According to Palestinian Arab leaders, Olmert offered far more than Barak agreed to in early 2001. Olmert offered the equivalent of 100% of the disputed areas.
In a June 25, 2009 interview with the Jordanian daily Al-Dustour, Palestinian Authority negotiations department head Saeb Ereqat said that the previous Israeli government, under Ehud Olmert, had offered PA President Mahmoud 'Abbas territory equal in size to 100% of the land occupied in 1967, by means of a land swap. Ereqat explained, however, that the PA would not agree to a land swap before Israel recognized the Palestinians' right to sovereignty over all the territory occupied in 1967. He added that there had been a steady erosion in Israel's position over the years, to the point that it had recently offered the Palestinians 100% of the territory; therefore, the Palestinians had no reason to rush into accepting the Israeli proposals. He stressed that the Right of Return and monetary compensation for the refugees were not mutually exclusive, and that the Palestinians would insist on receiving both.
Addressing the issue of Hamas, he said that nobody was asking it to recognize Israel, but that any government in which Hamas was a partner would have to recognize Israel and the commitments undertaken by the PLO.
And even that was not enough for the poor, stateless Palestinian Arabs.
In other words, the PA's chief negotiator is utterly unwilling to negotiate. He says that the Palestinian Arabs have nothing to lose by waiting.
From their perspective, they have an American president who is willing to push Israel to do everything they want. From their perspective, successive Israeli governments keep offering more and more to them anyway. From their perspective, the second Intifada was a success and terrorism pays big dividends.
Combined with Abbas' interview in the Washington Post in May we see that this is official Palestinian Arab policy: just say no.
The bitter irony is that Westerners and leftist Israelis are in a huge rush to grant a Palestinian Arab state to a people who aren't in any hurry to accept one.
The contrast to the Zionist leaders of the 1930s and 40s could not be starker. For the Jews, the establishment of a state - even one with borders impossible to defend from enemies on all sides - was a top goal. The entire reason it was so important was for the protection of the Jewish people themselves.
The West looks at Palestinian Arabs as having a huge grievance that must be addressed in order to soothe Arab demands. But the Palestinian Arab leaders do not think that their people are in any particular distress. They don't care about a state - they care about the symbolism of receiving everything they demand from Israel. Hence Erekat's insistence that a land swap of any kind is unacceptable before such a state is established on the Green Line borders exactly. And before even that happens, they will insist on the right for a few million more Palestinian Arabs to flood Israel itself.
For Palestinian Arabs, there is no downside to saying no. To them, their obstinacy has been rewarded over and over again.
The obvious reaction from Israel is to raise the stakes. Tell them that if they are willing to wait, Israel is willing to wait as well for a leadership that cares more about their people than about the idea of forcing Israel to lose. Tell them that the longer they wait, the more land they will lose. And follow up on it.
At the same time, let the international community know how Palestinian Arab leaders are thinking. Show that they have failed their own people again. Emphasize that they have shown zero interest in building a state. And, above all, make Israel's red lines as stark as the PalArab leaders make theirs. If the result is an impasse - so be it. It is not as if Palestinian Arabs on the West Bank are suffering - they clearly aren't.
As an aside, Erekat also shows the exact reason why a land swap is disastrous for Israel - it changes the situation back to before 1967 when the Arabs did not accept the Green Line and were "negotiating" as well as fighting to keep pushing the borders back to the Mediterranean. The major benefit of the Six Day War was that the Green Line finally became sacrosanct. Before that, it was simply an armistice line; now the international community accepts it as a real border. Once Barak offered a land swap, he set the psychological clock back to 1966, and all of a sudden Israel proper is negotiable, not just the territories.