[S.T.D.]

Israel could always decide to annex as much of the unpopulated areas of the West Bank as possible and just leave the population centres to the Arabs. This would make islands of arab settlements that would need to co-operate with Israel in order to trade and sustain an economy. These arab settlements would be obliged to live peacefully alongside a Jewish state in order to have their basic needs met, such as electricity, water and sewage to name but a few.
"Arab settlements" that felt so good to finally be able to call them what they really are. Reffo perhaps you have hit the only solution to the problem there. The only way to peace with the arabs is to make them totally dependent on Israel so they have to live peacefully, like it or not.