Palestine has been considered to be The Holy Land by the Jewish population for a long time. However, the Jewish connection with the land was mostly abstract and connected with dreams of messianic redemption.
The 19th Century saw the rise of Arab and Zionist Nationalism. The Zionists wished to establish a Jewish Homeland in Palestine under Turkish or German rule. Zionism grew mainly out of a need to counter the growing anti-Semitism in Russia and Europe. It grew into a full-fledged political movement in 1897. The World Zionist Organization and the Jewish National Fund led this movement. Both these organisations encouraged immigration and buying up of land in the erstwhile state of Palestine where they wanted a new Jewish nation established.
The British decided to make Palestine a Jewish national home. The Arabs opposed this idea, claiming that the areas now called Palestine were their land. The Arabs feared removal by the Zionists and detested the thought of living under Jewish rule.
The British was faced with the problem of the heavy cost it had to pay in the Second World War and consequently handed the problem of Palestine over to the UN.
The Jewish leadership accepted the plan whereas the Arabs did not. This led to a civil war in Palestine. The Jews quickly gained the upper hand and Israel declared its independence on May 14, 1948.
Within days of it being formed, 5 Arab League nations, Egypt, Syria, Trans Jordan, Lebanon and Iraq invaded Israel. The war ended in an Israeli victory. Israel then captured Palestinian territories much its original mandate and whatever few Palestinian territories were left unconquered by Israel were divided between the Arab League nations.
In the Six-Day War in 1967, Israel captured Gaza from Egypt, the West Bank from Jordan and annexed East Jerusalem, which was under Arab control until then.
Israel fought 2 more wars, the Yom Kippur War in 1973 and the First Lebanon War in 1982 against the Arab League and the PLO and Syrian forces in Lebanon respectively.
In 1987, the first Intifada, an uprising against Israeli rule in the Occupied Territories by the Palestinian Arabs, broke out. Hamas was founded during this time.
In 2000, the second Intifada broke out, symbolizing the failure of the peace process. It was led by Hamas.
It has officially not yet ended.
Following a civil-war between Hamas and PLO, the PLO has retained control of West Bank whereas Hamas is in control of the Gaza strip. The PLO and Israel are currently at peace, whereas Hamas and Israel have been at loggerheads. This resulted in the 3 week long Israeli invasion of Gaza to squash Hamas in 2008-09.
Jerusalem
The border of Jerusalem is a particularly delicate issue, with each side asserting claims over this city. The three largest religions: Christianity, Judaism, and Islam—include Jerusalem as an important setting for their religious and historical narratives. Israel asserts that the city should not be divided and should remain unified within Israel's political control. Palestinians claim at least the parts of the city which were not part of Israel prior to June 1967.
As of 2005, there are more than 719,000 people living in Jerusalem; 465,000 are Jews (mostly living in West Jerusalem) and 232,000 are Muslim (mostly living in East Jerusalem).
The Israeli government, including the Knesset and Supreme Court, is centered in the "new city" of West Jerusalem and has been since Israel's founding in 1948. After Israel captured the Jordanian-controlled East Jerusalem in the Six-Day War, they assumed complete administrative control of East Jerusalem.
In 1980, Israel issued a new law stating, "Jerusalem, complete and united, is the capital of Israel." Israel expresses concern over the security of its residents if neighborhoods of Jerusalem are placed under Palestinian control. Jerusalem has been a prime target for terrorism since 1967. Many Jewish neighborhoods have been fired upon from Arab areas. The proximity of the Arab areas, if these regions were to fall in the boundaries of a Palestinian state, would be so close as to threaten the safety of Jewish residents.
Without the West Bank, Israel would be only nine miles across at its narrowest point, close to its greatest population centre. Many fear that this would leave it vulnerable to any future attacks by an Arab alliance. Moreover, such an army would be fighting from the higher ground of the West Bank, and would find its invasion made easier, since it would not have to cross the Jordan River The threat of Qassam rockets fired from the Palestinian Territories into Israel is also of great concern. In 2006 — the year following Israel's disengagement from the Gaza Strip — the Israeli government recorded 1,726 such launches, more than four times the total rockets fired in 2005. Many Israelis see this as evidence that greater Palestinian autonomy necessarily comes at the expense of Israel's ability to defend itself against threats from the Palestinian territories.
Occupied Palestinian Territories is the term used by the United Nations to refer to the West Bank and Gaza Strip—territories which Israel conquered from Egypt and Jordan in the 1967 Six-Day War. The Israeli government uses the term Disputed Territories, to indicate its position that some territories cannot be called occupied as no nation had clear rights to them and there was no operative diplomatic arrangement when Israel acquired them in June 1967.
In 1980, Israel annexed East Jerusalem. The United Nations rejected this annexation on August 20 1980. Israel has never annexed the West Bank or Gaza Strip, and the United Nations has demanded the end of all hostility and encouraged the acknowledgement of the sovereignty, territorial integrity and political independence of every State in the area and their right to live in peace within secure and recognized boundaries free from war.
It has been the position of Israel that the most Arab-populated parts of West Bank (without major Jewish settlements), and the entire Gaza Strip must eventually be part of an independent Palestinian State. However, the conflict arises upon the question of the precise borders of this state. In 2000, for example, Ehud Barak offered Yasser Arafat an opportunity to establish an independent Palestinian State composed of the entire Gaza Strip and 92% of the West Bank. Because of security restrictions, and Barak's opposition to a broad right of return, Arafat refused this proposal.
Some Palestinians claim they are entitled to all of the West Bank, Gaza Strip, and East Jerusalem. Israel says it is justified in not ceding all this land, because of security concerns, and also because the lack of any valid diplomatic agreement at the time means that ownership and boundaries of this land is open for discussion. Palestinians claim any reduction of this claim is a severe deprivation of their rights. In negotiations, they claim that any move to reduce the boundaries of this land is a hostile move against their key interests.
Other Palestinian groups, such as Hamas, insist that Palestinians must control not only the West Bank, Gaza Strip, and East Jerusalem, but also all of Israel proper. For this reason, Hamas views the peace process "as religiously forbidden and politically inconceivable".