Answer:
Israeli Demands of Palestinians and other Arabs:
1) Hallowed Land: The Jews consider the Land of Israel (which is not necessarily all in the borders of the State of Israel) to be a holy piece of land in that God promised it to the Jewish people as an eternal inheritance. Thus, some Jews, especially Religious Zionists see resettlement of the Land of Israel by Jews to be part of God's plan and mandate and therefore do everything in their power to settle it. In addition, it contains specific religious and historical sites such as the Western Wall and the Old City of Jerusalem, the Cave of Machpelah, the Old City of Jaffa, and the Sanctuary of Shiloh among others. Jews want to ensure maintenance and access to the sites which they feel have been limited by the other. Jews claim that Jordanians used the Western Wall as a landfill.
2) Zionism: A number of Jews in Europe began to feel that they were being permanently and deliberately excluded from parts of European society because of the prevalent racial and pseudo-scientific forms of Anti-Semitism. They believed that there was no possible equality between European nationals and their Jewish residents and were disinterested in the Andalucian Solution because they did not want to be second-class citizens. They believed that the Jewish people needed to form a political apparatus (an Independent State) to defend themselves and their civil rights. Zionism originally had purely secular connotations, but with the advent of Religious Zionism, the powerful secular cause of Zionism joined with the Hallowed Land idea to provoke conflict. Jews want the Palestinians to accept the result of Zionism: a Jewish State. Many Arabs, like those behind the Arab Peace Initiative of 2007 and Qaddafi's "Isratine" are willing to accept an Israel that is democratic and majority Arab. This would defeat the purpose of a Jewish State, because that State would not have a Jewish character.
3) Security: This is paramount for most Israelis. They want to be able to go asleep every night and worry more about whether they bought the right baby formula than whether their baby is going to live another day. Israel has been attacked unceasingly since its declaration of independence and is extremely skeptical of armistices and other treaties for security guarantees. Israelis are thus hesitant to withdraw from a number of positions until it can be made clear that Israel will not have lost a strategic advantage in protecting itself for naught.