The Palestinians seek three things:
Creation of an independent state without recognizing a legitimate and permanent State of Israel in any territory.
Sovereign control of East Jerusalem as the capital of Palestine.
The right of entry for all remaining 1948/9 Arab refugees from Britain’s Mandatory Palestine, and for their descendants, to any place within pre-1967 Israel in which they, or their antecedents had lived.
Israel seeks three different things:
Recognition of the legitimacy and permanence of Israel within finalized “secure and recognized boundaries free from threats or acts of force.” This is the security promise of UN Resolution 242 to which Israel is entitled.
The capital of Israel in Jerusalem and Israeli protection for Jewish patrimony in Eastern Jerusalem.
“End of conflict; end of claims.” After an agreement, the Palestinians will not be able to press additional claims against Israel for territory or other “rights.”
For the Obama administration now to pursue a Palestinian state…would likely be seen by both sides as nothing more than a shiny new distraction for the benefit of the U.S. negotiators’ vanity, nothing more.