Up to and until 2012, there simply was no state or country identified as "Palestine." Nor was there an authority identified as a Government relative to the Palestinian claims. The entirety of the West Bank was "Occupied Jordanian Sovereign Territory" between 1967 and 1988. In 1988, when Jordan cut all ties with the West Bank, it became an abandoned territory under the control of the Israelis.
The settlers of which you speak are not Zionist Squatters. The separation between the West Bank and the Israeli Sovern Territory is a normal border under international law. The Gaza Strip was abandoned by the Israelis in 2005, which became an example of what happens when you give Arab Palestinians the responsibility of governance.