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Explainer-What is the two-state solution to the Israel-Palestinian conflict?
Published by Global Banking and Finance Review
Posted on July 30, 2025
5 min readLast updated: January 22, 2026
Global Banking and Finance Review
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Published by Global Banking and Finance Review
Posted on July 30, 2025
5 min readLast updated: January 22, 2026
The two-state solution proposes peace by establishing a Palestinian state alongside Israel. Despite support, challenges like settlements and Jerusalem's status persist.
, (Reuters) -Britain has said it will recognise a Palestinian state in September unless Israel takes steps including alleviating the dire humanitarian situation in Gaza and committing to a long-term peace process that delivers a two-state solution.
The announcement, coming after France declared that it will recognise a Palestinian state in September, has put renewed focus on the two-state solution to the conflict.
This is the idea of bringing peace through the establishment of a Palestinian state alongside Israel in territory Israel captured in a 1967 war. But the idea has long faced obstacles, and these have only grown with time.
They include accelerating Jewish settlement in occupied land, and uncompromising positions on core issues including borders, the fate of Palestinian refugees, and the status of Jerusalem.
WHAT ARE TWO-STATE SOLUTION'S ORIGINS?
Conflict occurred in British-ruled Palestine between Arabs and Jews who had migrated to the area, seeking a national home as they fled antisemitic persecution in Europe and citing biblical ties to the land throughout centuries in exile.
In 1947, the United Nations agreed a plan partitioning Palestine into Arab and Jewish states with international rule over Jerusalem. Jewish leaders accepted the plan, which gave them 56% of the land. The Arab League rejected it.
The state of Israel was declared on May 14, 1948. A day later, five Arab states attacked. The war ended with Israel controlling 77% of the territory.
Some 700,000 Palestinians fled or were driven from their homes, ending up in Jordan, Lebanon and Syria as well as in the Gaza Strip, the West Bank and East Jerusalem.
In a 1967 war, Israel captured the West Bank, including East Jerusalem, from Jordan and Gaza from Egypt, securing control of all territory from the Mediterranean to the Jordan valley.
Although 147 of the 193 U.N. member states already recognise Palestine as a state, it is not itself a U.N. member, meaning most Palestinians are not recognised by the world body as citizens of any state. Around 3.5 million live as refugees in Syria, Lebanon and Jordan and 5.5 million live in territories captured by Israel in 1967. Another 2 million live in Israel as Israeli citizens.
HAS A DEAL EVER BEEN CLOSE?
The two-state solution was the bedrock of the U.S.-backed peace process ushered in by the 1993 Oslo Accords, signed by Yasser Arafat of the Palestine Liberation Organization (PLO) and Israeli Prime Minister Yitzhak Rabin.
The accords led the PLO to recognise Israel's right to exist and renounce violence, and to the creation of the Palestinian Authority (PA). Palestinians hoped this would be a step towards an independent state, with East Jerusalem as the capital.
The process suffered heavy pushback on both sides.
Hamas, an Islamist movement, carried out suicide attacks that killed scores of Israelis, and in 2007 seized Gaza from the PA in a brief civil war. Hamas' 1988 charter advocates Israel's demise, though in recent years it has said it would accept a Palestinian state along 1967 borders. Israel says such statements by Hamas are a ruse.
In 1995, Rabin was assassinated by an ultranationalist Jew seeking to derail any land-for-peace deal with the Palestinians.
In 2000, U.S. President Bill Clinton brought Arafat and Israeli Prime Minister Ehud Barak to Camp David to clinch a deal, but the effort failed.
The fate of Jerusalem, deemed by Israel as its "eternal and indivisible" capital, was the main obstacle.
The conflict escalated with a second Palestinian intifada (uprising) in 2000-2005. U.S. administrations sought to revive peacemaking - to no avail, with the last bid collapsing in 2014.
WHAT MIGHT PALESTINE LOOK LIKE?
Advocates of the two-state solution have envisaged a Palestine in the Gaza Strip and West Bank linked by a corridor through Israel.
Two decades ago, details of how it might work were set out in a blueprint by former Israeli and Palestinian negotiators. Known as The Geneva Accord, its principles include recognition of Jerusalem's Jewish neighbourhoods as the Israeli capital, and recognition of its Arab neighbourhoods as the Palestinian capital, and a demilitarised Palestinian state.
Israel would annex big settlements and cede other land in a swap, and resettle Jewish settlers in Palestinian sovereign territory outside there.
IS A TWO-STATE SOLUTION POSSIBLE?
While Israel withdrew settlers and soldiers from Gaza in 2005, settlements expanded in the West Bank and East Jerusalem, their population rising from 250,000 in 1993 to 700,000 three decades later, according to Israeli organisation Peace Now. Palestinians say this undermines the basis of a viable state.
Jewish settlement in the West Bank has accelerated sharply since the start of the Gaza war.
During the Second Intifada two decades ago, Israel also constructed a barrier that it said was intended to stop Palestinian suicide bombers from entering its cities. Palestinians call it a land grab.
The PA led by President Mahmoud Abbas administers islands of West Bank land enveloped by a zone of Israeli control comprising 60% of the territory, including the Jordanian border and the settlements - arrangements set out in the Oslo Accords.
Netanyahu's government is the most right-wing in Israeli history and includes religious nationalists who draw support from settlers. The far-right finance minister, Bezalel Smotrich, has said there is no such thing as a Palestinian people.
Netanyahu said on July 7 he wanted peace with the Palestinians but described any future independent state as a potential platform to destroy Israel, saying control of security must remain with Israel.
Hamas won elections in 2006 and a year later drove forces loyal to Abbas out of Gaza, fragmenting the territories where the Palestinians hope to establish their state.
Hamas and Israel have fought repeated wars since then, culminating in the attacks on communities in southern Israel on October 7, 2023, that ignited the current Gaza war.
(Reporting by Nidal al-Mughrabi, Ali Sawafta, Maayan Lubell, Tom Perry; writing by Tom Perry and Mark Heinrich; editing by William Maclean)
The two-state solution aims to establish a Palestinian state alongside Israel in territories captured during the 1967 war. It has faced numerous obstacles over the years.
The two-state solution's origins trace back to the 1947 UN partition plan, which proposed separate Arab and Jewish states in Palestine. The declaration of Israel in 1948 and subsequent conflicts shaped the ongoing situation.
Key challenges include the expansion of Jewish settlements in occupied territories, disagreements over borders, the fate of Palestinian refugees, and the status of Jerusalem, which Israel claims as its capital.
The two-state solution was central to the U.S.-backed peace process initiated by the 1993 Oslo Accords, but subsequent efforts have faced significant setbacks, including violence and political opposition.
Advocates envision a Palestinian state comprising the Gaza Strip and West Bank, connected by a corridor through Israel. The Geneva Accord outlines potential arrangements for land swaps and the status of Jerusalem.
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