The Palestinians and the Arab League have recognised the existence of Israel and its rights to its territory. This "Jewish state" bit is in our head and not in the law which is the criterion for mutual recognition. Further, the Saudi Peace proposal, based on the borders prior to June 4, 1967 and EJ as the capital of Palestine, regcognised Israel and stated clearly that such steps taken by Israel would be an end of the conflict, with opening of diplomatic relations between Israel and all Arab nations.
Ya'alon met with security chiefs to assess situation following developments at Gaza border (Haaretz)
from the article: Erekat: No unilateral declaration of Palestinian state
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