Israel carries out the Realignment plan

Prime Minister Ariel Sharon unilaterally disengaged from Gaza and evacuated four settlements in the northern West Bank in 2005. He was planning to withdraw from 93% of the West Bank, leaving Israel with the remaining 7%, mainly the three major settlement blocs, in 2008 if negotiations failed. His successor Ehud Olmert subsequently dropped the plan and tried to negotiate a deal instead. Suppose this plan had been carried out. How would the situation have developed from then on?
 
IMHO aside from the issues in Israel politically I really don't see any changes. Neither the PLO nor Hamas is going to say "OK, we got Gaza back, we have 93% of the West Bank, let's be good neighbors." The international community for a while may be more lenient on Israel. However Hamas will continue to have a program of the eventual elimination of Israel, and the PLO will continue to demand any and all Palestinians who left Israel and their descendants have the "right of return". In short, while this would essentially be the two state solution, neither Hamas nor the PLO will accept this as the final settlement.
 
Israel gets a better rep on the international stage, Palestine's population becomes less motivated to push for full right of return, PLO and Hamas continue to push for that last 7% at a minimum and the debate devolves to "should Israel be allowed to get away with that little bit more of land theft" rather than the current nonsense. Plus side for Israel, they come off as the good guys (compared to OTL Israel anyway). They should probably stop celebrating an independence day, though, at least not without being honest about how their country was formed.
 
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