How do you resolve the conflict between the Jews and Muslims in Palestine?

The first thing worth noting is that the Israeli-Palestinian Conflict is not a conflict between Jews and Muslims. There are a number of Muslims who fight in the Israeli Defense Forces. It is a ethnic conflict in much the same way that Sri Lanka's conflict between the Sinhalese and the Tamils was an ethnic conflict. The fact that most Israelis identify as Jews and most Palestinians identify as Muslims is part of their ethnic make-up but not its defining aspect.

As concerns resolution, a number of things would have to take place before a long-standing peace (as opposed to a mere cessation of hostilities) could take place. There are other requisites, but there are the most important.

1) Mutual Recognition: Israel would need to recognize a completely independent and sovereign Palestinian Government that would fully control a certain amount of the former British Mandate of Palestine (most likely Gaza and the West Bank). Israel would also have to confer on this state the unambiguous nature of being correct and necessary for Israel. Conversely, Palestine would have to recognize the Right for Israel to Exist as a Jewish State occupying the remaining amount of the British Mandate of Palestine (most likely 1949-Israel). Both sides would have to recognize the historical and emotional value that the land also has to the other.

2) Regional/International Recognition: States that have adopted attitudes strongly favoring one side at the expense of the other, such as the Arab States would need to recognize the legitimacy of both Israel and Palestine.

3) Israeli Reparation Payments: Israel dispossessed many Palestinians of their property, either by malicious activities that took place during the Arab-Israeli Wars or by Ben-Gurion refusing to let Palestinians who left return after the 1948-9 War. Israel needs to pay the Palestinian government reparations for the land that was taken in this way.

4) Israeli Withdrawal from the Settlements: Israel must withdraw from the Settlements to provide Palestine with a viable infrastructure and complete sovereignty. The Settlers must return to Israeli territory. The buildings, however, should be left as partial payment of the above-mentioned reparations.

5) Palestinians Must Concede Right of Return: Recognizing the State of Israel as a Jewish State is meaningless if Palestinians en masse are allowed to Return to Israel. Therefore, Palestinians (and their backers) must abandon the notion that they can ever return to Israeli territory. Palestinians should leave the refugee camps and become proper citizens in this new country of Palestine.

6) Jerusalem Must Be Shared or Internationalized: Palestine and Israel both want Jerusalem and the only way to solve this is either divide the city East/West respectively and divide the Old City or Internationalize the City or some combination of Internationalization and division. Neither side will rest until it can assure its followers that its holy sites will be protected.

7) Liberal Thought: Just in general, people have to be willing to compromise and live with that compromise.