Donald Trump’s long-awaited “deal of the century”, unveiled with boastful fanfare on Tuesday in the presence of a beaming Benjamin Netanyahu, is not by any stretch of the imagination a plan that will allow Israelis and Palestinians to work out how they can live together in peace, equality and dignity.

It is unlikely to lead to any kind of negotiations, because the Palestinians were already understandably furious at a series of unilateral US moves that undermined decades of international consensus about how to resolve the world’s most intractable conflict – involving the status of Jerusalem, the legality of Israeli settlements and the ever-emotive question of Palestinian refugees. It ignores countless UN resolutions, the Oslo accords of 1993, the Arab peace initiative of 2002 and the fundamental idea that Palestinians, like Israelis, have the inalienable right to self-determination.

True, Trump’s team did use the term Palestinian “state” rather than define the end goal more honestly as “limited autonomy”. But their insistence on Palestinian submission to Israeli demands, and the truncated nature of the demilitarised territory such a “state” would hypothetically control (lacking a say over its own borders, airspace and territorial waters), along with the disarming of Hamas in the Gaza Strip, all combine to make the s-word meaningless.

The US has now granted its approval to Israeli annexation of the Jordan valley, which makes up 30% of the West Bank. It has given the green light for the application of Israeli sovereignty to the settlements built illegally since the 1967 war, which now house 600,000 Israeli Jews. The demand that Israel freeze existing settlements (though only in areas allotted to the Palestinians) for four years pales into insignificance compared to the recognition of that basic principle.

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On Jerusalem, Trump has built on his previous controversial transfer of the US embassy from Tel Aviv by talking about the capital of that future Palestinian state in the “eastern” side of the city, and suggesting that its notional capital will be located beyond Israel’s security wall in Abu Dis – a dreary and unprepossessing suburb.

The US plan’s reference to the hypersensitive Palestinian refugee question is blunter than the “just and agreed solution” called for by the Arab League in recent years, which is sufficiently vague to accommodate various possibilities, including a symbolic “return”. Positive analysis of Trump’s approach – especially in the US and Israel – has hailed the deal as a welcome “reframing” of the conflict, a “paradigm shift”.

But if, as the president warned, this “could be the last opportunity for Palestinians”, it will turn out to be another bleak milestone. One expert even compared its potential implications to Britain’s Balfour declaration of 1917, which pledged to establish a “Jewish national home” in Palestine while cautioning that nothing should prejudice the “civil and religious rights of its existing non-Jewish communities”, who then made up 94% of the population.

It is unclear what happens next. Netanyahu, the first Israeli prime minister facing corruption charges while in office, will press ahead next week with a cabinet decision on unilaterally annexing the Jordan valley. If that happens, it will pose a serious and immediate diplomatic challenge for the rest of the world, including the EU and Britain (days after Brexit), because it will remain illegal under international law.

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The Trump deal will be alarming for neighbouring Jordan, whose 1994 peace treaty with Israel was only signed because there was an Israeli-Palestinian peace process in place. That has become increasingly unpopular in the Hashemite kingdom in recent times. The United Arab Emirates, Bahrain and Oman all sent their ambassadors to the White House ceremony on Tuesday (although Saudi Arabia was conspicuously absent), and the announcement of $50bn of investment in the future Palestinian state will largely be down to those Gulf states.

But popular Arab support for the Palestinians will constrain even those autocratic regimes from going along wholeheartedly with the plan or seeking open “normalisation” of their semi-clandestine links with Israel.

Then there is the question of Israel’s self-interest. By supporting de jure annexation of the Jordan valley and continuing to deny Palestinians full rights, Trump will be perpetuating the conflict and maintaining what is often described as a “one-state reality”. That risks propelling the Jewish state further towards becoming a Middle Eastern version of apartheid-era South Africa – two peoples in the same territory with unequal rights, status, legal systems and opportunities.

Younger Palestinians are already disenchanted with the legacy of Oslo and angry that Mahmoud Abbas, the Palestinian president, still serves as an effective “security subcontractor” for Israel. For them, the US plan will reinforce the view that the only solution is to seek equal rights for Arabs and Jews in one single democratic state between the Mediterranean and the Jordan, to use the increasingly fashionable phrase – even though no one has a remotely workable strategy for achieving that goal. Abbas did indeed respond to the plan by threatening to suspend security coordination with Israel. But he has threatened that countless times before.

The past, as ever, really does matter. It cannot just be ignored. Trump and Netanyahu should have taken time out from their relentless self-promotion to read the piercingly accurate conclusion of the Palestinian-American historian Rashid Khalidi, in a book published this week: “There are now two peoples in Palestine, irrespective of how they came into being, and the conflict between them cannot be resolved as long as the national existence of each is denied by the other. There is no other sustainable solution, barring the unthinkable notion of one people’s extermination or expulsion by the other.”

• Ian Black is a former Middle East editor and diplomatic editor of the Guardian and a visiting senior fellow at the Middle East Centre, LSE. His latest book is Enemies and Neighbours: Arabs and Jews in Palestine and Israel, 1917-2017