If I would be prime minister of Israel i could bring peace within one month, and unlike Sharon keep my promise.
first step: talks with Arafat in Jerusalem about the preparation of a peace-conference in Europe or Washington, with lots of international donors. Israel would withdraw its forces from all the territories belonging to the PA . Make your plans public about your intentions to stop all occupation.
second: stop terrorism: expose the plan to stop the occupation and secretly ask the approval of Hamas, PFLP and Jihad. Probably only Jihad, and perhaps hamas would refuse. If they refuse than joint actions between PA-police, israeli army and secret service, in cooperation with international forces (US and European) to dismantle all organisations who still commit violence and refuse to benefit from an amnesty if they give in their weapons (as happened in northern ireland). This would most probably make an end to at least 90% of the terrorist activities.
thirth: permanent withrawel from israeli forces and install international troops and protection to protect the borders of israel and the remaining colonists.
forth: peace-conforence in which israel offers a full independant palestinian state and promise to take in a certain number of refugees (not more than 1.5 million). in return Arafat should sign a peace-treaty with Israel, recognise it, promiise security-cooperation, and allows continued international presence at the borders. Most likely Arafat would accept. Jerusalem would be divided and the holy sites in Eastern Jerusalem brought under international protection and maintained by a board of jewish and Islamic clerics. Europe and the US will promise to take in the rest of the refugees and pay for the resettlements of jewish settlers and palestinian refugees within Israel.
Separate negotiations with Israel and Libanon: the Holan-heights and pre-1967 border in return for a peace-treaty and recognition of Israel. Syria promises to keep the Golan as a demilitarised region. Other Arab countries would be very tempted to recognise Israel as well and do business with it. Israel would recover very fast and instead of being a military middle-eastern power it would be an economic tiger of the middle-East.
Arafat and the PLO would be treated as heroes for bringing liberation (as in 1993) and the moderates would easily win the election.
All this is very realistic and it's a pity for te whole region Israel's leaders are such extremists.