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Akuperma,
1. The Palestinians can be citizens of Jordan. That is their state. Similarly, Europeans, both Jews and non-Jews, who came during the Ottoman period had extraterritorial European citizenships. This was also true in China. Actually according to all polls most are willing to admit that they want to leave (80% in Gaza). The PA is a brutal kleptocracy. An international resettlement fund should be established to help them emigrate to countries that need immigrants. Canada, for example, needs 350K new immigrant workers. Plus their families that would take care of most of them.
2. As for the Jews living on the periphery, how is that different than Americans who live outside the east and west coast megalopolises or in small enclaves in those areas? Why does every Jew have to live in TA? FYI, these areas have industrial parks and hi-tech parks. With the Internet and telecommuting they could even eventually work for companies in the TA area.
3. Israel does not require anyone to modify his religious observance (unless you consider it to be a mitzvah to schnor). You are motzi shem ra on the whole country.