An Article by Dr. Eliezer Hadad From the Israel Democracy Institute

http://www.idi.org.il/sites/english/ResearchAndPrograms/Religion%20and%20State/Pages/TheRabbisLetterAndHalakhah.aspx

"The "Rabbis' Letter", signed by dozens of community rabbis in Israel in December 2010, asserts that Jewish law forbids the rental and sale of homes in Israel to non-Jews. Is the rental of property to non-Jews indeed forbidden by halakha? What is the status of non-Jews living as a minority among Jews? Are the Biblical prohibitions cited in the Rabbis' Letter applicable to Arabs in Israel today?
In this article, IDI Researcher Dr. Eliezer Hadad surveys opinions by contemporary rabbis who adopted a universalistic approach and found a halakhic basis for the equal rights mandated by both international norms and the Israeli Declaration of Independence."

Zionism

At the heart of Zionism should be two ideas:

1)  Maintaining the Israel/Palesine land, even if shared, as a safe haven for Jews over the world and
2)  Being able to assist Jews in returning to their ancestral and spiritual homeland        

These two ideas can exist without seeking to displace or have sovereignty over Palestinians. 

http://rabbimartingoodman.blogspot.com/2011/08/shared-lands-two-sovereigns-alternative.html

Shared Lands, Two Sovereigns: An Alternative Peace Solution To The Israeli-Palestinian Conflict

Shared Lands, Two Sovereigns:

An Alternative Peace Solution To The Israeli-Palestinian Conflict

(Draft by Rabbi Mordechai Martin Goodman)

1)      Any Jew or Palestinian, including Israeli settlers and Palestinian refugees, may move to and live in any city or town in Israel/Palestine.

2)      Israeli and Palestinian government buildings may be built and operated anywhere within Israel/Palestine.

3)      Both Israel and Palestine will write individual and overlapping constitutions.  Jews, Palestinians, and other groups will choose whether they want to be an Israeli national or a Palestinian national.

4)      Whether an Israeli national or a Palestinian national, Israelis and Palestinians will vote together in local elections, and pay local taxes.

5)      All national taxes will be equally shared by Israel and Palestine.

6)      All police forces throughout Israel/Palestine will be comprised of an equal amount of Israelis and Palestinians who will be partnered together from the level of patrol officers to police chiefs.

7)      Israel will maintain its IDF, but will not use the IDF for police action in Israel/Palestine unless called upon by both Israeli and Palestinian police chiefs in a given locale.  The IDF can be used in agriculture and infrastructure maintenance and creation. The agriculture and infrastruture force should be bi-national.

8)      All holy sites throughout Israel/Palestine, including The Temple Mount will be available to all go worship and pray, so long as the desire by anyone doing so is not meant to incite discord.  A bi-national governmental entity equally comprised of Israelis and Palestinians will be established so as to work out scheduling for holy site use with regards to holidays.

9a  Anti-incitement legislation will be passed by both the Israeli national government

      and the Palestinian national government. 

9b) A bi-national governmental entity equally comprised of Israelis and Palestinians

      will be established and given the power to order police forces to arrest those

      guilty of incitement.  Police forces can of course act independently as well.

9c)  Although hate speech, as opposed to threatening speech, will be legal, the bi-

       national governmental entity will also be charged of identifying, denouncing, and

       hopefully dissuading hate speech.