The entire quote: Netanyahu stated that a Two-State peace is impossible as long as Islamist militias hold sway.Netanyahu ....
The simple solution is Hamas and Fatah's armed wing decide a two state peace is better than perpetual war.
A major difference; Israel has elections and recent polling has Netanyahu losing power to parties fully supportive of a two state peace. The Palestinians choose not to have elections and even if they did, major factions of both main parties are opposed to a permanent peace.
And again, How does a terror group like Islamic Jihad (or Hamas) spending money to attack Israelis help the Palestinian people in any way?