Actually, that depends upon your view.
As I said it takes 2 sides to make peace.
That is true, if you see the world as "us" against "them".
In reality, there are MANY sides in this issue.
Israel's problem is that it treats ALL the Palestinians as terrorists.
That is why Israel does not see a problem with rocket attacks against an apartment building, as long as Israel kills the "bad guy" it was going after.
Even Yasser has/had to deal with different factions in his organization.
Work towards reducing the problem. Find the factions that Israel can work with and help them expand their power base.
Work with the other nations there and through the UN to get those factions some land of their own. It doesn't all have to come from Israel. Hell, you have the maps. Offer them something GOOD like the chunk where Egypt, Israel and Saudi Arabia and Jordan meet. It's water front property.
I'd have a bit of trouble selling that to Jordan, but it could be done.
If not there, slice bit from Israel, Lebanon, Jordan and Syria. They'd end up with access to the Mediterranean Sea.
If you can't stand for that either, then move them over the Gaza strip and run it up along the border 'tween Egypt and Israel.
But get the UN to buy into it so you can get UN support for weeding out any terrorists (without helicopters shooting apartments) that try to setup a home there.
No Palestinian is born a terrorist.
They can be raised that way.
And Israel can help raise them that way.
Or Israel can help those who are NOT terrorists to setup a better life for themselves.