After reading history I believe the correct model for Israel to resolve this conflict is American defeat of Japan in WWII, without the use of nuclear weapons. At the time the Japanese were possessed by a fundamentalist fanatical culture focused on emperor-worship and employing suicide pilots as a millitary tactic, much like the present day Palestinians. They too had no interest in peace. It was only by their total defeat that a new paradigm for Japanese society was created. The total defeat of the Palestinian terrorists is a necessary pre-condition of any further withdrawal. The longer it is delayed means a greater cost in Israeli lives, civilian and millitary. Israel will announce at the end of this war on terror that it will be further withdrawing from land and allow a Palestinian authority, under a mandate perhaps, to run their state and govern their own affairs.
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Preliminary report: Shooting attack in East Jerusalem's Damascus Gate (Haaretz)
from the article: Peres balks at Olmert's plans for further West Bank pullout