I support a free Palestine... Complete with it's 1915, Hussein/MacMahon accord, pre-partition, pre-colonization borders.
Recognize, Sign treatys and establish trade with, Provide with their share of the plunder taken from Germany in 1919. (ie: coal, iron, couple dozen whole factorys, small arms, couple sqadrons of fokker D.VIIs and Siemens-Schuckert D.IVs, and a small fleet of german ships) Pay their League of Nations dues for them, and give them a century to get caught up.
Also, Palestine hosts the 1940 olympics in Jaffa.
Let them experience the 20th century as a free people, and hope they forget the other 20th century.
As for the occupation forces?? make them leave.