Sigh. There’s no way to do a short answer to this. And my answer will necessarily generalize a great deal.
The majority of the hostility began after World War II, when waves of Jewish immigrants (the refugees from Europe) started to come to what was then Palestine. There was already a sizeable Jewish community there, and had been continuously since about 1200 BC, along with a steady stream of Jewish immigrants. There were periods of waves of immigration, for example, in the 1890s and early 1900s.
Palestine was under British “mandate” (read: control) as part of the World War I peace arrangements. The British never tried to smooth relations between the Jews and Arabs, but often did their best to stir them up. It was not Britain’s finest hour.
The Jews viewed themselves as pioneers, tilling the soil that the Arabs had left idle. The Jews purchased land from the Arabs, at exorbitant price; the Arabs thought they had the best end of the bargain, huge payments for worthless land. As the Jews fertilized and irrigated the land, and built modern cities, the Arabs had second thoughts; the land was now much more valuable than when the Jews had bought it.
In 1948, the United Nations agreed to partition the area into two states, a Jewish state (Israel) and an Arab state (Palestine). The map was a complex of little bits and pieces, so that the Jewish state would have many disconnected pieces.
The Arab nations surrounding the area tried to wipe out the nascent Jewish state, and launched their armies. They urged the Palestinians to flee (to avoid the massacre) as the Arab armies “pushed the Jews into the sea.” The Arabs viewed the war as one of extermination of the Jews. Then, when all the Jews were gone, the Palestinians would gloriously return and claim all the land, the buildings, the wealth of the dead Jews. So, along with religious hatred, we add sheer greed.
Most Palestinians believed their Arab brothers, and fled. The Israelis urged the Palestinians to stay, to work together to make the new nation(s) viable, and many Palestinians did.
The war was a miraculous success for the vastly outnumbered Jews, who David-vs-Goliathed the Arab armies. The state of Israel then was a unified country instead of several little islands in a Palestinian sea. (Yes, the land was taken in battle.) The Palestinians who remained became Israeli citizens, and generally speaking did quite well. (Yes, there was some discrimination against them, although it was illegal under Israeli law.)
The Palestinian refugees languished in camps in territory that had been seized by Jordan. (Yes, Jordan used the opportunity of the war to seize territory for itself rather than help the Palestinians.) The Palestinian state never came into being. The Arab nations gave almost no aid to the refugees; they preferred refugees as a symbol rather than working towards resettlement.
Jerusalem was a divided city, controlled half by Israel, half by Jordan. Sites that were holy to Jews (like the Western Wall, the remains of the Temple from 70 AD) were forbidden for Jews to visit.
There were several other efforts by the Arab nations to destroy Israel, notably in 1956, 1967, and 1971. The Arab states never recognized Israel as an independent nation, and most of them still do not today.
In 1967, the Arab nations launched a war against Israel – the famous Six Day War. The Arabs were not only defeated, but massively defeated. Only U.N. political intervention stopped Israel from capturing Damascus, and probably Cairo. The Israeli army conquered the West Bank (including all Jerusalem) from Jordan, the Golen Heights from Syria, and the Sinai peninsula from Egypt.
At this point, several things happened. First, the Israeli government made the holy sites in Jerusalem accessible to ALL religions, and unified Jerusalem. Second, Israel had a major bargaining chip – large hunks of conquered land. Third, the Arabs decided that the Palestinian refugees were a good rallying point, and started to use them as propoganda: oppressed Palestinian refugees and land seized in military conquest was a more sympathetic version than greed and religious hatred.
The PLO, led by Yassir Arafat (and others), thought that blowing up passenger planes was a way of calling the world’s attention to the plight of the Palestinians. (Current airport security and all that bother arose in response to Mr Arafat’s terrorism.)
There was a lot of double talk. The hard-line Palestinians talked about getting their land back, as though they meant the land seized by Israel in 1967, but they in fact meant ALL of the territory, including ALL of Israel.
In the late 1970s, Egypt negotiated a peace with Israel. Israel gave Egypt back the Sinai, and in return Egypt recognized Israel’s right to exist. There has been commercial exchange as well. There was hope that the other Arab states would join in, but such hope never materialized, although I believe there is now a peace treaty between Israel and Jordan.
The Arabs found that rallying around the poor displaced Palestinians, fighting for their own country, got a far more sympathetic press in the U.S. than did their terrorist activities.
Hence the current problem and mistrust. The Israelis would very much like to believe that the Palestinians are looking only for their own territory, and would recognized the independence of Israel. However, there is a long history of suspicion that the hard-line Palestinians (backed by the other Arab nations, notice how quickly Iran and Iraq have yelled their support) want to take over ALL of Israel.
OK, that’s my perspective. I’m obviously fairly biased, but I have tried to present the Palestinian side as well. They view themselves as oppressed by Israel, although many will admit that they have been badly abused and used by their Arab brethren.
Two other comments:
(1) Mr Arafat has never hesitated to use children as martyrs to his cause. Putting children and teens in the front lines is nothing new to him; it’s a lot easier, in fact, to persuade teens that they are serving a glorious cause by dying on behalf of blah blah. Not just throwing stones and Molotov cocktails, mind you; a few years ago, there were several bombs on passenger buses in Israel – young kids carried them, willing suicides (martyrs in their own eyes) who blow up innocent civilians. (In the eyes of the hard-line Palestinians, no Jews are “innocent” since they occupy Palestinan “homeland.”)
(2) Even if there were good will on both sides, the situation is very difficult. There are Arab/Palestinian communities scattered throughout the area. I’ve seen a map, it’s a mess. Imagine a city, with these three or four square blocks under one government, and those three or four adjacent blocks under another government; with little islands controlled by one government surrounded by territory controlled by the other. How do you run an effective police force if you can’t get to an area without going through passport control? How do you manage a mail service or road repair or schools when every few blocks are under control of one country, then the other? So the problems are enormous, even if there were good will.
Hope that helps.