Dominion of Palestine

Introduction
Israel has lost the Third Arab-Israeli War, and the Palestinians are expecting to regain a homeland. That's not quite what they're going to get.

Point of Divergence
When Jordan warns Egypt (officially still United Arab Republic) of the incoming Israeli air force, the Egyptians are able to pass the message on to the targeted air fields. (OTL) The Israelis find the MiG-21's waiting for them and after a vicious battle, they're forced to call off the next few waves of attack. Egypt has lost dozens of planes and several air fields, but Israel won't have air superiority in the rest of the war.

Without the air advantage, Israel is pushed back out of Sinai and the Golan Heights, and Egypt begins to advance over their border. The Israelis dig in hard, making the Arabs pay for every inch. After two weeks of fighting, pressure from the global powers and national interests (the Israelis want to survive, the Arabs weren't expecting such a costly campaign) lead to an armistice: the "Jerusalem Treaty".

July 1967 to August 1971
Under the treaty, Israel demilitarises its borders in exchange for United Nations peacekeepers (UN Israeli Border Force); Israel is allowed to use the Straights of Tiran but sedes some of the water rights to the Arab states; Jordan & Israel officially recognise each other’s half of Jerusalem; and a road is to be built linking the West Bank and Gaza. President Nasser boasts that this is a victory for Pan-Arabism.

As previously promised, the Palestine Liberation Organisation is given some official control over the Gaza Strip, ruling it on Nasser's behalf. It still remains a barely tolerated group in Jordan, however, and PLO/Jordanian tensions ratchet up as the Palestinians agitate for semi-autonomy there as well. The Seven Points agreement fails.

Tension is rising in Gaza as well: the Palestinians were promised that they could return home to Israeli land, and their patrons instead cut a deal that benefitted them instead. Other factions spring up in Gaza, where the PLO are slowly seen as having 'sold out'.

During all this is the “War of Attrition”, as the PLO continues attacks on Israel. Half of their attacks fail because the PLO can't get past the UNIBOF peacekeepers; enough of their attacks get through and Israel, with the demilitarised borders, cna only hope to intercept them with armed police. Under siege, Israel becomes more authoritarian and militarised. Every time a peacekeeper is shot, Egypt and Jordan come under fire for allowing the PLO to operate.

Fed up, King Hussein II of Jordan starts a crackdown in the summer of 1971. The Palestinians hit back ("Summer Rising"/"Black Summer", depending on your politics). However, the PLO are better armed and have greater backing than in our timeline, and Hussein is pressured to cut a deal: the West Bank will be given semi-autonomy as a dominion.

Dominion of Palestine
Three major problems will haunt the Dominion of Palestine from the start:


 * Jordan "encourages" all Palestinians in its territory to move to the dominion. The demand for housing, food, and water shoots up.


 * The Gaza PLO members are demanding a seat at the table, which the West Bank members consider an affront: they weren't part of the Summer Rising.


 * Gaza now wants to be part of the dominion or have semi-autonomous status itself, and Egypt - Palestine's main patron - is clear they won't allow it.

(more to come)