The Arabs do not want an independant Palestinian state as the palestinians are the jews of the arab world. Hated, mistrusted and abused. Unfortunately the last 50 years of struggle has made giving them their own state the only method of self determination available to them. Whether it is an Islamic state or a failed state makes no difference, it will be their state. As for that effect on Israel, nothing will change the fact that the world wishes that the Jews would just go away and disappear from the face of the earth so it annoys them to see Jews in the news every day.
thanx,
bill