As much as I agree with the right of the Jewish people to self-determination, I don't see how there will ever be peace in its current guise.
If I came into your garden, set up my deckchair in it and put a fence up around two thirds of it so you couldn't get in I imagine you might be somewhat irritated. If I then kept popping up in your bit and putting down some plant pots I think you would be more annoyed still. If I could see you were annoyed so I started pelting you with garden trimmings you might get more mad still.
Agreed, it's a bit of an absurd analogy and the reality is many times worse, but in that scenario would you just give up those bits of your garden?
The fact of the matter is that the self-determined location of the Jewish state is in one of the most controversial and religiously divided areas of the world. Give them New Jersey and the world would be a lot more peaceful, but that wouldn't be acceptable to them. Given the history of the area (Israel, not New Jersey!), I can understand that perspective too.
Around and around we go.