Maj.-Gen (res) Giora Eiland, former chairman of Israel’s National Security Council, in “The Future of the Two-State Solution,” writes that no Gaza-West Bank state is possible, for numerous reasons (among them are Hamas and defensible borders), and he proposes a different alternative:
Why can't we have multilateral swaps between Israel, Palestine, and Egypt?
If we make Gaza double or triple its current size by adding additional territory from Egyptian Sinai — say another 600 sq. km. — this could give Gaza the space it needs. Suddenly Gaza would have the space to build a new city of a million people, along with a real seaport and airport, and to create the conditions that would make economic expansion possible.
At the same time, Israel needs 600 sq. km. in the West Bank because the 1967 line is unacceptable from Israel's point of view [since it is not a defensible border]. In return, Israel could give to Egypt 600 sq. km. in the Negev in southern Israel.
At the end of the day no one loses land, while multilateral swaps enable us to solve the currently intractable problem of Gaza and solve Israeli needs in the West Bank. . . .
With this plan, not only does Egypt lose nothing, but at the end of the day Egypt can gain significant benefits from this arrangement. The new seaport and airport next to Egypt can become major economic connections between the Gulf and Europe. . . .
In this proposal no one loses anything — neither Egypt, nor the Palestinians, nor Israel. This doesn't solve all of the problems, but it does solve at least one significant problem – the territorial dimension.
There are maps and further analysis in Eiland’s September 2008 monograph for the Washington Institute for Near East Policy, “Rethinking the Two-State Solution.” An hour-long video presentation by General Eiland is here.