The refugees` problem is actually the EASIEST issue to solve, because the Arabs are fully aware that Israel cannot admit any significant number back. They use the refugee issue in order to gain concessions on the other issues: Territory and Jerusalem. The way the Saudi plan puts the refugee problem is not bad: "Achievement of a just solution to the Palestinian refugee problem to be agreed upon in accordance with U.N. General Assembly Resolution 194." This is open to interpretation, otherwise the Saudis would have said: "Implementing Resolution 194". Indeed, the Geneva Initiative solves the refugee problem with the vast majority of refugees get settled elsewhere, with everybody calling it "fulfillment of Resolution 194". As the article analyses, the Arabs are aware that Resolution 194 did not create a "right of return". An additional support for this view is that Israel was admitted to the UN in 1949 after it made some commitments about compensating refugees. Israel did not commit to returning them to their homes, and nevertheless the UN found this satisfactory and admitted Israel as a member.
Kerry meets Egyptian officials in bid to assuage concerns over Iran deal (AP)
from the article: Who's afraid of renewing the peace process?