"
I think you're picturing things wrongly, we're not speaking of arab countries (Saudia Arabia proposed a peace deal/framework to Israel, in which if they withdraw to the 1967 borders, which is what Israel is without The currently Palestinian populated area's with minimal israeli/jewish presense), if they did withdraw, Israel would get FULL ARAB WORLD Normalization, which is obviously the road to peace (Normalization as in no more war, and the start of neutrality, opening ways for diplomatic channels in order to strive for peace).
ok, that side note was big, i think you're reffering to arab countries, check
http://www.masada2000.org/GreenL-opt.gif - Thats what is called the Green Line, the greet part is where Palestinians live now, the West bank and Gaza, occupied terretories in 1967 (while being in a Truce with Israel, Israel invaded, thats why its considered Occupied territories internationally), Jewish presense there is minimal, mostly through settlements (people Put in there intentionally to Be there, and populate).
What the palestinians are demanding, or fighting for in that area, is to be Independant, remove the israeli military, it's normal, Occupation, as the UK occupied India, only Israeli's do not give any [profound] services, and surely does not invest into the land. Not to mention the occupied palestinians do not have Israeli ID's, so they are somewhat 'In the Air', Occupied, with no rights regarding the State that occupies them. Obviously there are sub-issues, like East Jerusalem (again, majority is arab palestinians, minimal jewish presense), Water rights and terretory independance.
___________________________________________________________________________________________
A summation of everything you said that is quoted above illustrates my point.
The Palestinans, and other Arabs, which you try to seperate but are actually all part of the same ongoing conflict, refuse to accept the fact that they lost a war, and therefore feel that they should be able to dictate, not negotiate, the terms of any settlement.