I'm curious where the tipping point is, where the military response exceeds the financial cost of a political response. It's one thing to have tensions simmering on both sides of a border, it's another that one side feels wronged and is lobbing bombs over the fence. The fact that they're having to develop a laser defense system to defend against lobbed bombs seems like it's time to reevaluate political solutions.
There are really only three solutions. One, Israel annexes Palestine in its current form, and ceases to be a Jewish state. Two, Israel annexes Palestine after removing its current inhabitants. Three, Israel stays in a state of low-grade warfare while carving out the most desireable bits of Palestine for its settlers as its population grows. One is untenable for obvious reasons. Two is untenable until memories of the…
Israel has everything to gain by a true peace deal with Palestine. Palestinians though have everything to lose - their entire identity is intertwined with returning to their old homes from 1948. I don't think there is symmetry; one side basically "won" and would really like to live in peace if it was possible (barring a few religious Jewish settlers), but the meaning of peace for the other side is basically letting go of its identity and admit defeat.
Palestinians can't let go of what happened in 48, it's as foundational for them as Zionism is for Israelis. A lot of people miss this subtle point but if you really listen to Palestinians it's all there.
While if you really listen to (most) Israelis - its mostly about security. Most Israelis don't give much of a hoot about the settlements.