The Arab countries will settle for nothing less than the eradication of Israel. The Palestinian crisis creates a continual low-level war with Israel. They've made temporary peace treaties with Israel, but they would invade and conquer Israel the moment they think they can win.

This was the arrangement made in the 1960s, that the Palestinians would be forced to stay in the West Bank and Gaza until Israel is defeated.

Who does it benefit: The Arab countries, who force Israel to spend military effort on the Palestinians instead of other productive uses. It also creates bad press for Israel in Western media.

Israel tried to purchase the disputed land from the Palestinians and make arrangement for them to be resettled elsewhere. The Arabs refused.

Israel is in a no-win situation. They can't make peace, because every offer is rejected. They can't hold a ceasefire, because they will be attacked eventually. The can't wipe out the Palestinians and murder all of them, due to defective Western morality.

If Israel tries to wipe out Hamas, that is impossible without substantial civilian casualties in Gaza, which makes Israel look bad according to defective Western morality. If Israel offers a ceasefire before wiping out Hamas, that just gives Hamas time to rearm for their next attack. Even if Israel wipes out Hamas, most of the Palestinian population still hates Israel and Jews, so the problem will remain unsolved.