And instead of helping to build a place for Palestinians to live, they kept them under direct military occupation until 2005, then under blockade plus air raids (in retaliation for Palestinian attacks, but usually ending up with a 10:1 ratio of dead Palestinians for each killed Israeli citizen).
What they're seeing now is exactly what the French and British discovered after WW1: if you try to humiliate and subjugate a whole country, even after you have just decisively won a war against them, you'll only radicalize them, ending in a bigger war (thankfully, Palestine doesn't have the resources to become Nazi Germany even if they want to).
The only solutions to have long lasting peace are either (a) investment and openness, or (b) complete annihilation or something close to it. I'm advocating as much as I can for (a).