What makes this problem difficult to solve?

Difficulties

All of these issues must be worked out if an agreement is to be made. This puts the region and the world in a difficult situation. Each of these issues would be controversial to try and solve on its own, but the problem with this conflict is that all of these issues must be solved together. We can see that creating a proper Palestinian state and making Israel happy at the same time would make very few people perfectly happy. 

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Both sides say that they want the problem to come to an end, but neither side is willing to make major concessions. In an issue of this magnitude, both sides need to make huge concessions. For example, if Palestine wants to control the whole West Bank, huge Israeli cities would have to be moved. If one side wants to control Jerusalem as their capital, the other side will have to give up all access to their most holy city. If one side wants to control the water supply, the other side must be reliant on them for water, something essential for life. If the sides want to live in peace, they will have to get along. It appears as if this issue may never have a good solution.