"There is but one way in which the looming collision could be made less catastrophic. Obama could decide to change course; instead of opposing recognition of Palestine, he could support it, as Israel should, if it acted rationally, under two conditions: Palestinians have to renounce any claims this side of the 1967 borders, including the right of return, and the Arab League would recognize Israel’s legitimacy and move towards normal relations. Palestinians would probably agree to that, and so would the Arab League as this corresponds to its peace initiative."
This is one of the Palestinians' core issues, one that the masses say the leadership has no authority to compromise on. They see this as an inalienable individual right. Abbas may one day compromise on this, but only in a final agreement. He would lose all support if he announced the refugees won't come back even before he achieved de facto independence.
Strenger is just one of many Israelis who do not realize how hard it will be to reach peace with the Palestinians, especially because of their unwillingness to come to terms with the fact that they can't become citizens in Israel proper.
Anyway, today it seems there will be another way out of this mess other than Strenger's suggestion. Abbas has agreed to resume talks in France. I hope Netanyahu follows suit.