Apparently David Ignatius came away from his meeting with Bibi Netanyahu convinced that the key stumbling block to Israeli acceptance of a Palestinian state is something that doesn’t get much attention:
Binyamin Netanyahu’s friends liken him to a good poker player. They explain, for example, that before the Israeli prime minister plays the card marked “Palestinian state,” he wants an American commitment that this state will be demilitarized. [...] Here’s where Netanyahu’s poker skills will be tested. The Israeli prime minister wants U.S. and Arab leaders to pledge that any future Palestinian state will be demilitarized — with no army and no control over its airspace — before he agrees to negotiate the details of statehood. Netanyahu probably isn’t bluffing on this one: Unless a formula can be reached that protects Israeli security, he won’t play.
One thing to note on this is that it’s not an irrational Israeli demand—this really would advance Israel’s interests and wouldn’t, per se, be a gross violation of Palestinian human rights.
But another thing to note is that this is not the usual picture you get of Israel eager for peace and ready to make a deal, but constantly thwarted by the lack of Palestinians willing to acknowledge Israel’s right to exist. In Ignatius’ telling, what Netanyahu is doing is essentially holding millions of Palestinian civilians’ basic rights hostage hoping to force them into a situation of such utter desperation that they’re willing to accept an infringement on their sovereignty that no other country accepts.