The way to fix the Middle East conflict looks obvious—except to Israelis and Palestinians

The U.S., Europe and many Arab governments insist the overdue answer is the two-state solution, under which Israel and a Palestinian state would exist side-by-side.

The snag is that Israelis and Palestinians no longer believe in it.

The past 10 months have dealt the biggest setback in decades to the chances of a negotiated peace. The Hamas-led Oct. 7 killing of nearly 1,200 people in southern Israel and Israel’s devastating response, which Palestinian authorities say has left more than 40,000 dead in Gaza, have confirmed for both sides that their unwanted neighbor has no regard for their lives.

“Right now, Israelis and Palestinians do not believe that the other side are human beings," said Khalil Shikaki, head of the Palestinian Center for Policy and Survey Research in Ramallah. “This is not a permanent fixture of Israeli-Palestinian relations. But that is where we are right now."

In fact, support for side-by-side states has been dwindling for well over a decade. While surveys from the late 1990s until around 2010 showed solid majorities of Israelis and Palestinians backing the two-state solution, it has been downhill ever since.

Now only 32% of Palestinians believe in the formula, according to a PCPSR survey released in June. Among Israeli Jews, belief in peace based on two states has collapsed to 19%, according to a survey by the Pew Research Center published in May, from 32% shortly before Oct. 7.

Most Israelis and Palestinians know they need to find a way to share the land between the river and the sea. But they can no longer see a partner on the other side.

The Death of Trust

For many Jewish Israelis, Oct. 7 deepened the fear that a Palestinian state in the West Bank and Gaza would fall under the control of extremists such as Hamas and become a launchpad for terrorism.

Surveys by Shikaki’s institute that found around 70% of Palestinians approved of Hamas’s Oct. 7 attack are seen in Israel as proof that their neighbors are bent on murder.

“This generation of Palestinians has shown its face," said Gadi Taub, a historian at Jerusalem’s Hebrew University and political commentator. “We know what their intentions are, because they celebrated the seventh of October."

Taub grew up in a family of peace activists and strongly supported the 1990s Oslo Accords, the most sustained attempt so far at reconciliation between Israelis and Palestinians. He grew disillusioned about the possibility of peace after the accords ended in failure and violence.

Israel now has only one option, Taub said: “Occupation."

“Do I like it?" he said. “No. Is it better than dying? Yes."

“It is like two people where one is holding down the other. If you let him get up, he’ll kill you," said Hagai Segal, an author and West Bank settler. “It is tragic of course."

Benjamin Netanyahu has become the longest-serving prime minister in Israel’s history by validating—critics say fanning—voters’ fear of relinquishing control of the land.

“Everyone knows that I am the one who for decades blocked the establishment of a Palestinian state that would endanger our existence," Netanyahu said in a video address early this year.

Oct. 7, Israel’s worst-ever security failure, has hit Netanyahu’s personal popularity, but it has further ingrained his narrative about the conflict.

Israel needs security control over all of the land west of the Jordan River, and that “conflicts with the idea of sovereignty" for the Palestinians, Netanyahu said in January.

Shikaki’s surveys show that Palestinians’ support for the two-state solution has declined since 2010 in tandem with a growing belief that it is no longer viable. Israel’s ever-expanding settlements and a nationalist, pro-settler turn in Israeli politics have left Palestinians struggling to see any scope for a compromise, said Shikaki. Support for armed struggle against Israel has risen in the same period.

Doomed to Fight

The refugee camp of Jenin, a maze of cement and cinder blocks, covers a hillside near the northern edge of the West Bank. It looks out over tidy Israeli farmland, where the grandparents of some Jenin residents used to live until they were expelled or fled during the Arab-Israeli war of 1948, when Israel won its independence and many Palestinians lost their homes. The West Bank fell under Jordanian rule until Israel conquered it in the Six-Day War of 1967, beginning a long occupation.

“It is the only refugee camp where people can see their own land," said Fareed Bawaqneh, a soft-spoken electrician who lives in Jenin camp. “Maybe our great-great-grandchildren will get it back."

An Israeli drone buzzed high overhead as Bawaqneh looked out over a jumble of flat roofs, tangled power lines and the ruins of an Ottoman-era train station. His father, a schoolteacher, was shot on his own doorstep by an Israeli soldier as he tried to help a wounded man in the street, according to the family.

Bawaqneh, who rejects partition, said he can see only two solutions to the conflict: “Either we die and they live, or we live and they die."

Murals in the camp show children bearing a large key, the symbol of the dream of return. Teenagers play-fight with toy guns in narrow streets pockmarked by real firefights between Israeli forces and local militants. Roads have been plowed up by Israeli armored bulldozers seeking hidden bombs. Posters commemorate recent martyrs, pictured holding M4 automatic rifles. Some are young boys.

Jenin camp is one of the West Bank’s main strongholds of militant resistance to Israel. People here are divided over the ultimate aim: to win statehood in the West Bank and Gaza, ending the Israeli occupation since 1967? Or to undo the creation of Israel in 1948?

“If anybody tells you 1948, they are crazy," said Jamal Hweil, a leading figure in Jenin from Fatah, the main Palestinian secular nationalist party. “We believe completely in the two-state solution." But Israel’s expanding settlements are eating up the space for a deal and driving more Palestinians toward the utopian idea of reversing 1948, he said.

High on the hill, young militants with assault rifles took shots at glass bottles and kept missing. A middle-aged former militant, Mohammed Amer, took over a rifle and hit the bottles. Amer looked weary. Two of his sons were killed during an Israeli raid last year.

If Israel agreed to a Palestinian state in the West Bank and Gaza, Amer said, he would wholeheartedly support peace.

“The problem is not what I want," he said. “It is what Israel will give. They won’t give us 1967 borders. They won’t even give us the borders of Jenin."

Nearby, young boys took turns holding an M4 carbine. Girls outdid each other with their families’ number of martyrs. Days later, one of the misaiming militants was incinerated in a car by an Israeli drone strike.

“We are doomed," Amer said. “We will fight each other until Judgment Day."

A Time of Hope

Not so long ago, Israeli and Palestinian leaders came close to a deal.

The Oslo Accords were widely popular when they began in 1993. Israel and the Palestine Liberation Organization, led by Fatah, recognized each other. A Palestinian Authority was created to run parts of the West Bank and Gaza and cooperate with Israel. The aim was to build trust and pave the way for a final partition deal. Palestinian leader Yasser Arafat and Israeli Prime Minister Yitzhak Rabin won the Nobel Peace Prize.

In Jenin, a hotbed of the intifada in the preceding years, youths laid olive branches on Israeli army jeeps, recalled Hweil, then a young Fatah fighter. “We longed for peace. We wanted a normal life like everybody else," he said.

In liberal Tel Aviv, the prospect of two states was intellectually irresistible, said Taub, the historian. Israel’s declaration of independence had proclaimed “the self-evident right of the Jewish people to be a nation, like all other nations, in its own sovereign state." How could the Palestinians be denied that universal right?

“And then buses began to explode," Taub said. Suicide bombers from Hamas and other militants opposed to Oslo killed dozens of Israeli civilians. Taub recalled the dreaded sound of booms followed by sirens.

Jewish extremists also took aim at peace. A far-right settler gunned down 29 Palestinians in a mosque in Hebron. An ultranationalist student shot Rabin dead at a peace rally in Tel Aviv.

Violence escalated. “We had a narrative ready for that," Taub said. “We said, Oh, the enemies of peace are the radicals on both sides, and we must be brave and cross this difficult terrain." But Taub could see no nonviolent Palestinian partner. “Gradually I realized I was saying things that were no longer true," he said.

“We felt that we gave them everything, and what we got back was terror, so we felt betrayed," said Ami Ayalon, head of Israeli security service Shin Bet at the time.

In reality, Israeli leaders weren’t yet ready for a Palestinian state, Ayalon said. “It was after the intifada," he said. “We hated them. What we wanted was security."

Therein lay a problem with the peace process. “Arafat saw it as a political opportunity, something that would take us to a state," Hweil said. “But Israel looked at it as a security arrangement."

The Palestinian Authority began to look like Israel’s junior partner in managing the occupation. Many Palestinians thought their new officials cared more about their personal status, budgets and limousines than about national liberation. Cynicism spread.

The Israeli settler population in the West Bank doubled during the Oslo years. Expanding settlements brought more soldiers, roadblocks, checkpoints, strip-searches and daily humiliations for Palestinians, Ayalon said. “What they wanted was the end of occupation. So Palestinians felt betrayed."

“You’re sitting at the table to make peace with me. At the same time you’re building more and more settlements. Does that show you have good intentions?" said Issa Amro, a Palestinian activist known for his nonviolent protests and frequent arrests by the Israeli military. “Oslo was fake from the beginning. It was about control, not about peace."

Last Chances

As trust deteriorated, Israeli Prime Minister Ehud Barak tried in 2000 to jump to the final deal: a Palestinian state. The night before flying to the U.S. for a summit with Arafat and President Clinton, Barak gathered close aides at his home, recalled his spokesman Gadi Baltiansky. Barak told them the summit at Camp David was make or break for the two-state solution.

“What if it is in the middle? What if we make progress but don’t reach an agreement?," Baltiansky asked Barak. “You see this pencil, Gadi?" the prime minister replied, holding one up. “Either I sign a deal, or everything collapses."

The summit made some breakthroughs on the principles of a deal, but the two sides remained far apart on the details of the thorniest issues: borders, security, refugees and how to share Jerusalem. Israeli and U.S. officials didn’t believe Arafat truly wanted a deal. Palestinian officials doubted Barak could implement one. A second Palestinian intifada erupted. Barak declared there was no Palestinian partner for peace.

Baltiansky has continued to run a nonprofit, the Geneva Initiative, promoting a two-state accord and contacts between the two societies. “It is more than lonely," he said recently. “Your own friends and relatives ask you, ‘are you still going on about this peace issue?’"

Barak was succeeded by right-wing hard-liner Ariel Sharon, who was deeply mistrustful of Palestinian leaders and didn’t want an agreement. Instead, he took the fateful decision to withdraw Israeli soldiers and settlers from Gaza unilaterally. “There was no reason, no logic, no benefit" to having masses of Israeli troops protect a small number of Jewish settlers in the teeming, hostile Gaza Strip, said Sharon’s deputy and successor, Ehud Olmert.

The 2005 pullout was a huge boost for the local militants from Hamas, Shikaki said.

“Palestinians said the Israelis were running under fire from Hamas, and we got to our 1967 borders without making a single concession," Shikaki said. “Hamas won the public in Gaza at that point with the narrative that this conflict can only be resolved by violence."

Despite all the setbacks, the two-state solution came closer than ever in 2008.

Olmert had made his name as a right-wing mayor of Jerusalem who opposed any territorial retreat. But he came to believe that Israel needed to separate itself from the swelling Palestinian population. Otherwise it couldn’t remain a Jewish-majority democracy.

New Palestinian President Mahmoud Abbas, also known as Abu Mazen, was more firmly against armed struggle than Arafat. The two leaders built on earlier talks, including Camp David, and their positions came within touching distance.

But Olmert was facing corruption investigations and resigned as his party’s leader.

“I was a lame duck," Olmert said ruefully. “A couple of Israeli senior ministers came to Abu Mazen and said to him, ‘Wait, no one should sign with Olmert. He’s sliding.’"

In September 2008, Olmert played his last card, showing Abbas a large and detailed map of future borders between Israel and Palestine.

“President, I beg you, sign it," Olmert recalled saying. “We’ll go together to the United Nations, then a joint session of Congress, then the European Parliament. Then we’ll invite all the leaders of the world to Jerusalem. And then we’ll both go for elections and we’ll win on the momentum that this will create."

Abbas replied that a further meeting was needed to study the map, Olmert said. He never heard back.

Abbas declined to comment.

“I think that Abu Mazen made the greatest mistake in the history of the Palestinian cause. He should have said yes to me," Olmert said. “It might have changed everything."

After Peace

On both sides, popular support for the two-state solution faded in the decade that followed.

Dahlia Scheindlin, an Israeli political consultant and opinion pollster, said Israelis remembered only disappointment and Palestinian terrorism. Right-wing coalitions under Netanyahu portrayed the Palestinians as implacably hostile and Israeli peace advocates as leftist enemies of the state.

A series of short wars in Gaza between Israel and Hamas also hardened public attitudes. As Israel’s economy enjoyed a technology-driven boom, many Israelis felt they were doing just fine without answering the Palestinian question.

On the Palestinian side, settlement expansion under Netanyahu convinced many that Israel had no interest in ever ending the occupation. Abbas’s standing sank as Israel ignored him and the Palestinian Authority became associated with repression and corruption.

“There is no real peace process to speak of after Olmert fails," Scheindlin said. “Peace seemed very remote."

Israel, Arab states and the wider world ignored the Palestinian national cause for years. By 2023, Israeli security chiefs were warning Netanyahu that the risk of an explosion was rising, possibly involving Hamas, Hezbollah, West Bank militants and more. Israel’s vaunted intelligence agencies missed the signs when it came on Oct. 7.

Write to Marcus Walker at Marcus.Walker@wsj.com and Anat Peled at anat.peled@wsj.com