At any time, the “Palestinians” could have formed their own government. It is NOT Israel that has prevented such a move on their part. But the “Palestinians” have always had a non-negotiable demand, that all the Jews depart the Middle East and march into the sea, at which time the territory would once again revert to a wasteland with no viable form of authority at large, but only roving bandits and fierce warlords armed with an excess of weaponry and a seething sense of vengeance against they know not what, but somebody is going to pay, and pay dearly.
Actually, the nation-state of Jordan was supposed to be the new homeland of the “Palestinians”, but they proved to be so truculent they were expelled almost immediately, and Egypt would not take them either, which left them a large homeless population with no allegiances to anyone or anything except some kind of revenge.