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1. I think you have forgotten that missiles flying at Israel is unfortunately not a thing of the past. Iran is trying very hard to build its own bases in Syria. Of course the leaders show no inclination to suicide. Why should they, when they have actively encouraged and convinced the masses to do it for them? Yes there is a difference between Jordan today and Jordan of 1967 – but note that the treaty was signed in 1994- many years had to pass, a whole new generation in fact, before it happened. We are discussing the situation on the ground today in the West Bank- incitement, a warped education system that inculcates lies and hatred, etc etc. In this environment, peaceful co-existence is not possible. The point of the slow-pace of the Oslo accords was for things to change so that the 2 peoples could live peacefully together. But that did not happen, and there is much evidence to believe that it won’t happen any time in the near future either.
2. They can’t build an economy because they don’t want to. Much easier to blame Israel for their problems than to do anything to fix them. It’s very convenient for them to claim victim-hood. All the conditions that you describe did not stop the Zionists from building an economy and the workings of a future state when they were under the British Mandate. Not having official diplomatic ties and trade with other countries does not force them to put every penny they have to building rockets, terror tunnels and paying reward money to terrorists’ families. They have gotten billions over the years from donor foreign countries to build their economy. Look how much they have accomplished.
3. This is not about who hates us more- Yishmael or Eisav. They both hate us- chazal distinguish the difference in that Eisav hates us no matter where we are- even from afar, while Yishmael gets riled up only when we are close. Being ruled over by the Jews is not a crime or immoral act on their part. The Arabs in E”Y were always ruled over by someone else. Jews have long been ruled over by Arabs. Under Arab rule, non-Moslems were treated like inferior citizens, which is how they got along with Jews living among them and why there was “peaceful” co- existence. They could not accept Jews in any other way, hence the hatred and desire to kill us when circumstances changed.
I am not relying on Hashem to bail out the state of Israel. I am relying on Hashem to bail us out of golus and bring the geula, which is the only true solution to the Arab-Israeli conflict and antisemitism in general. Yes, the current situation is not sustainable. Your solution is even less practical. When stuck between the sea in front and the enemy’s army in pursuit behind us, we don’t try to come up with defeatist strategies but we turn to Hashem for salvation. I don’t expect Europe or the US to understand this concept, but I would think that a frum Jew in Lakewood would.