As for Gaza not being able to sustain its population, i'm doubtful. It's a tiny territory almost devoid of material/natural resources, but then there are many places and enclave countries in the world that are similar in size, heavily populated and with good standards of living. The reason why: They're not unremittingly belligerent with their neighbors, run by a government explicitly dedicated to the erasure of one of those neighbors, and overall allowed to exchange with the rest of the world fully.
With that said, the hardline stance of Netenyahou and those who support him is doing little favors to Israel either, if a path to peace is what Israel wants.