Scholars and policy makers have debated whether coercive or conciliatory policies are more effective in combating insurgent violence and promoting conflict resolution. Some argue that coercive policies are an effective deterrent, whereas conciliatory policies signal weakness in the face of violence. Others claim that punishment is counterproductive, while conciliatory measures can promote trust and reduce grievances that lead to violence. However, empirical evidence that could shed light on this debate remains limited. The few studies that have examined this question have typically focused on how varying policies impact violence levels, but not how they affect public attitudes towards conflict and its resolution. This study addresses this gap by examining how coercive and conciliatory policies the Israeli government employs in its conflict with the Palestinians shape public opinion in Israel and Palestine. We utilize data from an original survey experiment designed to test how varying policies affect how ordinary Israelis and Palestinians assess the likelihood of peace, the likelihood of violence, and the perceptions of the other side to the conflict. By highlighting how the public evaluates and reacts to state policies, this study sheds light on the broader effects of counterinsurgency measures, with important policy implications for understanding the Israeli-Palestinian conflict and obstacles to its resolution.