There are a myriad of reasons underlying and undergirding the Arab-Israeli Conflict in recent times and it is important to evaluate all of these rationales. However, it is important to note that the actual military conflict is an international one with set international players. The spiritual conflict is much more pervasive. At the core for this difference is that Jews and Arabs see their communities as being brethren in the same way that all Americans see each other as brethren. There is a saying among Arabs that goes "If an Arab falls in the desert and nobody hears him, everybody still feels him."
NOTE: Jews are an ethno-religious group, while Arabs are merely an ethnic group with an incredible variety of religious difference (similar to the way that White connotes a race with an incredible variety of religious differences). These days, Jews do not typically target Moslems with faith-based issues (i.e. we abhor you because of the false prophecy of Mohammed) and Moslems similarly do not target Jews on faith-based issues (i.e. we abhor you because you say that Isaac was taken to Mt. Moriah instead of Ishmael being taken to Saudi Arabia).
NOTE 2: Reasons cited for the conflict therefore vary from participant to participant and observer to observer. A powerful example of this divide can be found in opinion surveys of Palestinians and Israelis.
Causes for the Arab-Israeli Conflict:
1) Hallowed Land: The Jews consider the Land of Israel (which is not necessarily all in the borders of the State of Israel) to be a holy piece of land in that God promised it to the Jewish people as an eternal inheritance. Thus, some Jews, especially Religious Zionists see resettlement of the Land of Israel by Jews to be part of God's plan and mandate and therefore do everything in their power to settle it. In addition, it contains specific religious and historical sites such as the Western Wall and the Old City of Jerusalem, the Cave of Machpelah, the Old City of Jaffa, and the Sanctuary of Shiloh among others. Muslims also consider Jerusalem holy because of Mohammed ascending to Heaven on the Buraq over Jerusalem's Temple Mount. Both cultures want to ensure maintenance and access to the sites which they feel have been limited by the other. (Jews claim that Jordanians used the Western Wall as a landfill and Arabs argue that Israelis arbitrarily close off access to Al-Aqsa Mosque and the Dome of the Rock.
2) Zionism: A number of Jews in Europe began to feel that they were being permanently and deliberately excluded from parts of European society because of the prevalent racial and pseudo-scientific forms of Anti-Semitism. They believed that there was no possible equality between European nationals and their Jewish residents and were disinterested in the Andalucían Solution because they did not want to be second-class citizens. They believed that the Jewish people needed to form a political apparatus (an Independent State) to defend themselves and their civil rights. Zionism originally had purely secular connotations, but with the advent of Religious Zionism, the powerful secular cause of Zionism joined with the Hallowed Land idea to provoke conflict. Zionism is strongly opposed by many for many different reasons. See the link at the bottom of the page for Anti-Zionist arguments and rationales.
3) Halutzim & Jewish Land Acquisition: In the First Zionist Congress in 1897, the main resolution was to acquire, by any means, a piece of land to be made a country for the Jews. Early Zionists tried to figure out how to attract Jews to leave their country of origin and come to build this Jewish State. The general consensus always revolved around building a State in the Land of Israel/British Mandate of Palestine since that would make attraction easiest. (The idea of the Jews Returning to Israel had a very romantic notion to Jews at the time and still does today.) As a result, politically influential Jews began purchasing tracts