The Palestinians do not refuse to acknowledge Israel's right to exist. There is no such thing as the Palestinians. The proper term is some Palestinians...
The Israeli government's insistance on punishing all Palestinians for the actions of some Palestinians is a crime against humanity. As long as Israel continues to act like this it will continue to suffer the consequences. And that, my friend, is not a threat. It is a simple observation of fact.
The refusal to allow the right to vote on the basis of ethnicity is called apartheid. It is a sham to use the word democracy to describe a place that.
The Israeli government has given around 1,000,000 Palestinians citizenship. Obviously they aren't punishing them all. You like to play fast and loose with the truth.