Pressure from other Arab governments, especially Egypt, has caused the Palestinian National Authority, and the major Palestinian terrorist organizations, to agree to an Israeli deal that would see Israeli troops, and most Jewish settlers, leave Gaza and the West Bank.  But about 40 percent of the 220,000 Jewish settlers would remain, mainly in the West Bank. Palestinians see this as an Israeli attempt to annex part of the West Bank. Israel is trying to get the US to go along with this plan, as the United States has promised to supply billions of dollars a year in payments (call them bribes if you like) to Israel and the Palestinians if they can hammer out a peace  deal. 

Israel is moving along on this plan, telling the Palestinians that they can take it or leave it. The situation is pretty desperate on the Palestinian side. Their economy is a mess, and terrorist operations have even interfered with food and other aid coming into Palestinian territories. Since the violence began in September, 2000, some 3,400 have died (77 percent of them Palestinian, mostly young men attacking Israelis, while most of the Israeli casualties have been unarmed civilians.) Palestinian attacks have become less and less effective. But the Palestinians don't lack for volunteers to make these attacks. The Palestinian problem is that, increasingly, the attacks just get the attacker killed and have no effect on the Israelis. Palestinian efforts to mount major attacks in revenge for the death of Hamas founder Sheikh Ahmed Yassin have so far failed. The Palestinian terrorist groups are willing to go along with a peace deal, for a while anyway, so they can rebuild, and come up with some new, and more effective, ways to destroy Israel.