Originally posted by: dna
Ironically enough, ex-prime minister Barak offered just that to Arafat several years ago, and Araft rejected it without providing a reason, nor an alternative arrangment. A bit on this is included in the movie
Obsession.
Even more ironic is the fact that the "occupied territories" (West Bank & Gaza) were not occupied prior to the war in 1967, and were conisdered Jordanian and Egyptian territories; however, you proably won't be surprised to know that there was no attempt made during those long years since 1948 to 1967 to form any Palestinian state in the West Bank.
And by the way, the West Bank would still be Jordanian territory today, if the King hadn't chosen to open a front with Israel. Nevertheless, I doubt we would've seen any Palestinian state in this hypothetical scenario; the PLO & friends were more preoccupied with killing Jews, than forming a state -- an observation that it is still true today.
I recommend the movie, you'll see some bits of the corruption and what was going on in Gaza while they were supposed to be building a state.