Regardless if it's Israel or the PLO, the US gov is to blame. Look at US aid to Palestine. The problem is not whatever each side is doing, the problem is that we're paying both of them to do it.
I'd like to offer some constructive criticism of Israel...if you look at their domestic policy, they're still a fundamentally Keynesian social democratic country. The "right wing" parties are usually just more religious or nationalist and don't differ significantly from the left wing ones (which are well to the left of the US Democratic Party). If Israel took a more fiscally conservative direction, I think it would improve as a whole. A big reason for the popularity of social democratic and Keynesian ideas in Israel is that all of this is paid for by the US, just like how India is in a similar situation with the UK. Cut the aid to Israel and I see it going down a more Hong Kong-like route which will improve the nation as a whole, both domestically and on foreign policy.
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