The Palestinians are exactly where most of the the rest of the Arab nations want them to be: trapped in an unlivable situation to be drawn on as useful idiots and cannon fodder for their goal of eliminating the Israelis down to the last infant.
The last thing these Arabs want is for the Palestinian problem to be solved, either by a peaceful settlement with Israel, by ceding the Palestinians some land in the vast Arab holdings, or by integrating the Palestinians into other national populations.
An exercise for the student: much is made of the "abuse" of Palestinians under Israeli rule. Check out how many rights Palestinians have in, for example, Jordan.
Something similar is being done with minorities in our own country, which serve as political cannon fodder--not physical cannon fodder yet, thank God--for certain political interests. While these minorities are disenfranchised, poor, and stuck in ghettos and barrios, they are useful. The last thing these political interests want is for these minorities to be fully integrated into middle-class society, where they will no longer be useful, and may actually end up supporting the opposition.
Current Events » in reply to "Peace" in the Middle East
It's a lot simpler than that.
