Very sadly, the way things are at the moment I think you are right about the two state option, although ultimately this is probably the only way to resolve the situation.
Sad to think that under the Muslim Ottoman Empire the Jews felt far better off there than in Catholic Europe and many fled to Palestine even though the region was overwhelmingly Arab still. Ironically, at this time, they suffered far more at the hands of Christendom than the more tolerant Muslim empire.
It was the pogroms and anti-Semitism they suffered in Russia that initiated the whole Zionist movement in the late 1800s. Further pogroms in Russia during the revolution there and then more persecution in the late 1920s in Poland and Hungary led to the 3rd and 4th Aliyahs.
Whilst it was understandable that the Jews needed somewhere to settle and live in freedom away from the anti-Semitism that was rife in Europe, it was also understandable that the majority Arab population felt threatened by increasing numbers of Jewish immigrants to the area and angry that the British and other major powers were all for establishing a home for the Jewish population in Palestine but refused to consider majority rule come independence which would have then still been Arab.
The Holocaust swelled the number of Jewish immigrants further still so that by the end of WW2 the Jewish population in Palestine had risen to 33%. Keen to get out, and mindful of both its commitment to creating a Jewish homeland whilst keeping the Arab League onside because it needed their oil, Britain passed the problem to the UN in 1947. The UN too recommended the two state solution but the Arabs rejected it. Even had they accepted this back then, it is doubtful that Israel would not still have gone on to expand its territories illegally into Palestine such was the continuing influx of post war refugees from Europe and the Zionist "Law of Return".
The root cause of the initial problem, it seems to me, (and as you pointed out in your own earlier post) was the proliferation of anti-Semitism across most of Europe and Russia in the first half of the 20th Century which led to such huge numbers fleeing persecution to settle in Palestine. Can't blame the Jews for wanting to create a safe homeland but, on the other hand, Israel's continued illegal expansion can also be understandably read as a kind of colonization by the once majority Arab population.
Unfortunately, whilst more right wing Zionism is still very much alive and kicking in Israel the whole situation has been made infinitely worse by the rise of Islamic extremism and, as you say, neither side will back down. It's easy to side with Israel over all in this because they are literally fighting for their survival against a hateful ideology that would destroy them-but I personally just don't think that it should be forgotten that Israel's own actions have helped create this situation in the first place. If a solution is to be found surely it can only come through moderates replacing the Zionists in Israel and somehow over throwing Hamas in Gaza and encouraging a replacement moderate Palestinian rule there. The more innocent Palestinians die in Gaza, however, the harder this will be as hatred and resentment will build and only play into the hands of extremists.
The big concern at the moment -aside from the obvious one around innocent Palestinian casualties-is whether Israel can realistically reach its goal of destroying enough of Hamas to make it ineffective without getting Iran or Hezbollah fully involved and the international escalation that would inevitably lead to in the Middle East. Worrying and sad times.





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