This dispute is serious: it endangers the peace of South-West Asia (if not the world), a vital strategic and petroleum-producing region. The root of the problem is the violent demand by the Palestinians for their own sovereign state. They want it in their ancestral homeland with Jerusalem (or at least East Jerusalem) as the capital. That, however, is absolutely impossible. East Jerusalem is the Jewish holy place and thus non-negotiable by Israel. In any event the former Palestinian homeland is now mostly settled and occupied by Israeli citizens. There is no room there for a viable sovereign State for the million resident Palestinians, not to mention the three million refugees in neighbouring countries. Something has to give. The problem originated in the First World War. By 1916 there was a military stalemate. It appeared that Germany would grind the Allies into making a humiliating peace treaty involving loss of territory and prestige.
Desperate for support, the British Government promised the Arabs a sovereign state, including Palestine, if they rebelled against Germany's ally, the Ottoman Empire (Husain-McMahon Agreement). They did. Then in 1917, to obtain support for the Jews of the Diaspora, the corrupt British Prime Minister Lloyd George promised Palestine to them (the Balfour Declaration). It was a classic example of the swindler who sells the same land twice and then disappears with the double pricer leaving the two buyers to fight it out among themselves).
In this case the price was Allied victory in the First World War. Having obtained it, Perfidious Albion reneged on both her false promises. This resulted in four Arab-Jewish wars: 1948, 1961, 1974 and the two Intifadas (1987-93 & 2000-2005). Israel has emerged victorious; it has is an internationally recognised sovereign State, a homeland for the Jewish people after nearly two millennia of persecution. The Palestinians, however, have been displaced. Most are refugees in neighbouring countries. The remainder live under unacceptable Israeli rule.
Human nature being what it is, if two groups of people cannot or will not live together in peace, they must be separated. The territory of Israel is, however, far too small to accommodate two viable countries, one Arab the other Jewish, each of over three million inhabitants. Another Balfour Declaration is needed, this time giving the Palestinians a homeland. The question is where? Most of them have already left their ancestral territory, albeit unwillingly. The remaining minority should be reunited with this Diaspora in a new Palestinian republic. Although they are ethnic Arabs the Palestinians are just as entitled to a homeland as other peoples. Nationality is a state of mind, and the Palestinians have it. Ethnicity has nothing to do with it, as the separate, fiercely independent Hispano-American republics prove. The Palestinian refugees have not been absorbed into other Arab countries and they will not rest until they have their own country.
The territory to be assigned is negotiable, because the Palestinians are scattered and anyway are descendants of settlers in the territory of the Jews after the latter were depatriated by Hadrian in 135. The Syrian President Assad Senior once correctly complained to United States Secretary of State, Henry Kissinger, that the Arabs should not have had to provide territory for a Jewish homeland necessitated by European anti-Semitic persecution. By the same token, the Arabs should not have to surrender yet more territory to create a homeland for Palestinians displaced by the creation of Israel. The territory for a new Palestinian republic must therefore be provided and financed by Europeans because the latter's forebears caused the displacement, and they themselves are dependent on secure petroleum supplies from the region affected.
A tortuous process preceded the Balfour Declaration in 1917. Having failed to secure permission to settle in the Ottoman Empire, the early Zionists obtained abortive agreements to do so in Sinai, then Uganda, before finally securing Palestine. The Palestinian process will, however, be easier. All responsible political leaders now accept the necessity of a Palestinian homeland, whereas until the Nazi persecution. the need for a Jewish homeland was debatable.
The difficulty will be finding politicians with the vision and ability to achieve this. Theodor Herzl was a genius and his successor as Zionist leader, Chaim Weizmann, a man of exceptional ability. With great difficulty, a Jewish Sate was eventually secured in 1948. Similar, Palestinian “prophets” must be found and then backed by Europeans and Arabs, just as the early Zionists were backed by Jews and sympathetic European Gentiles. It is in the self-interest of both Jews and European Gentiles to help create the new Palestinian homeland. For the former it will result in peace for Israel, for the latter, secure petroleum supplies.