One thing I find interesting in reading various authors who discuss the history of the Arab-Israeli or Israeli-Palestinian conflict is how the role of the USSR in exacerbating the conflict, and the role of its demise in providing an opportunity for a potential settlement of the conflict, is generally completely, or almost completely, ignored. [A few sentences only tangentially on point deleted, perhaps a subject for a separate post.]
Consider, first, that Israel could have bought itself quite a bit of security if the U.S. had allowed it, France, and the UK to triumph in the Sinai War in 1956. But Eisenhower and Dulles were afraid this would drive Arab public opinion into the pro-Soviet camp.
Then consider that the East bloc secret services recruited, trained, and financed Yasser Arafat to create the violent Palestinian nationalist movement that became the PLO, starting around 1964.
After Israel emerged victorious beyond its wildest dreams in 1967, the influence of the USSR was apparent in several ways. First, the Soviet bloc led an international campaign of boycott and defamation, larded with anti-Semitism, against Israel, creating a siege mentality that has stayed with Israel ever since, and made it that much more difficult to persuade Israel, already traumatized by the Holocaust and the expulsion of Jews from Arab lands, that the "international community" is to be trusted.
Second, Israel's performance against Soviet-supplied enemies Syria and Egypt persuaded the U.S. that Israel was a regional superpower that needed to be engaged, both to further U.S. interests, and to try to keep the (nuclear-armed) country stable and secure so that it didn't inadvertantly start WWIII.
And finally, while religious fanatics were among the most zealous settlers of the West Bank, a certain level of settlment was supported virtually across Zionist party lines, due to the perceived threat of a renewed Soviet-backed war of destruction against Israel. (In part, this was due to Lyndon Johnson reneging in 1967 on American security guarantees provided by Eisenhower in 1956--Israel saw that the U.S. could not be trusted to guarantee its security.) Israeli military and political leaders believed that holding at least some parts of the West Bank gave Israel the strategic depth to ward off, or even entirely discourage, an attack from the West, which proved prescient when Jordan declined to involve itself in the Yom Kippur War.
In 1973, by the end of the Yom Kippur War, Israel had crossed the Suez canal, had a huge segment of the Egyptian military surrounded, and was prepared, if necessary, to march on Cairo (Juan Cole, displaying his usual penchant for accuracy, calls this a "draw-to-slight victory" for Egypt). Damascus was also within range. The U.S. insisted on a cease-fire, because the Soviets threatened to intervene on behalf of Egypt and Syria.
In 1977, Anwar Sadat had tired of the Soviets and had thrown them out of Egypt. When Jimmy Carter naively sought to invite the Soviets to a regional "peace conference," Sadat hastily decided to make his famous visit to Jerusalem. While Sadat and Menachem Begin had little in common, they did by this point share a loathing of the USSR--Begin had been deported from Poland and imprisoned in the Gulag by the Soviets during WWII.
Throughout the 70s and 80s, the Soviets funded every rejectionist and terrorist movement willing to take money from it. Dovish arguments in Israel were met with skepticism because of the continued role of one of the two superpowers in financing those who called for, and acted for, Israel's destruction. Meanwhile, U.S.-Israeli ties grew closer as the old socialist ethos in Israel gave way to strong anti-Soviet sentiment under Likud rule, and a generation of Israelis came of age--including a few hundred thousand Soviet Jewish refugees--with a Soviet Union sworn to their country's annihilation.
By contrast, the fall of the USSR was one of the major factors that allowed the Oslo negotiations and agreements to move forward. Without the backing of a superpower, Yasser Arafat seemed less like a potential destroyer of Israel and a lot more like a has-been terorist who would be willing to settle for what he could plausibly get. Strategic depth became less important when the Soviet's last major ally bordering on Israel, Syria, virtually collapsed militarily in the absence of Soviet aid.
This story, indeed, would likely have a happy ending, but for the rise of new ideological movement, replacing Communism, even more implacably hostile to Israel--Islamic fundamentalism. But that's another story.
In any event, ignoring the role of the USSR in the Arab-Israeli conflict vastly impoverishes our understanding of Israel's motivations over the decades. To emphasize one point above, while commenters today often assert that Israel's settlement activity on the West Bank, beyond perhaps a few locations right near Jerusalem, was either obviously foolish or a reflection of an inherently colonialist ideology, a major rationale for it at the time was to provide strategic depth against a threat ultimately emanating from the Soviets. Similarly, while many question why Israel was unwilling to try to negotiate earlier with the PLO, this becomes more understandable when one considers that the PLO was a creation of, and financed by, the Soviet Bloc, which was overtly hostile to the very existence of Israel. Similarly, Israel was reluctant to give back all or much of the West Bank to Jordan when it had the chance for fear that a Soviet-backed Palestinian coup could topple King Hussein--as almost occured in September 1970. One could surely not imagine the ideological evolution of many right-wing Israelis into the implicit acceptance of a Palestinian state if the USSR was still around to be the primary sponsor of the Palestinian cause.