BEIRUT—President Trump’s Middle East peace plan has jolted regional dynamics, with Israel preparing to quickly annex West Bank land once expected to be part of a Palestinian state and key Arab leaders tentatively backing the U.S. initiative.

For decades, Arab and Muslim leaders have held fast to the view that any deal with Israel should include a withdrawal of Israeli forces from Palestinian land, and the establishment of an independent Palestinian state with parts of East Jerusalem as its capital.

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