Territory can be surrendered and a Palestinian state created - and most Israelis would favor such a move - IF they were assured that this would not jeopardize Israel's existence. Hamas has been very explicit that it will not accept a Jewish state of Israel, even if it were to consist of Tel Aviv alone. As if that were not bad enough, they have stated time and time again that there is no place for Jews in their future state whatsoever. No binational state because there would be no Jews. The PA is more moderate, but has a history of doublespeak and weasel words which are hardly confidence building.
There can be a final status agreement if we have partners we can trust. We would like that.