do you think this makes peace more or less likely?
That is a different question. Not more likely, not less likely, is my answer.
But that is not Israel's motivation any longer since they have long since realized the Islamic states will always hate them and plot to destroy them if given the chance. Israel is now concentrated on their safety and security and their survival. To them (and to me) that makes far more sense as far as use of their limited resources is concerned.
This conflict began in Genesis 16 when Abraham grew impatient waiting for the son G-d promised and had relations with his servant girl, Hagar. Hence was born Ishmael the father of the Arab race and Islamic world (by extension). And G-d prophesied they would be wild donkeys of men with their hands upon each others' throats and live in hostility towards all their brothers and neighbors. If that is not prophetic I do not know what is.
I am not saying Israel should not continue to seek peace agreements, but it seems almost a certainty there will never be peace in that land until Jesus returns.