The question of Israel's illegal settlements in occupied Palestine is one of the core issues of the conflict. In blatant violation of international law, the continuing expansion of new and existing settlements by consecutive Israeli governments has caused a major rift between Israel and the Obama administration.

And while the entire world (with the notable exception of Israel) is in agreement that the settlements must to a large extent be dismantled in any peace agreement, the question of what to do with the settlers themselves is even thornier.

The more than half a million Israeli Jews currently living on land occupied by Israel during the 1967 war range from hard-line ideologues to economic opportunists. What binds them is the fact that all were actively encouraged by Israeli government policies of financial incentives and extensive protection by the Israeli army to move into the settlements.

During the so-called "peace years" between 1996 and 2000, settlement activity accelerated at an unprecedented pace under both Israel's Labor and Likud governments, bringing into question the sincerity of the country's intentions about peacemaking from the very start. So the question is not only what should be done, but also what can viably be done in order to resolve this issue.

Let me state from the outset that I am of the firmest belief that each and every settler living in the occupied Palestinian territory has no legal justification to be there. Their presence there has nothing to do with the security of the State of Israel and everything to do with the perpetuation of the occupation of Palestine, rendering any potential "agreement" next to useless before the ink dries on the paper. These are neither benign "neighborhoods" nor communities. They are very potent weapons in the arsenal of subjugation and occupation. But they are, as Israel very well knows, facts on the ground. And they cannot be ignored. So should they be allowed to stay?

Some, like Hillel Halkin writing in The Wall Street Journal earlier this year, have disingenuously proposed that the settlers be allowed to remain in Palestine as Israeli citizens under Palestinian rule. He compares them to Palestinians living inside of Israel. This analogy willfully ignores the fact that Palestinians in Israel are living on the land where they have resided for centuries and millennia. They are not, and have never been, transplants. They did not steal any property, unlike those living in the West Bank settlements of Ma'ale Adumim or Kiryat Arba.

Others believe that each and every settler must be permanently removed from a nascent Palestinian state. This is simply far-fetched and would be nearly impossible to carry out without a horrible toll in treasure and blood. For even though the settlers were actively planted, lured, or "seduced" into taking up residence in the occupied territories, they have become a sort of Frankenstein, a monster of their own state's creation, and have become accustomed to being treated with kid gloves when it comes to applying any sort of law that doesn't suit them. No matter how much most Palestinians want them to go away, it is quite obvious that they will not go gently into that good night.

Therefore, we come to the third option, which I feel holds some merit. As part of a comprehensive agreement between Israel and Palestine, all people currently residing within the borders of the Palestinian state will be given the option of becoming Palestinian citizens. This means that the original owners of the land where the settlements stand would be compensated at the going property rates for the land that was taken from them. Those Palestinians who sold their land would of course not be compensated in any way.

Palestinian citizens would have the same rights and responsibilities regardless of race or religion. Those who choose to leave the newly independent Palestine and have legitimate claims to property within its boundaries shall be duly and fairly compensated for their loss. Quid pro quo, Palestinians from pre-1948 Palestine who have legitimate property claims shall also receive equitable treatment and compensation.

There would be a time limit on such litigation (possibly 10 years post-independence) with the possibility of resolving the issue through a form of class-action suits. An independent arbitration commission with Palestinian, Israeli, and international jurists would resolve all cases. The findings of such a commission would be final.

At the same time, the settlements would immediately become true "communities," open to all citizens of the state. How many Israelis would take up this offer, I honestly don't know. What I do know is that in order to build lasting and deep-rooted peace you cannot commit injustice. By giving everyone the opportunity to become equal and responsible citizens, and allowing those Israelis who always claim to love the land more than the state to live out their dreams, by being inclusive rather than exclusive, you have the chance to defang one the most difficult issues (among many) and set a solid foundation for a just, robust, free and democratic Palestine.