Israel's religious and national identity are incorporated into Judaism with distinct cultural traditions and customs which differ from the Palestinian identity. Their languages are distinct as well. The Palestinians are mainly Muslims or Christians and their customs are unique to them. Basically the trends over the 20th and 21st centuries are movements towards cultural independence and national sovereignty. Integration into a bi-national state would still encompass one group being discriminated against another group because fundamentally they'll have different constitutions which ascribe to their cultural identity. In the business world this type of amalgamation sometimes leads to hostile takeovers where one party of interest loses to another. We don't want to take over them and they shouldn't take over us. Israel and Palestine are distinct nations.
16 killed, 50 injured as buses collide in far east Russia (DPA)
from the article: Who’s afraid of the bi-national state?