Israel (now broader Mid East discussion)
What sticks or carrots do we have with the Palestinians?
Again I don't have issue with your approach....I just don't see where we have any kind of real leverage on Palestine that couldn't easily be overcome by outside players (if we are talking financially)
We have a lot of leverage with any Arab state that funds them. We give a fair amount of funding as well.
The Palestinians have less to lose, that's kind of the issue, so there is less we can do to hurt them. But they have aspirations like anyone else. And if Israel makes serious moves to indicate that there is a viable solution for the Palestinians, and the Palestinians don't accept, we keep funding Israel and allow Palestine to continue to be squeezed. If Palestine does accept basic Israeli rights, then we stop Israel from squeezing.
It's a long term strategy based on game theory. Basically, the strategy that generally leads to best outcomes for everyone is:
1. Generally nice - ie, it starts off with cooperation, not defection
2. Is retaliatory - it responds to defection with immediate punishment
3. Is forgiving - punishment is limited and short duration, and allows the other party to start again
If Israel offers a viable Palestinian state, and Palestine rejects without offering an alternative that is also viable for an Israeli state, immediate pressure is applied (restriction of goods and money coming from the US and Arab allies, Iran is unlikely to be able to make up the difference). If both Israel and Palestine accept, money comes in. If one party defects, they get immediately punished, and then you reset and play the next round.