Here is basis my theory, people in the the disputed territories are sad, they've lost loved ones and homes on both sides, Palestinians get a lot of sympathy & lip service but not much else, Israel gets US. Support, but is constantly threatened by its neighbors. All sides have a valid point (If your response to this post so far was "where is the middle east" or "I didn't they were fighting out there", feel free to take an old stack of newspapers and bludgeon yourself to death with it).
So I have several key measures;
1. Invite Russell Peters, Chris Rock, Carlos Mencia (I don't think he's really all that funny, but even without some head gear he'll in all likelihood be mistaken for an Arab by the locals), Dane cook, the Blue collar comedy tour etc for a series of shows in the disputed territories. That they are funny is undoubtedly true, but I'm also betting that they are actually universally funny and that they're jokes will hold up in cultural translation. For eg. I'm sure folks in Israel/Palestine can also laugh along with redneck stereotypes of marrying your first cousin.....in fact it may be mainstream (Dunno if it is too mainstream, I don't believe in evidenciary support, I put it down my beliefs in conspiracy theories, the most longstanding one is that all Science is a conspiracy against the oppressed Mullahs).
I also feel that people who laugh together, eventually buddy up and find ways to get along, humanizes their adversaries. Once their laughing endorphins flow through their respective blood streams the feel good factor emerges, and they'll be way more likely to chill and who knows maybe even be homies. And Has anyone noticed that terrorists emerge from countries that have terrible comedy shows (ok, Afghanistan doesn't really have enough local TV yet, but still Saudi Arabia is terrible.... 9/11; 15-19 hijackers).
Anyway, worst comes to worst, the audience collectively hates them all and finds something in common with each other....win win either way.
2. Pretend to find Oil: Every developed country in the world plus China will make it their number one priority to solve the crisis. Even the socialist nations will find it imperative to help their Arab/Jewish brethren. Unrelenting amounts of Economic aid will be promised, favourable trade treaties, Infrastructure development treaties, maybe even schemes to reclaim a huge chunk of Sea for new settlements; the whole turkey will all the fixings if you will. They'll make it so attractive to make a deal, that both sides can't help but do it. The last round of negotiations will look like this;
Israeli Premier Benjamen 'I Likud looking tough' Natanyahu "Alright Mahmoo (Mahmoud 'I like being Head of State of a Powerless nation" Abbas), you can have Jerusalem but that means your family will have come over to our place for Hunnaka and New Years....I insist."
Hell the United States may even partner up with Fiji again and make a coalition of the willing, drop another 150,000 troops (10 of which will be from Fiji) to keep the peace.
One reason that this may actually work and the western world would actually try to fix the over arching issues rather than pull another African job where the locals can be bribed, the folks down their aren't particularly fearful of their governments. Israelis because they believe in democracy (they would also be very expensive to bribe) and Palestinians don't notice if they have a government half the time. Then again, the flip side may be that Al-Qaeda may suddenly appear to have a strong presence in Palestine/Israel and then you get Afghanistan style bombing and an invasion....but such are the risks of life.
All hell will however break loose once they realize that there is no Oil there.....so this is a plan without an end game....
3. Have a block party, have Britney Spears, Madonna, Rolling Stones and U2 perform along with religious figures singing 'All you need is love' from Love Actually, and everyone will tear up and make peace. Afterwards Bono can be joint President of both Countries.