Whether Israel is a Jewish state or a state of all its people or a homeland for Jews is an Israeli decision, not something to negotiate with Palestinians. Bibi likes one phrasing Likud back benchers maybe like another. Shas wants another and the 20% Arab parties want something else and Labor wants a different thing and Meretz another. Bibi is trying to use the Palestinians as a hammer to smash his vision down internal opposition in Israel.
PM: We'll surround ourselves with fences in defense against the wild beasts around us (Haaretz)
from the article: Netanyahu: No peace until Palestinians accept Israel as Jewish state