It's a sensitive issue, that Israel could easily defuse by giving the Palestinians E.Jerusalem. Keep your friends close and your enemies closer.
Yep, that will work. This can easily be demonstrated by the fact that every single time Israel has given land, or any other concession, to the Palestinians they responded by throwing huge parties that celebrate their new found friendship with Israel.
What land has been given? Palestinian land has been shrinking for years. It's hard to imagine them throwing a party, but throwing rocks is a totally different story when your own government will be in the line of fire.