Philppe: If we forget that the UN countries all agreed on the partitioning of Syria, Lebanon, Turkey, Jordan and Israel at the same time, even then there were no group called the 'Palestinians' in the lands before 1947. There were Jews, Arabs and Christians in various ratios, scattered throughout the area since as far back as recorded history goes. Going by other historical details, the Jews were the founders of Jerusalem and a Jewish empire, 3000+ years ago, and the city of Jerusalem has changed hands multiple times over the centuries. The most recent takeover was when the Allied forces defeated the Ottoman empire and divided up the Ottoman lands into various areas, with the British in control of the area Israel is defined, back in 1918. It was originally decided that the whole area of current Israel and current Jordan were to be given to any Jewish people who wanted to settle it, mainly because the Jews were considered the most likely to be able to manage the lands impartially. The Arabs were considered unreliable and would most likely tear down anything not Muslim, and the British didn't want that to occur. Later, the land to be given to the Jews was pared down to the current area, mainly because the British wanted to reward a certain Arab prince who had given substantial aid during WW II, and they formed Transjordan as the area he was to rule. The rest (About 1/4) was granted to Jewish rule. Between 1880 and 1948, many Jewish groups bought huge amounts of land from Arab owners in order to form the country by economic means, if the British rescinded their offer. The total amount purchase was approximately 1/3rd of what is Israel today, and was sold to them at extremely high prices for empty or unusable land. The Jews transformed these swamps and deserts into farms and valuable real estate, employing many Arabs who came to work for them.
So the Jews have been in these lands for millennia, and turned what was once barren wastes into arable paradise. The Arabs around them cant' stand this, and want to see all the Jews wiped or driven out, and have been using their own citizens as cannon fodder to do so. Thus the creation of the Palestinians in 1968.
Why continue to build settlements in controversial areas? There aren't any other areas in Israel where people can build without getting involved in a bitter spat?