Entities unilaterally declare Statehood or Sovereignty. The International Community of States recognize such declarations. I agree that the international community ought demand A) Israel abide by the Law and it's UN obligations and that B) a Palestinian state be declared. However, this would require Israel to withdraw to it's own actual Sovereign boundaries. Therein lies the problem. Israel has thus far refused.
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Russian jet hit inside Syria after incursion into Turkey, U.S. official says (Reuters)
from the article: Livni to Sweden: Ditch EU plan on dividing Jerusalem