Xmas present for the Middle-East?

Mahmoud Ahmadinejad, President of Iran, has recently called for the population of Israel to be resettled in Europe or America. He might be closer than you think to a possible solution of the long and painful Israel/Palestine conflict.

Here's a possible straw-man solution, all elements to be implemented concurrently:

a) Israel renounces its independence and becomes a fully-fledged state of the USA. Israel withdraws to its pre-1967 borders, handing over existing settlements intact to the Palestinian authorities. Existing jewish settlers are offered the option of staying in the new EU state or relocating to Israel with generous compensation packages, underwritten by the US. Compensation will be reduced in the event that property is destroyed or damaged by evacuees.

b) Palestine is granted membership of the EU. Special long-term budgets for reconstruction and development are agreed by member states. Safeguards are built in to minimise corruption and grants are dependent on an ongoing democratic government.

c) Jerusalem becomes a UN-administered city, with policing and security provided by Blue Berets. The UN Headquarters is relocated from New York. Both Israel and Palestine are permitted to locate their state legislatures in the city, with each assembly granted diplomatic status. This would effectively give them the status of embassies and permit the respective governments to provide their own armed security for their own premises.
Government ministers, elected deputies etc would also enjoy diplomatic status in Jerusalem, making them immune from arrest in the city.

What would be the likely effect of these steps?

The territorial integrity of Israel would be guaranteed, no neighbouringsovereignn state would dare attack a state of the USA.

EU support and aid, combined with easy access to European markets, would rapidly help to transform the Palestinian economy and, hopefully, the political situation. It would also help to consolidate the democratic institutions of the state and, being a member of the EU, lead to a more considered relationship with its US neighbour - and vice versa.

A peaceful neighbour in Palestine would ultimately provide greater border security for Israel, though it could take generations to overcome the resentments of the last 60-odd years.

Moving the UN headquarters to Jerusalem would provide a huge economic injection to the region, with thousands of well-paid diplomats and functionaries providing a major ongoing boost to the local economy.

Locating the UN in Jerusalem, where East meets West, might also make it more effective in bridging differences between the West and the Muslim world.

Having both a US and an EU presence in the middle-east could also provide greater security for the West.

However, countries such as Iran and Syria would be very hostile to such a solution which would give the US and EU much greater influence in the region, as well as placing them within easy striking range of the US forces.