In October 1995, Israeli Prime Minister Yitzhak Rabin declared Israel would not return to the 1967 borders as required under international law. He said Jerusalem would remain unified and under exclusive Israeli sovereignty, and that most of the settlements would remain. Further, he described the Palestinian "entity" to be created as something that would be "less than a state."
What Israel proposed at Camp David in August 2000 (the first occasion when final status issues were directly negotiated), was a Palestinian "state" in something approaching 80 percent of the West Bank plus Gaza. The capital would not be in Jerusalem, although some limited municipal authority in Palestinian neighborhoods might be granted. The 20 percent of the West Bank that Israel would keep would be made up of the settlements, military bases, and, crucially, the bypass roads that effectively divide the West Bank into separate regions. It was as if someone's house had been occupied against their will for many years, and they were suddenly told that they could have all the rooms back, but the occupier was going to keep control of the hallways between the rooms. How much of a home would that be?
Israel proposed maintaining control of two major east-west highways, which would cut the West Bank into three completely separate, non-contiguous areas. Key water sources, underground aquifers, would remain under Israeli control, as would external borders and air space. About 20 percent of the West Bank settlers, primarily from small isolated settlements, would be resettled inside Israel; the other 80 percent, including the large settlement blocs, would remain under Israeli jurisdiction and under the protection of the Israeli army; the Palestinian state would have no authority over the Jewish settlers.