australian passport who had served in the Israeli military as well as Mossad. He was arrested on national security charges. In 10 months in prison he was visited 50 times by his family, had frequent access to vigorous lawyers he chose and was not mistreated.

ASIO told the Department of Foreign Affairs and Trade about Zygier's incarceration and made several reports to the attorneys-general. The most senior figures in the offices of the prime minister and the foreign minister were notified as well.

Under the governing international conventions, if a citizen is on trial in the nation of his citizenship, that nation is not obliged to give consular access to another nation whose passport he may also hold. Such considerations didn't even arise because Zygier didn't want Australian consular assistance. Yet the whole case has been used, characteristically, to paint Israel as a secretive, militaristic, national security state.

This week Rudd demanded that Israel say what Zygier was charged with. Yet the official DFAT report on Zygier, which the Gillard government accepts in its entirety, recommends that the official Israeli inquiries be allowed to conclude before Australia seeks any more information.

For his part, Carr mostly handled the matter well. He commented that there was no information to suggest that Zygier's Australian passports had been used for intelligence purposes. He then went on to say, however, that if this turned out to be the case Australia would be outraged and, absurdly, Australians would be put at risk. Yet when dealing with a friendly nation, surely it is reasonable to wait for evidence of an offence before throwing the switch to outrage.

Fairfax journalist Peter Hartcher commented that Carr tried to put more distance between Australia and Israel. Hartcher is right. This is the mainstream view. The same is true of Rudd. The question is: why? Beyond Zygier, let me offer some examples of where Labor has got it wrong on Israel and then suggest the analytical mistake at the root of these missteps.

Last year in a cabinet revolt, Julia Gillard was overridden on a key UN vote. Australia was set to vote no to elevating the status of the Palestinian Authority to an observer state at the UN. Carr and Rudd opposed Gillard's position (though Rudd was not a player in this vote). Under the baleful influence of Gareth Evans, a tremendously negative force on contemporary Labor foreign policy who offers only a bureaucratic version of conventional wisdom (and conventional wisdom is often wrong), Canberra changed its vote and abstained.

In its own terms, this was a very bad move. There will never be a resolution to the Israeli-Palestinian dispute until both sides compromise over an agreement. This UN move, along with many tens of millions of dollars of increased Australian aid to the Palestinians, gives them something for nothing. It helps convince the Palestinian leadership that the way to success doesn't involve compromise and negotiation. Instead the international community will do their job for them. It is a destructive syndrome.

Then, in the Australia-UK Ministerial Meeting in January, Carr ratcheted up Australia's rhetoric on Israel. For the first time, his office briefed journalists, Canberra was describing all Israeli settlements in the West Bank as illegal. Also, we were calling on President Barack Obama to lead a new peace effort on the Israeli-Palestinian dispute.

To simply call all Israeli settlements illegal is simplistic, reductionist, almost childish. It jumbles together in one category Jewish suburbs of East Jerusalem, large settlement blocks envisaged under every serious negotiation as staying with Israel, and those settlements illegal under Israeli law. It fails to recognise that there has been no physical expansion of settlement territory since 2004, that settlements occupy less than 3 per cent of the West Bank, that any settlement territory kept by Israel will be matched by land given to a Palestinian state from Israel proper and that settlements have never before been an obstacle to negotiations. Australia's position is also wrong in international law. Jordan, which formerly controlled the territory, is not the sovereign power andUN Security Council resolutions require a negotiated outcome.

But why take this position at all, except to kick sand in the Israelis' eyes? China claims all of the South China Sea almost right up to the Philippines shore, yet Canberra maintains a strict neutrality. If Israel is a friend, why the gratuitous aggro?

The demand that Obama urgently seek a peace settlement betrays the deeper analytical flaw by Carr and Rudd. At the moment, Syria does not exist as a nation, 70,000 of its citizens have been killed and its army has abandoned the border regions with Israel. Egypt is in terrible internal turmoil. Its army has effectively lost control of the vast Sinai area that borders Israel. No one can know what its future government will be like. And that's only the tip of the iceberg. The Palestinian leadership is murderously divided between the West Bank and Gaza. Surely it is intellectually fraudulent to imagine that any Israeli government could make a comprehensive peace in this context.

Underlying this is the cardinal doctrine of conventional wisdom among Guardian readers, UN habitues, European think tank staff and the like, and that is the implausible notion Israel is at the heart of Middle East disputes and the West's troubles with Islam.

Jimmy Carter, a kind of rich man's Evans, gives the platonic ideal of this position, when he writes: "The heart and mind of every Muslim is affected by whether or not the Israel-Palestine issue is dealt with."

The respected Jeffrey Goldberg, a senior editor at The Atlantic, points out that this notion now is simply "empirically insupportable". The civil war in Syria, the bloodshed and polarisation in Egypt, the chaos in Libya, the murderous politics of Tunisia, the disintegration of Yemen, the overarching Sunni-Shia conflict, Pakistan's support for South Asian terror, Afghanistan's Taliban - none of these can be remotely attributed to anything to do with Israel by anyone who takes reality seriously.

Just because an idea is widely uttered at the UN doesn't mean it embodies any reality. Carr, Rudd and Evans add to this zeitgeist error the subsidiary error that Australia seriously damages its reputation by supporting Israel at the UN, a proposition for which there is no evidence.

But even if it were true, this would be a price worth paying. Israel is Australia's friend and ally. The Labor Party used to know this and care about it. Joining in the popular kicking of Israel is not a sign of moral courage, though it will win plaudits from the usual suspects at the UN and in conventional international relations think tanks.

But it is an immoral position that betrays fundamental political, moral and ethical values that Labor used to understand pretty well.

Rudd and Carr are gifted men of great goodwill. On this matter they are completely wrong.