1) Give them their own state. This is difficult for quite many reasons, and Israel (by which I mean the current government) doesn't want that
2) Give them full citizenship rights equal to Israel's citizens, make sure they have a proper minority representation, and let them participate in the regular political processes. The current government certainly doesn't want that, and I have no idea what part of the Palestinians would want that.
3) Continue to treat them as sub-human, and deal with the consequences of the hatred that fosters. That seems to have been the "strategy" before October last year.
4) Try to exterminate or exile them, or at least decimating them to such an extend that the problem becomes smaller.
Since 1) and 2) are (again, from the perspective of Isreal's government) undesirable, and 3) has stopped working, 4) seems to be their current strategy.
As the Palestinians are the majority, the Jewish Israelis would become a minority in terms of citizens and votes. This is very much akin to Apartheid South Africa, where a minority ethnic group rules over the rest of the population.
The problem with understanding this situation is that it probably has more to do with Israel's internal politics than what the situation looks like on the ground in Gaza and elsewhere. Just a quick read from the wikipedia page should give an idea just how corrupt the situation really is.
There's also the fact that Palestinians aren't a homogenous group in any sense of the word. That makes it hard for them to unite under any political flag. It also doesn't help that the borders are all closed, from both sides, and no neighboring country are willing to accept them.
From the outside the situation certainly looks very bleak.
For a commonplace example, look at a soccer match, fans screaming at the referee whenever a decision doesn't go their team's way.
Speaking for experience from some relatives, the immigration laws for people of jewish faith and ancestry were nigh insurmountable if you came from african, arab or middle east countries and pretty much just nominal even in recent times for those who had even a remote connection but came from the US and the UK.
I have the feeling they are jewish the same way Henry IV was a Catholic when he said "Paris is well worth a Mass".
The Israeli govt and people would be very supportive of (2). After all, there are more Arabs living in Israel than in Palestine. The Palestineans, on the other hand, overwhelmingly reject this option.
I fear their plan is to expand military operations into additional countries until they can get back into a pseudo-stalemate scenario. That'd explain the bombings in Lebanon, Syria, Yemen and Iran.
Why is it Israel’s problem? There was a legal agreement in 1948. It could have been so simple.
But it is also obvious, historically, why Arab countries aren’t welcoming masses of Palestinians into their countries even in these dire moments.
https://www.jewishvirtuallibrary.org/quot-the-iron-wall-quot
> There can be no voluntary agreement between ourselves and the Palestine Arabs. Not now, nor in the prospective future. I say this with such conviction, not because I want to hurt the moderate Zionists. I do not believe that they will be hurt. Except for those who were born blind, they realised long ago that it is utterly impossible to obtain the voluntary consent of the Palestine Arabs for converting "Palestine" from an Arab country into a country with a Jewish majority. ...
> The native populations, civilised or uncivilised, have always stubbornly resisted the colonists, irrespective of whether they were civilised or savage. ... Every native population, civilised or not, regards its lands as its national home, of which it is the sole master, and it wants to retain that mastery always; it will refuse to admit not only new masters but, even new partners or collaborators. This is equally true of the Arabs. Our Peace-mongers are trying to persuade us that the Arabs are either fools, whom we can deceive by masking our real aims, or that they are corrupt and can be bribed to abandon to us their claim to priority in Palestine , in return for cultural and economic advantages. ...
> We may tell them whatever we like about the innocence of our aims, watering them down and sweetening them with honeyed words to make them palatable, but they know what we want, as well as we know what they do not want. Every native population in the world resists colonists as long as it has the slightest hope of being able to rid itself of the danger of being colonised. That is what the Arabs in Palestine are doing, and what they will persist in doing as long as there remains a solitary spark of hope that they will be able to prevent the transformation of "Palestine" into the "Land of Israel." ... Colonisation can have only one aim, and Palestine Arabs cannot accept this aim.
> We cannot offer any adequate compensation to the Palestinian Arabs in return for Palestine. And therefore, there is no likelihood of any voluntary agreement being reached.
Now, Jabotinsky was arguably naive in that he thought that after the inevitable forcing of the Arabs to accept Jewish colonization of their homeland, once they have "given up on all hopes", they could be negotiated with on the terms of settlement:
> In the second place, this does not mean that there cannot be any agreement with the Palestine Arabs. What is impossible is a voluntary agreement. As long as the Arabs feel that there is the least hope of getting rid of us, they will refuse to give up this hope in return for either kind words or for bread and butter, because they are not a rabble, but a living people. And when a living people yields in matters of such a vital character it is only when there is no longer any hope of getting rid of us, because they can make no breach in the iron wall. Not till then will they drop their extremist leaders, whose watchword is "Never!" And the leadership will pass to the moderate groups, who will approach us with a proposal that we should both agree to mutual concessions. Then we may expect them to discuss honestly practical questions, such as a guarantee against Arab displacement, or equal rights for Arab citizen, or Arab national integrity.
The problem, of course, is that once you have that amount of upper hand over someone, you don't actually have to negotiate. You can just keep taking everything you want, by force. And that is exactly where Israel found itself in the long term.
Although there remains the case of 700,000 Palestinian refugees who (in the hypothetical scenario of a unified state) would tilt the balance further if allowed to return to their/their parents homes or given property as compensation for repossessed homes.