Well the "myths" aside, the dominant position among arab govt.s is that they will accept and guarantee Israel security in return to withdrawing to the 1967 borders and establishment of a Palestinian state with East Jerusalem as its capital. Moreover, they will also establish diplomatic and trade relations as well.
The problem is that the current Israeli coalition govt. is compose of extremely religious fanatic and right wing parties and instead have promoted policy of establishing Jewish settlement in West Bank areas for example.
However both the loony right wing on both arab/muslim and the Israeli/jewish sides get prominent coverage in the others constituencies. And the more death and destruction the stronger these fringe fanatics become.
The peace plan for those who don't know:
Document: The Arab Peace Initiative, 2002
Official translation of the full text of a Saudi-inspired peace plan adopted by the Arab summit in Beirut, 2002.
The Arab Peace Initiative
The Council of Arab States at the Summit Level at its 14th Ordinary Session,
Reaffirming the resolution taken in June 1996 at the Cairo Extra-Ordinary Arab Summit that a just and comprehensive peace in the Middle East is the strategic option of the Arab countries, to be achieved in accordance with international legality, and which would require a comparable commitment on the part of the Israeli government,
Having listened to the statement made by his royal highness Prince Abdullah bin Abdul Aziz, crown prince of the Kingdom of Saudi Arabia, in which his highness presented his initiative calling for full Israeli withdrawal from all the Arab territories occupied since June 1967, in implementation of Security Council Resolutions 242 and 338, reaffirmed by the Madrid Conference of 1991 and the land-for-peace principle, and Israel's acceptance of an independent Palestinian state with East Jerusalem as its capital, in return for the establishment of normal relations in the context of a comprehensive peace with Israel,
Emanating from the conviction of the Arab countries that a military solution to the conflict will not achieve peace or provide security for the parties, the council:
1. Requests Israel to reconsider its policies and declare that a just peace is its strategic option as well.
2. Further calls upon Israel to affirm:
I- Full Israeli withdrawal from all the territories occupied since 1967, including the Syrian Golan Heights, to the June 4, 1967 lines as well as the remaining occupied Lebanese territories in the south of Lebanon.
II- Achievement of a just solution to the Palestinian refugee problem to be agreed upon in accordance with U.N. General Assembly Resolution 194.
III- The acceptance of the establishment of a sovereign independent Palestinian state on the Palestinian territories occupied since June 4, 1967 in the West Bank and Gaza Strip, with East Jerusalem as its capital.
3. Consequently, the Arab countries affirm the following:
I- Consider the Arab-Israeli conflict ended, and enter into a peace agreement with Israel, and provide security for all the states of the region.
II- Establish normal relations with Israel in the context of this comprehensive peace.
4. Assures the rejection of all forms of Palestinian patriation which conflict with the special circumstances of the Arab host countries.
5. Calls upon the government of Israel and all Israelis to accept this initiative in order to safeguard the prospects for peace and stop the further shedding of blood, enabling the Arab countries and Israel to live in peace and good neighbourliness and provide future generations with security, stability and prosperity.
6. Invites the international community and all countries and organisations to support this initiative.
7. Requests the chairman of the summit to form a special committee composed of some of its concerned member states and the secretary general of the League of Arab States to pursue the necessary contacts to gain support for this initiative at all levels, particularly from the United Nations, the Security Council, the United States of America, the Russian Federation, the Muslim states and the European Union.
For purposes of comparison, the following is an earlier draft discussed by Arab foreign ministers on 25 March, 2002, in advance of the summit:
The Council of the Arab League, which convenes at the level of a summit on March 27-28, 2002 in Beirut, affirms the Arab position that achieving just and comprehensive peace is a strategic choice and goal for the Arab states.
After the Council heard the statement of Crown Prince Abdullah bin Abdul Aziz in which he called for the establishment of normal relations in the context of a comprehensive peace with Israel, and that Israel declares its readiness to withdraw from the occupied Arab territories in compliance with United Nations resolutions 242 and 338 and Security Council resolution 1397, enhanced by the Madrid conference and the land-for-peace principle, and the acceptance of an independent, sovereign Palestinian state with al-Quds al-Sharif as its capital, the Council calls on the Israeli government to review its policy and to resort to peace while declaring that just peace is its strategic option.
The Council also calls on Israel to assert the following:
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Complete withdrawal from the Arab territories occupied since 1967, including full withdrawal from the occupied Syrian Golan Heights and the remaining occupied parts of south Lebanon to the June 4, 1967 lines.
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To accept to find an agreed, just solution to the problem of Palestinian refugees in conformity with Resolution 194.
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To accept an independent and sovereign Palestinian state on the Palestinian lands occupied since June 4, 1967 in the West Bank and Gaza Strip and with Jerusalem (al-Quds al-Sharif) as its capital in accordance with Security Council Resolution 1397.
In return, the Arab states assert the following:
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To consider the Arab-Israeli conflict over and to enter into a peace treaty with Israel to consolidate this.
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To achieve comprehensive peace for all the states of the region.
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To establish normal relations within the context of comprehensive peace with Israel.
The Council calls on the Israeli government and the Israelis as a whole to accept this initiative to protect the prospects of peace and to spare bloodshed so as to enable the Arab states and Israel to coexist side by side and to provide for the coming generations a secure, stable and prosperous future.
It calls on the international community with all its organisations and states to support the initiative.
The Council calls on its presidency, its secretary general and its follow-up committee to follow up on the special contacts related to this initiative and to support it on all levels, including the United Nations, the United States, Russia, the European Union and the Security Council.