With negotiations for a two-state solution entrenched at an impasse for some time now, Israelis and Palestinians should entertain new ideas for their future as neighbors. In these pages, I suggested that Israel sponsor the UN bid for Palestinian statehood and now I propose another idea.The bilateral mutual interests expressed this past winter – by Arabs and Jews – at the “Best Plans for a Peaceful Israel/Palestine” conference at Ariel brought to mind a new kind of arrangement— almost a new kind of country—that would result in peace.The establishment of a double country – or an umbrella organization, if you will – called the Israel Palestine Federation is doable and can encompass the current and long-term aspirations of both peoples. I repeat, it can encompass the current and long-term aspirations of both peoples. It would very quickly vaporize the main impediments to peaceful coexistence: for example, access to all of “the holy land” and the existence of two sovereign countries. Indeed, a federation would bind the Israeli and Palestinian national interests without forcing the peoples to combine.The key stipulation would be that the agreement would last for 100 years. This would be long enough for social evolution to make it likely to be successful, but short enough from the current vantage point for the participants to see it as something not permanent if it doesn’t work out.Israel would be “Israel, the home of the Jewish people.” Palestine would be “Palestine, the home of the Palestinian people.” Both states would exist as sovereign entities but also with freedom of movement between them. The right of return would exist – for both homes. Palestinians to Palestine, Jews to Israel. But once a person is admitted to citizenship in one or the other state (and by this route, to the federated state as a whole), he or she would be free to live in and move to any place in either state after vetting by the respective state security – a vetting process which can be done away with after trust builds over the years. Other than facilitating this, the current laws of Israel or the West Bank would not be forced to change, to a large degree. However, it is likely that real democracy would gradually seep into Palestinian life.Internal Federation borders – between Israel and Palestine – would not have to be changed from what they are now, nor permanently established. The border status quo would exist for the 100-year period, but over time would cease to be such an explosive issue, as people settle where they want to, and Palestinian prosperity overcomes their propensity for violence against their fellow federation citizens. Yet it is unlikely that populations would drastically shift locations: no one would be forced to, and movement could only happen according to individuals’ economic abilities.The states would be likely to retain their own local character if the populations willed it, but some long-term changes could not be predicted. Neighborhoods of Jews or of Palestinians would pop up in unlikely places, and many integrated neighborhoods and towns would also develop. All laws would prohibit unfair treatment of either federation nationality. Most Jewish “settlers” in Judea/Samaria would stay where they are (because “anyone can live anywhere”), but would have to prove legal ownership (i.e. they bought the land).Jointly administered “land courts” would resolve disputes. Some hard feelings would continue, but most would die out quickly with the overall national conflict being resolved, and most of the rest would evaporate over the long term.A financial compensation system should be part of the federation, whereby Palestinians proven to be exiled during the establishment of Israel (this is not the same thing as “thrown out by Israel”), or proven to be deprived by Israeli settlement, would be compensated within and by the state of Palestine. Then, as stipulated above, once “enstated” within Palestine, they would be free to move to wherever they want in the Federation, but no one would be forcefully uprooted to make room for them. This would be jointly funded by Israel and Palestine (other countries – Arab, European, China, whoever – could contribute) and administered by Palestinians solely within Palestine. Exiled Palestinians who live elsewhere would be eligible for this funding, but could use it to stay where they are – e.g., to continue to live in Jordan or the US, or wherever they had gone.Given control of this fund, it is unlikely that Palestinians would want to flood their own state with immigrants, and not all would want to come, so in-migration would not be overwhelming. In addition, to make it fair to Israel economically, a system could be established whereby international contributions to the fund are in some fashion matched by contributions to Israel.Furthermore, the funds now channeled to various and sundry Palestinian and pro-Palestinian organizations would mainly be channeled to this one (the “return” fund) and to the state government of Palestine.Eventually there could be a Federation Defense Force. Individual state security forces – the IDF in Israel, a minimal PA force in Palestine – would continue as long each state wanted. Indeed each state would remain an independent state as long as it wanted, though under this “umbrella” of cooperation.And there would be no “occupation.” Indeed, each state would sign an agreement that it will never attempt to occupy or attack the other.The federation would be between Israel and the West Bank. Gaza would be welcome, but the welcome would depend on Hamas signing on to the agreement. Of course, the agreement would make it no longer necessary to figure out how to deal with the geographical separation of Gaza and the West Bank, which would become a non-issue. The two entities would be part of the Palestinian state, and there would be free movement among all the entities. (Completely free movement might take a few years to establish, mainly to control the movement of weapons, as well as the development of mutual good will.)Any citizen of this Federation could live anywhere within it, including anywhere in Jerusalem. Other than the law that citizens would become citizens of their side of the Federation and live there to begin with (and upon entry as immigrants), there would be no restrictions on where to Iive.Palestine would be allowed to build capitol government buildings in Jerusalem – in a limited part of it, if necessary – and “use” it as its capitol. There would be no division of the city, in the same way that no other borders would be changed or more finally established than they are now. Joint custody of the land and its history would promote joint – rather than rivalrous – protection of all of it.At the end of 100 years the denizens of this Federation, likely a very prosperous and powerful one, would see that they had developed a need to coexist and the motivations to do so; they would have learned to live together and seen that they had to. They would have a joint, bi-national homeland essential to all of them that they would have to defend together. They would still have their own identified separate homes – Israel for Jews, Palestine for Palestinians – but also a need for each other.The writer, whose essays have been published in Commentary Magazine, The Wall Street Journal, The New York Sun, and The Jerusalem Post, is based in New York.