This is by no means a slam on Israel. But, there are many who come to these threads and post the Bible as if it is the final arbitrator of the issue.
I believe that the Bible is the final arbitrator, but the Sinai Covenant had conditions to the land. Conditions that Israel had to carry out or be removed from the land. The Book of Judges alone shows the consequences of not obeying the covenant. Then of course, the Assyrian captivity, the Babylonian captivity, and the dispersions under the Romans. Were they the judgement of God... or were they just political consquences to some very bad political treaties and decisions? I know answers will differ...
Perhaps Israel is not at peace because she has failed to live up to those conditions.... still.
Then, again, perhaps Israel is not a peace because the Arabs will never accept a Jewish state in the midst of holy Muslim land?
Then, again, perhaps Israel is not a peace because in the last 10 years, Israel hasn't truly decided which course of action she wants to follow. From Rabin to Peres to Netanyahu to Barak to Sharon. Lot's of differing opinions on just how and what Israel will do for peace and what Israel will give and take back.