From Crikey, Tuesday 19 May 2009, by Bren Carlill, Australia/Israel & Jewish Affairs Council policy analyst [my emphasis added - SL]:
...newspapers will carry stories of...an apparent rift between [Israeli Prime Minister Binyamin Netanyahu's and US President Barack Obama] ... In short, Obama strongly backed the need to establish a Palestinian state. Netanyahu refused to say the same thing.
People might ask, if international opinion is in favour of establishing a Palestinian state, and if the last three Israeli prime ministers likewise supported such an outcome, why is Netanyahu being so stubborn?
The answer comes from studying recent history. Netanyahu thinks that if Israel gives the Palestinians something they want, such as land, the Palestinians should give Israel something Israelis want, such as peace. It's how he understands the land for peace framework. [It's called REPCIPROCITY ...I said RECIPROCITY - SL]
Netanyahu saw that in the first few years of the peace process Israelis handed over lots of land, but got an increase -- not decrease -- in terrorism. So when he became prime minister in '96, he put the brakes on the peace process. He made it clear -- Palestinians would get no more land 'til Israelis got some peace. The peace didn't come; the process stopped.
After his '99 election loss, he saw how Israel withdrew from Gaza in 2005 and how rockets increased after that withdrawal.
A decade later, Netanyahu's hands are once again guiding the Israeli ship of state. He'll be damned if he'll give the Palestinians statehood unless and until they are willing and able to run such a state and not use it as a garrison from which to stage attacks on Israel.
So, what's he doing about it?
He's continuing the program championed by Quartet envoy Tony Blair, to have an American general in the Palestinian Authority (PA) properly train Palestinian security services. The program has been a huge success, with law and order restored to a handful of Palestinian cities and more forces on the way.
He also believes endemic Palestinian corruption must end if Palestine is to be viable. The international community is in a prime position to help, by ensuring (not just demanding) that aid given to the Palestinians is accountable, and dependent on the PA ending anti-Israel incitement.
... checkpoints are being slowly, carefully, lifted. Combined with the newly trained Palestinian police, there is a slow, careful change in Palestinian governance and economy.
Netanyahu ...is a pragmatist. He sees the Israeli control of Palestinians as a millstone around his country's collective neck. He wants it to end, but he knows if it ends without foundational planning, the result will be more poverty and more deaths (on both sides), with peace further away and harder to reach. History has proved this to be the case. Twice.
The most important issue vis-à-vis the Palestinians is that the West Bank does not become Gaza. If Israel were to pull out of the West Bank tomorrow, rockets would follow. Unlike Gaza, which is on Israel's periphery, the West Bank embraces Israel's industrial and civilian heartland. Rockets from the West Bank would shut down Israel's economy and bring about a massive military response. No one, except Hamas, wants that...