The confederative solution is probably the right one. Differently from a federative one, the confederation stresses the autonomy/independency of its parts. Differently from federation the confederation praises ethnonational identity. A confederation would allow Umm el Fahem for example to be part of the palestinian part, while isettlements blocs could be included within the Israeli perimeter. (Confederation encourages as ethnonationalism as you can get) A confederation may not be limited to Palestine -Israel but could include some other countries of the Mediterranean. This is indeed Sarkozy's utopia . A "mediterranean confederation"
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Khamenei: Iran to back Palestinians 'in any way we can' (Reuters)
from the article: Strenger than Fiction / Israel should consider a one-state solution