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Both Israeli and Palestinian society is defined by national aspirations.
The current situation in the Middle East makes now a less than ideal time for Israel to risk resolving the conflict.
The problem isn't land distribution, it's that they
A) want the same bit of land or
B)Have political and religious differences that make having two states essentially a foundation for two warring nations
Neither the Jews nor the Arabs will be able to eradicate the other or force the other to lose their attachment to the land.
There is much opposition to the formation of two states by both Palestinians and Israelis.
Nationalism and the nation state system is prevalent throughout the international community and will not disappear from our political consciousness any time soon.
Making two states is easier said than done. It is impossible to divide the land without causing more conflict.
A two-state solution was attempted already and didn't work out very well.