There has been a "peace" between the "moderate" Arab states and Israel since the 70s, and top world leaders don't seem to care enough about Israeli demolitions of Palestinian homes and Israeli annexation of Palestinian land to put real pressure on Israel to stop. The US government has it all under control: they paid Israel and Egypt billions of dollars, they vetoed every UN Security Council resolution against Israel, and they made sure the price of oil remains stable by all means possible. They got Israeli and Palestinian leaders to talk about resolving the conflict, and evidently they got the PA to cave on key demands. Yet Israel's response to the PA concessions was to say NO THANKS, Israel's getting by just fine annexing land whenever Israel wants. Americans call this the "peace process".
It has been obvious for a long time that Israel would like to annex the West Bank, and probably many conservative Americans would like the US government to help Israel in achieving that goal. But how will they achieve this and keep Israel Jewish? How does Israel take the rest of the 20% of historic Palestine without expelling a majority of the Palestinians from the West Bank and Gaza? In the modern age of the internet and freedom of the press, it has become difficult for Israel to pull off a Deir Yassin often enough to chase most Palestinians out. Even America would not allow it (except maybe the Tea Party). So the Palestinian populations in the West Bank and Gaza grow, even with continued emigration and economic hardships.
Israel does not want to give the Palestinians in the occupied territories Israeli citizenship, because then there would be more Palestinian citizens of Israel than Jews, and it would no longer be a "Jewish" state. So the progressive Israelis realize they need a two state solution.
And the conservatives just keep demolishing and saying God gave them that land, dammit.
Jeff Halper, who founded the Israeli Committee Against House Demolitions, summarizes:
"In the complex situation in which Palestinians and Israelis currently find themselves, two things seems equally evident: First, a viable and truly sovereign Palestinian state alongside Israel is an absolute prerequisite for a just and lasting peace; and second, Israel needs a Palestinian state. Without a Palestine state Israel faces what it considers as two unacceptable options. If it annexes the Occupied Territories and grants citizenship to their three million Palestinian inhabitants, it creates de facto a bi-national state of 5 million Jews and 4 million Palestinians (not counting the refugees), an option that would end the Zionist enterprise. If it continues its Occupation, it inevitably creates a system of outright apartheid, an untenable option in the long run."
Israel, especially when led by conservative governments, has stalled on real peace, and the US, along with its "moderate" allies in the region - Egypt, Jordan, KSA - have helped Israel stall. Now we know the Palestinian Authority has also helped Israel stall. It should be no wonder why so many Arabs have turned to the Muslim Brotherhood for answers. The policies of the US and Israel since 1967 have created enemies across the Middle East, and the rise of Islamic fundamentalism has resulted in unprecedented terrorism.
The need for justice in Palestine has become even more imperative now that the Egyptian people have stood up to Mubarak, who's been taking billions of dollars in US aid but has done little to alleviate poverty in his country. Mubarak has done what the US and Israel want him to do: clamp down on Islamic extremism and seal the border with Gaza. Essentially the US, Israel, and Egypt have been implementing measures to ensure "stability" in the short term. But what does "stability" mean? And how long are the Arabs supposed to stand by as Israel annexes more Palestinian land and makes life difficult for Palestinians in the territories?
Sealing borders and imprisoning Muslim fundamentalists may be a short term solution, but it will not solve the Palestine problem. Military spending will not bring true peace to Israel. Egyptians are no doubt pissed off at their government for taking Israel's side and doing nothing to help end the plight of the Palestinians.
Israel alone can defeat any Arab nation military, including Egypt. But that doesn't mean that Israel should not change. Israel must change; Israel must be fair to the Palestinians in order to bring about true peace. If they agree to a two state solution, Palestine must not look like an archipelago state. If they annex the remainder of Palestine and opt for a one state solution, the new Palestinian citizens of Israel must have the same rights as Jews.
Arabs and Muslims must also change. They must stop calling for the "destruction" of Israel. There will be no destruction of Israel. There will be no "pushing Israel into the sea" as the Baathists proclaimed in the 60s. The reality has been the opposite in the last half century: the Palestinians were pushed into the hills of the West Bank, into Gaza, Jordan, Lebanon, Egypt, and other parts of the Middle East. Nevertheless, the Arabs must be fair to the Israelis, a large number of whom were born in Israel and should not be blamed for what happened decades ago. The Arabs should remember the Arab Jews who were expelled from Arab nations over the last six decades. The Arabs should be educated on the Holocaust, but Israel should not exploit it. The age of healing wounds must begin in earnest. It will help Iraq heal too, I believe.
Why is Palestine-Israel so important? Because it is decades old. The injustice continues; it's a wound that will not go away and it unites Arabs and Muslims. It must be dealt with fairly. The closer you are to Palestine the more you feel the injustice. Cairo is very close to Palestine and has been directly involved in the conflict since 1947. A democratically elected government of Egypt will demand justice for the Palestinians. Without justice, there will be no peace.