One Middle East problem is that the Palestinian residents of the Gaza strip and the West Bank are stateless, they are citizens of no state. Stateless people often find themselves badly treated and the Palestinians are no exception. There are several ways for the Palestinians to become citizens of a state:
1) They could become citizens of Israel.
2) They could become citizens of an independent state (or states).
3) They could become citizens of existing states other than Israel (most plausibly Egypt and Jordan).
Matthew Yglesias doesn't like option 3.
... total non-starter.
While the problems Yglesias points out are real, the other options have problems as well. Yglesias favors option 2 but it is doubtful that an independent Palestinian state would be viable. Among other problems it would likely be too weak to defend itself against Israeli aggression whether military or economic. Egypt and Jordan are also weaker than Israel but they have more ability to resist and thereby deter gratuitous aggression.
I think it is possible that option 3 is the lesser evil.