Let me play the part of Bibi: “ Now we all know that Israel is a very small country yet surrounded by many giant Arab countries. Therefor I am all for a Palestinian state as long as it is in Egypt or Saudi Arabia, or Jordan, or Syria. You folks know that most Palestinians are Arab and that they hate the Jews so YES I will support their state on Arab land.”
It is simpler than that. The Palestinian state was called Trans-Jordan, later shortened to Jordan. That was the portion of the original Israeli state that was split to accomodate the Arabs.