Your assumption is based on considering Israel a benign humanistic power. Unfortunately, we part ways on this assumption. Maybe it was that way until the Six Day War, but then the quick success corrupted much of the nation. "There was no one to talk to" was initially true but later it became a mantra for holding to occupied land. As a former politically involved Israeli I can tell you that "not having a partner" became the official policy. It's not true anymore that if the Arabs agreed to the 67' borders Israel would readily accept it. Israel wants much more and you can't expect that the Palestinians would take whatever small slice of the pie they are given. There won't be peace in the area until an equitable settlement is reached.
26-year-old sustains serious injuries in Tel Aviv stabbing (Haaretz)
from the article: Peretz: Gaza beach blast may have internal Palestinian cause