You're right in that there can't be peace if both sides won't compromise. But in fact both sides are not totally inflexible- Israel has been trying since Oslo to make a peace agreement with the Palestinians, and at this point has even agreed to the creation of an (illegitimate) Palestinian state in the West bank and Gaza. In the framework of the Oslo accords, and in fact in every single peace agreement that there has been, the PA's only responsibility was to unequivocally end terrorism, to prevent it from within, to dismantle the groups. They have consistently refused, and continue to educate their young that one day they will destroy Israel. After all these years of brainwashing, their national identity is defined by the struggle to destroy Israel.
Israel has repeatedly shown itself eager to compromise for peace, and has offered many concessions, whereas the terrorism and murder of Israeli non-combatants has never ceased. There can't be peace if both sides won't compromise. The PLO charter includes in it the vow of struggle until the destruction of Israel, and has never been amended.
If both parties wanted peace, there would be peace. All this international diplomacy and whatnot wouldn't be necessary, there would just be peace, the parties would find a way. There won't be peace until those that are against it are defeated.
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Truth is peace. We are all souls in bodies.
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