In order to try to make any kind of peace settlement with the Arabs and Israelis, it is important to understand the background of their conflict.
If the Arabs believe that they have been given the entire land of Israel by God, then they will never be satisfied with just a Palestinian state and portions of the land.
If they believe it is their divine right to possess all of Israel, which they do, then giving them a Palestinian state will never completely satisfy them and more terrorism and war can be expected.