The latest news from Israel is that the Netenyahu government announced its version of the peace plan. That is, if you can call it one. The Israelis are making a major mistake by not withdrawing from the West Bank such that it gives Palestinians the lightning rod by which they can cement their hatred towards the Israelis and unleash a new round of terrorist attacks. Netenyahu suggests that Israel will never give back any part of Jerusalem; keeping it united under Israeli rule. If that weren't bad enough, the Israelis also want to maintain a significant presence in the West Bank.
My only guess on the strategy that Netenyahu is embarking on is that he is cowering before the religious zealots in the Knesset who make up the swing votes in his ruling coalition. Many of the religious parties, including Shas and Agudat Israel, have a view towards maintaining a "Greater Israel" that includes all of the West Bank, Gaza and most importantly, Jerusalem. This stems from a religious belief that God has willed that the Jews have returned to their Promised Land and are entitled to all that they have won through their hard work and conquest such that they demand nothing less than maintaining Israel's borders at their maximum extent; inclusive of the post 1967 lands.
However, this runs counter to the needs of Israel to peacefully coexist with its neighbors and its Palestinian brethren. That is the only way Israel can insure its long term survival without massive military expenditures. In many respects, the Palestinians are in a similar position to that of the dispossessed Jews following World War II. They have no land to call their own and in many instances were uprooted from their ancestral homes. The religious parties in the Knesset apparently have very short memories since they were themselves once dispossessed and scorned upon by others.
While the Israeli government apparently thinks that a hardline approach is the only way they can insure their nation's survival, I am not so sure. What do you think?