That was basically the plan/situation in 1948.
Muslim/Arab neighbors rejected such in favor of attempting to wipe out all the Jews and erase Israel.
They have tried several more times since.
History shows how that turned out.
Of course they rejected it, they had a right to reject it. A foreign colonial power (Britain with the UN) was planning to create a new state carved out of territory where over a million Arabs
already lived and had homes. Those people were never afforded a democratic vote to choose the government!
The government was to be a Zionist led government, imposing itself on all the non-Jews already resident there. They would go to bed as normal then wake up one day and find they had a new Jewish government, unelected, and hostile to Arabs.
I'd reject that, any sane self respecting leader would reject that being done to their population.
The Zionists rejected the other idea, a single state with a democratically elected government where all the people got to vote in whether they be Arab, Egyptian, Jewish, European etc. - a democratic state, that gave equal rights to all its people.
That single state solution was rejected out of hand by the Zionists, they never wanted a state with
Zionist representation in parliament, they wanted a
Zionist Government - big difference.
"Israel" was never a
Jewish ambition, it was a
European ambition and it got embraced by
European Jews, secular socialist minded Jews who had no affinity with the Levant or its culture, it did not spring from Judaism, from the Jews already dwelling the Levant, it was
foreign ideology, imported and forced upon the indigenous population and feared by Arab and Jew alike.