It offers peace and normalized relations between the entire Arab region and Israel, in exchange for complete Israeli withdrawal from the occupied territories including East Jerusalem, as required by UNSC Resolution 242, and a "just settlement" of the Palestinian refugee crisis "in conformity with (UN) Resolution 194."
Hamas had reservations and abstained on these votes but said it would not oppose a plan adopted by the Arab League and accepted by Israel. On December 1, 2010, the Israeli newspaper Ha’aretz reported Hamas leader Ismail Haniyea’s agreement to honor the Arab League plan if endorsed by a Palestinian referendum including all Palestinians in the West Bank, Gaza and the diaspora.
It is unlikely that a Palestinian plurality will accept any "final status agreement" that evades their right of return. In April 2009 - soon after Cast Lead, when occupied and blockaded Palestinians would predictably have been highly motivated to find a solution - a One Voice survey of Israelis and Palestinians in Gaza and the West Bank found that refugee rights were rated a "very significant" issue by 95% of Palestinians and only 25% of Israelis. This same survey found 87% of Palestinian respondents rating the "Right of return AND compensation" as "essential" to a solution.
Including the diaspora, some 4½ million Palestinians have UN-registered property claims against Israel, supported by Articles 13 and 17 of the Universal Declaration of Human Rights, UN Resolution 194, and Israel’s own pledge as a condition of its 1949 admission to the UN. This pledge has remained unfulfilled for over six decades.
Israel's pledge to internationalize Jerusalem - a second condition of its UN admission - also remains unfulfilled. This probably still represents the best solution to the Jerusalem dispute, designating the city as an international historic site sacred to the three Abrahamic religions and administered by the United Nations.
Israel has privately rejected and formally ignored the Arab initiative and instead has maintained a holding pattern through the pretense of a "peace process" while continuing to expand its West Bank settlements, undermine the elected Palestinian government of Hamas and split the Palestinian resistance, corrupt the PA in Ramallah, lay siege to Gaza, and confiscate Palestinian properties in East Jerusalem. This pattern has faithfully followed the game plan advised by PM Ariel Sharon in 2000 to seize as much land as possible as long as they can get away with it.
Having achieved treaties with immediate neighbors Egypt and Jordan under heavy US foreign aid incentives, and with the Gulf states controlled by US oil interests, few viable adversaries remained and these were immediately targeted for "regime change" by the neoconservative-controlled first Bush administration. As reported at that time by General Wesley Clark from his Pentagon conversations, targeted regimes included Iraq, Iran, Libya, Sudan, Syria and Lebanon. Only some have oil, but all share the common features of unfriendliness to Israel and freedom from US control.
Holding these cards and dealing from a stacked deck, Israel saw no need to cede any land for peace. However, with only Iraq neutralized by the Bush administration, Lebanon successfully resisting Israeli aggression in 2006, and an Arab uprising underway in 2011 including removal of Mubarek in Egypt, Israel may now be reconsidering its options.
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