Some of the most enduring images of the twentieth century have been generated by the Palestinian-Israeli conflict. The historic handshake in September 1993 between Israeli leader Itzhak Rabin and Palestinian chief Yasser Arafat is but one of them. For the better part of a century the conflict of two peoples over one land has defined the politics of the region and has had a major impact on many aspects of international politics, including political economy, and international and state terrorism. In some respects, as we argue in this chapter, both the Palestinians and the Israelis have been hostages to their own histories as well as to each other. In addition, the nature of the contemporary world since 1945 can go some way in explaining the nature of this conflict and the major factors that have dominated it at various junctures.