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"...secular, egalitarian social democracy. Perhaps if they could point to one nation with a Muslim majority that successfully functioned that way..."
What, are Muslims too sub-human and therefore incapable? There is a country named Turkey, doesn't sound like you've heard of it. Go look it up.
"If there's a third option or a fourth option available to Israel, would someone please tell me what it is?"
I guess not. They may as well just exterminate all Palestinians plus any other Arabs that try to get in the way. Then they will have peace, right?