What would be the Palestinian state has become so fragmented by settlement building that it's hard to envisage a two-state setup working. On top of that, it's hard to see how two countries that would quite likely be hostile to each other could sit peaceably side by side. Israel isn't very good at that and the Palestinians have plenty of allies who love fighting proxy wars, and Israel has the US giving totally unconditional support. Not a recipe for success, even if both sides were initially satisfied with the carve-up, another obstacle. Those settlements... One great big democracy is the only answer, but that is impossible for Israel to stomach for the demographic reason Joe describes and due to the fact that Israel will never be persuaded to drop its "Jewish state" claim. In the long run I think that American aid to Israel must be made conditional on its dropping its bellicose attitude and settlement building and that the west should invest heavily in the development of the Palestinian territories. Prosperous and thriving countries seldom see the need to be at war with each other. Give both sides prosperity but give them both something to lose.