When Israel was created as a state in 1948, 750,000 indigenous Palestinians, whose families had lived in Palestine for hundreds of years, were forcibly expelled by, or fled in terror of, the powerful militias that would soon become the army of the State of Israel. The one million or so Palestinians inside Israel today, who constitute just under 20 percent of the population, are those that remained and their descendants. Despite international law and specific UN resolutions, none of those forced into exile have been allowed to return. In fact, Israel's admission to the United Nations in 1948 was conditioned on on its willingness to abide by General Assembly resolution 194 calling for repatriation and compensation.
From Israel's creation in 1948 until 1966, the indigenous Palestinian population inside the country lived under military rule. Since that time, Palestinians have been considered citizens, can vote and run for office; several Palestinians serve in the Israeli Knesset, or parliament. But not all rights inside Israel are granted on the basis of citizenship. Some rights and obligations, sometimes known as "nationality rights," favor Jews over non-Jews (who are overwhelmingly Palestinian) in social services, the right to own land, access to bank loans and education, military service and more.
More than three times as many Palestinians live under Israeli military occupation in the West Bank, Gaza and East Jerusalem, than remain inside Israel proper.