The reason is simple. Arabs, especially Muslim Arabs, feel a deep shame that territory that once was Arab, once Muslim was taken from them by unbelievers. And not just ordinary unbelievers but by the hated Jews. The Arab refugees who by dint of being the closest to the cause of that shame were thus severely despised by non-refugee Arabs.

In December of 2006, Palestinian-born Al-Jazeera editor-in-chief, Ahmed Sheikh granted an interview to Pierre Heumann, the Middle East correspondent of the Swiss weekly Die Weltwoche where he explains why Israel is to blame for the ignorance and lack of advancement among Arabs since 1948:

VDH's Private Papers Blog, Israel Did it!

Sheikh: In many Arab states, the middle class is disappearing. The rich get richer and the poor get still poorer. Look at the schools in Jordan, Egypt or Morocco: You have up to 70 youngsters crammed together in a single classroom. How can a teacher do his job in such circumstances? The public hospitals are also in a hopeless condition. These are just examples. They show how hopeless the situation is for us in the Middle East.

Heumann: Who is responsible for the situation?

Sheikh: The Israeli-Palestinian conflict is one of the most important reasons why these crises and problems continue to simmer. The day when Israel was founded created the basis for our problems. The West should finally come to understand this. Everything would be much calmer if the Palestinians were given their rights.

Heumann: Do you mean to say that if Israel did not exist, there would suddenly be democracy in Egypt, that the schools in Morocco would be better, that the public clinics in Jordan would function better?

Sheikh: I think so.

Heumann: Can you please explain to me what the Israeli-Palestinian conflict has to do with these problems?

Sheikh: The Palestinian cause is central for Arab thinking.

Heumann: In the end, is it a matter of feelings of self-esteem?

Sheikh: Exactly. It’s because we always lose to Israel. It gnaws at the people in the Middle East that such a small country as Israel, with only about 7 million inhabitants, can defeat the Arab nation with its 350 million. That hurts our collective ego. The Palestinian problem is in the genes of every Arab. The West’s problem is that it does not understand this.

So it isn't that the land area of Israel is absolutely vital for the Arabs to have, it is because Jews "took" it from them. Before the Jews were there, no one wanted the land. Arabs were not building hotels or resorts there, they were not opening schools and universities, they were not sending their best and brightest to settle there. Arabs had no problem with population density then or now in the Middle East, there was no quest for Lebensraum that the Jews thwarted and most importantly, Arabs could live anywhere in dozens of Arab nations. This really is all about Malvy, the eighth deadly sin, the desire for something one does not need (nor would miss if it were gone) simply because someone else has it.

The 350 million Arabs who force 1948 Arabs to be refugee pawns could easily absorb those few million into their countries. Certainly the oil rich Saudis, the other Gulf Arabs, and even Iran could donate a few hundred million to settle those Arabs instead of spending billions in arming the Palestinians in futile fighting or supporting Muslim terror. Wouldn't it make sense for the US and Europe to send money to build homes once in Egypt, Syria, the Jordan and Lebanon than send money to build homes time after time after time that they are destroyed by the Israelis? Every Palestinian could be living in a 20 room villa with a pool and an olive garden given the tens of billions wasted on Gaza and West Bank rebuilding, reconstruction and re-arming.

Arabs (and Muslims) need to swallow their pride and get over it, the Jews are better, smarter, stronger - so what? Arabs could live in peace and prosperity even without Western aid if they simply did business with Israel, bought butter instead of guns, sent their kids to schools instead of terror camps, and built sewers instead of tunnels.

There is no solution to the conflict that involves two states. For Arabs there is no land for peace unless Israel gives up all the land. Given this, 1948 Arabs and their families must be removed from Gaza and the West Bank and settled outside of Israel. International moneys should be used to place them and the other refugees in homes instead of tents. Force their Arab host countries to absorb the refugees - let them have jobs, go to school, live ordinary lives. Until they stop being pawns there will be constant war and all Arabs will continue to live dismal, hopeless, futile lives.