Start by Trust. Peace would Follow. Or Else?

I think at the heart of the Arab-Israeli conflict is huge mis-trust. To overcome this, someone must show considerable good will. I propose that the Arabs take the lead by doing the following:

Give Israel all the recognition in accordance to UN resolutions, treat Israel as a welcomed member of the middle east, and normalize all relations - diplomatic, economic, and social.

Require that Israel abides to all UN resolutions within a period of 10 years with specific well defined milestones. If Israel doesn't meet a milestone, revert some aspect of the benefits provided earlier.

This should be designed in a way that if Israel doesn't completely comply with UN resolutions, the Arab's should end up terminating all relations with it and publicly declaring it as their enemy.

This might seem crazy. It is also not easy to implement. It requires that the Arab countries remain (1) strong and (2) united for a period of time.