Israeli settlements are spread throughout the West Bank, severely undermining the prospects for a Palestinian state. Most of the world considers the settlements illegal, and the ongoing construction is interpreted by many Palestinians as a sign that Israel does not intend to leave the West Bank.
Jerusalem is a city with a long and contested history. Both Israelis and Palestinians claim it as their capital, and the city is home to some of the holiest sites in the world to Jews, Muslims and Christians. Israel controls the entire city today, and many Israeli leaders insist on keeping the city, undivided, under Israeli rule.
Israel faces very real threats to the safety of many of its citizens, mostly from militant, non-state actors. A number of formulations, including American security guarantees, have been proposed, but Israel maintains that it needs to hold on to key pieces of the West Bank due to security concerns.
The international community envisions a two-state solution based on the de facto borders of Israel prior to 1967. But Israel has never accepted those borders and believes negotiations should be based on current conditions, including large settlement blocs.
The number of Palestinian refugees has grown to over 5 million over the past 67 years. Palestinians insist on their right to return to what is now Israel, while Israelis are overwhelmingly steadfast in their total opposition to accepting more than a token few Palestinians to Israel. It is the most vexing of all the issues between the two peoples.