From your reference:

Nevertheless, there is a range of ulterior motives for Israel's denial of Palestinian statehood. If Palestine were declared a state, then immediately, Israel, by its present occupation of the West Bank will be in breach of the United Nations Charter. Palestine, as a state, could legitimately call upon the inherent right of individual or collective self-defense under Article 51 of the Charter to remove Israel from the occupied territories. Palestine, as a state, would be able to accede to international conventions and bring legal action against Israel on various matters. Palestine could accede to various international human rights instruments, such as the Covenant on Civil and Political Rights. It could even join the International Criminal Court and file cases against Israel for war crimes. It would be a tinderbox of a situation that is highly likely to precipitate conflict in the Middle East.[27]

There is a lively debate around the shape that a lasting peace settlement would take (see for example the One-state solution and Two-state solution). Authors like Cook have argued that the one-state solution is opposed by Israel because the very nature of Zionism and Jewish nationalism calls for a Jewish majority state, whilst the two-state solution would require the difficult relocation of half a million Jewish settlers living in the West Bank and East Jerusalem.[28] The Palestinian leaders such as Salam Fayyad have rejected calls for a binational state or unilateral declaration of statehood. As of 2010, only a minority of Palestinians and Israelis support the one-state solution.[29] Interest in a one-state solution is growing, however, as the two-state approach fails to accomplish a final agreement.[30][31]

That's why Israel will never make peace.

Various "transfers of power and responsibilities" in the Gaza Strip and West Bank from Israel to the Palestinians took place in the mid-1990s.[39] The Palestinians achieved self-governance of major cities in the West Bank and the entire Gaza Strip. Israel maintained and continues to maintain a presence in the West Bank for security reasons. In 2013 Israel still had control of 61% of the West Bank, while the Palestinians had control of civic functions for most of the Palestinian population.

So they never wanted to give back the Palestine territory.