I wonder if it is a religious issue that is driving the violence. To mee it seems mostly like a land/tribal issue.
Late last century the Zionist movement was founded. Its goal was the establishment of a Jewish homeland in Palestine, and dozens of Zionist colonies were thus founded there. At the start of the Zionist colonization of Palestine, the inhabitants were Arab peasants. Most of the population were Moslem, but in the urban areas there were some groups of Arab Christians.
In WWI the British and the Arabs collaborated to take Palestine from the Turks. The British, in a leadership role, promised Zionist leaders to help in the establishment of a Jewish “national home” in Palestine, with regard for the rights of non-Jewish people. However, the British had also promised the Arab leaders who had assisted them against the Turks to support the creation of independent Arab statesin Palestine. The British couldn’t fulfil both promises.
In 1919 there were about 568,000 Muslims, 74,000 Christians, and only 58,000 Jews in Palestine. The British then encouraged Jewish migration to the area; the Jewish population then increased rapidly (also due to the rise of Nazism in Europe). There have been problems ever since. The Palestinians feel that their land has been illegally and immorally snatched from them with the consensus of Great Britain, and the (later) support of the USA. The other Arab states are outraged. The Israelis have held tenaciously on to their new land, sometimes even adding to the portions of Palestine under their control and destroying the homes of Arab settlers. In general, the Palestinians are dispossessed, the Israelis are much wealthier, and the Arab world is reluctant to intervene since the US threatened to take action against Egypt in the Egyptian-Israeli war.
It’s a complicated mess. What is going on now is hardline behaviour on behalf of both the Palestinians and the Israelis. Barak is the first Israeli leader who has ever offered to return significant portions of Israeli occupied lands to the Palestinians. Unfortunately, some moronic Palestinian militant movements insist on all or nothing (meaning Jerusalem must be returned as well). Barak himself does not always have the support of the whole Israeli government. Arafat (it has been opined) started the recent spate of violence in the hope of putting pressure on the Israelis to give up Jerusalem, but the violence quickly escalated beyond his control. The Israelis retaliated using ample force (tanks, gunships, and missiles against peasants).
In other words, the idiocy on both sides of the issue for the last 100+ years has demolished what little hope there seemed to be of a peaceful resolution. In recent years the USA has slightly withdrawn some of the direct support it was giving Israel, and the Arab world does not intend to tolerate more of what they perceive as crimes against Arabs. I hope for everyone’s sake that open war does not happen, but it is such a volatile situation that you never know. Especially since it is rumoured that Egypt has some of the largest weapons stocks in the world, and Syria/Lebanon would like to see the end of the Israeli problem.