Aside from history and demography, the social, economic, geographic and religious ties binding Palestinians and Jews together, for better or for worse, are so intertwined and interdependent that a two-state solution to the Palestinian-Israeli conflict is unrealistic.
Yet, due to the age-old bitter feud, a quick jump to a “traditional” one-state solution is perhaps a bit too ambitious. Some prior form of geopolitical union is first called for.
I propose a general referendum throughout the Holy Land, and let the people decide, for a confederation between Israel and Palestine. That would enable both peoples to retain some autonomy and pave the way for further future integration.
In that case, we would have one country, say Isratine, with one political capital, Jerusalem. Then, Tel Aviv could be the capital city of Israel and Ramallah the capital city of the province of Palestine. It is not outlandish! Consider that the Temple Mount, Judaism’s holiest site is in the same vicinity as the Al-Aqsa mosque, the holiest Muslim site in Palestine, and, consider that Jewish neighborhoods and Arab neighborhoods have co-existed side by side all along. Forget the current intifada for a minute; you would see that an impressive level of administrative cooperation already existed between Palestinians and Jews in the Holy Land. In fact, I would argue that the co-existential arrangements established between Israelis and Palestinians in the Holy Land amounts to a quasi-confederation, in the administrative sense at least. Can that be denied?
A confederation would also serve the socio-religious needs of both peoples –Jew for having a Jewish society, and Palestinians a Palestinian society. Each people will have their own government/politicians. Thus, “Isratine” would become a confederation, like Canada, and bilingual too!
It is worth noting that even if the right of return is implemented in a final solution, the Jewish character (of the province of Israel) would not be significantly affected. The following quote from the official Jewish National Fund (JNF) website explains why:
“By the time Israel became a state in 1948, JNF owned 12.5 percent of all the land of Israel, on which 80 percent of Israel’s population now lives.” 
Further, noted Palestinian researcher, Salman Abu Sitta, more or less agrees. His research on Israel’s demography concludes that 78% of the Jews in Israel live in 15% of Israel proper; 85% of the land is mostly refugees’ land, in which 22% of Israelis live. 
In other words, the ethnic concentration of Jews will not be altered, nor will that of the Palestinians, even if the refugees are allowed to return to their original homes.
Before Jordan lost control of the West Bank, in wake of the 1967 war, it was considering establishing a confederation with the Palestinian territories, for much the same reasons I propose such a solution to the Palestinian-Israeli conflict.
 “Is the Right of Return Feasible?” by Dr. Salman Abu Sitta, AUGUST-7-2001 (http://www.palestineremembered.com/Acre/Right-Of-Return/Story440.html)
Mr. Baha Abushaqra is a Media Activist with Palestine Media Watch.