The major obstacle to peace talks is the fundamental
unwillingness and political inability of the
Arab governments to acknowledge Israel's right to exist.
It is likely that a palestinian state will be formed.
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The Palestinian people have a distinct cultural, historical, and political identity, but they do not have full sovereignty over their own nation-state. The status of a Palestinian nation is a complex and contested issue that is closely tied to the Israeli-Palestinian conflict.
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The Arab State in question was the Arab Palestinian State. Both
the Israelis and the Arabs prevented the Palestinian Arabs from
realizing their own state and both parties continue to do so.
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There are numerous such organizations, but the most successful
(politically) in achieving this goal is the Palestinian Liberation
Organization.