PP, I think you have a good point and you articulate it well. Where I differ is that I don't think Israel's "underlying need is security" is any match for Jewish Israeli's underlying greed in keeping as much of the wealth/land for themselves as possible.
They are doing their best to prevent Palestinians from moving to Israel due to their strong demographic fear - one of the hottest political conversation topics amongst Jews in Israel is how to get rid of the Arabs within Israel itself (not the occupied territories).
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