Pathfinder..
Israel already offered them an independent state in something like 95% of the territories - they rejected this offer (made by the previous israeli PM Barak along with Clinton) and instead started this current intifada. The offer may not have been perfect, may not have given them everything they wanted but it was a start and thousands of ppl would still be alive now if they had accepted it..
They already have an army - last I heard they had something like 80,000 'police' all armed with kalashnikovs and other weapons obviously essential for 'police work'!
As for weapons of mass destruction - no israel will never allow this, same as the US will never allow Iraq to have them for obvious reasons..
They already have allies and economic aid and all those other things you mention - the Palestinian Authority does/has all this right now but they seem to think that war is better..
As the Ferengi say: war is good for business..
