The occupation just perpetuates the violence.
The United States supports national determination. Israel needs to help create a democratic Palestinian nation with which they can have a close cooperative peace and prosperity with. Every situation they could try would have risks, but this would be the right thing to do, with the best chance of success.
Israel tried to make a peace deal to create a Palestinian State, but the talks failed. The PLO should have accepted the deal, even though they didn't get everything they wanted.
Once personal bonds between the people grow much larger, and Israel knows they can trust them, the new state can get more sovereignty. "Blessed are the peacemakers, for they will be called children of God." Mat 5:9. Over the years the polls have fluctuated, but a majority of Israelis and Palestinians support the two peaceful states.
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