When the palestinians are ready to talk peace and save their country and people, i believe they will sit down and Israel will be there to trade.
In the meantime, they continue to be used by Islamic fundamentalists like Ahmedinejad to their detriment.
Apartheid was lifted when Mandela sat down with the boers and accepted that bygones be bygones and everyone turns a new leaf.
Anything short of such an approach will never solve the palestinian problem. The position of both parties are currently too deeply entrenched, for one side to win.
The situation is Israel is further complicated by the fact that the fate of Christianity is tied to the survival of Israel (book of revelations), so as long as the Christian nations retains the balance of power, Israel will always be proteted.
"The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins