Bubbette, Before the collapse of the Ottoman Empire the majority of Jews and Arabs in the Middle East lived in peace and harmony. They traded with each other and even intermarried (why do Sephardic Jews look like Arabs, Ashkenazic Jews look like Europeans and Falasha look like Ethiopians?) The largest and oldest synagogues were in cities like Damascus (burnt down in the late 40s in reponse to the seizure of Arab lands and the ethnic cleansing of over 400 Arab villages in Palestine). The problem dates back to the Balfour Declaration, which does not predict a state of Israel, but a homeland for Jews within Palestine. Herzl, in the 19th century, thought that no more than 50,000 Jews would settle and the original settlements from the 19th century onwards were developed through negotiation, land purchase and tolerance. Herzl recognised that the Arabs are Semitic and claim descent from Abraham through his son Ishmael. It all went pear shaped during the Mandate and, yes, Jewish settlers were killed as were Arab farmers and merchants.
I have lived and worked in modern Israel/Palestine and most people I met wanted peace. The young Palestinians want a western style pluralist democracy. They were also happy to live with the moderate and tolerant Jews, many of whom have Arab friends and business partners (the latest suicide bombing was in a restaurant jointly owned by Jews and Arabs in a city which has a Jewish Mayor and an Arab Deputy Mayor). There are 1 million Arabs living in towns and cities across Israel. They are Israeli citizens and are represented in the Knesset (itself built by agreement and subject to a lease on Armenian Christian land). The Christian Arabs, of which there are several hundred thousand, are brutalised by Israel even though they are under threat from the Islamic state demanded by Hamas.
Those who have watched Life of Brian will understand the parody on Popular Front for the Liberation of Judaea, Judaean People's Front etc. The Palestinians have the same arcane set of political groupings. They are disunited and some see peaceful progress as the way forward whilst some espouse terrorism. Some terrorists are selective in their targets, some are random. Some are on ceasefire, some are active. Everybody has break away groups. Arafat, the democratically elected President (one man, one vote, one time), can't even go to the shops and the PA are not allowed to drive their vehicles on any of the A-roads between settlements. Last year the Israelis banned the driving of vehicles in the northern West Bank (donkeys sold at 5 thousand pounds). The whole thing is a mess and, after sitting and talking to people on both sides of the line, I cannot see a solution.
In international terms the Israelis are the illegal aggressors. If you go to the appropriate websites you will find the Fourth Protocol to the Geneva Convention. This makes it clear that an occupying nation that settles it's own civilians on occupied territory commits an offence. It also makes it clear that the occupying power is responsible for the welfare of the occupied people. Israel is in breach of its international obligations, whilst anyone with an understanding of history could see the Palestinian 'terrorists' in the same light as those nasty horrible Frenchmen who fought against the illegal German occupation of their territory during the forties.
Israel is in breach of large numbers of UN resolutions and should withdraw from the occupied territories and dismantle settlements. Unfortunately the Israeli infrastructure will not allow that. Gilo is a suburb of Jerusalem with no clear boundary other than on paper. Ma'ale Adummim (sp) is over 30000 people living in a fortified settlement deep in the West Bank. They have separate roads from the Arabs (who can be and are shot on sight for driving on settler roads). The settlements in the Jordan valley occupy some of the most fertile land in the Middle East and secure access to that most precious commodity, water. Losing the Jordan Valley settlements would cripple the modern Israeli economy (the Oslo Accords gave the PA the Jordan Valley subject to a 100 year lease being granted to the Israelis so that they could occupy it for economic and security reasons).
In the Jerusalem Post the right wing Jews refer to a 'final settlement' of the Palestinian problem. This involves 'transfer' (ethnic cleansing) of all Israeli Arabs to either the West Bank/Gaza or to Jordan and other countries. The most extreme look at the Old Testament lands of Israel including the East Bank of the Jordan as far as Amman and see the transfer of all Arabs from west of the Jordan and the eastern Jordan valley to anywhere (4 Members of the Knesset support this view).
Gaza (Gath) belonged to the Philistines (Arabic for Palestinian is Filistinee), but there are fanatical Jews who want to take that from the Arabs (the as yet undeveloped gas field would make Palestine or Israel economically viable).
Last year 50000 Orthodox Jews circled the walls of the Old City and declared that they would build the third temple in this generation. This requires the destruction of the third most holy site in Islam. Ironically, the most extreme Ultra Orthodox extremists want the secular Jews to do all of the fighting and refuse to join the IDF whilst calling for murder and mayhem on a massive scale.
These snippets are intended to put a different perspective on the situation. Many Israelis don't want to occupy the 'territories' and refusing to bomb people in their own country in contravention of the Geneva Convention is legally correct.
I conclude, however, that there is no solution, because in Isreal and Palestine there are too many Jews living in the first century AD, too many Muslims living in the seventh century and the majority who, live in the 21st century, are unwilling or unable to stop them.