In the Six-Day War, Israel conquered the Gaza Strip and the West Bank, which was previously controlled by the Jordanian kingdom (in addition to the Golan Heights and the Sinai Peninsula). Then-Prime Minister Levi Eshkol understood the problems involved in conquering the West Bank very well and tried to avoid it. The West Bank was only conquered after Jordan failed to listen to Israel's warning not to intervene in the fighting.
Immediately after the victory, Defense Minister Moshe Dayan ordered the opening of borders between the Gaza Strip, Israel and the West Bank. The result was that millions of Palestinians, who until then were subject to a separate sovereignty (in the Gaza Strip – Egypt; in the West Bank – Jordan) found themselves under Israel's rule. At the same time, a link was created between them and Israel's Arabs. It was a key step for forming a Palestinian national feeling, which Israel initiated and contributed to.
Those days, however, Israel adopted an unequivocal policy based on saying no to a Palestinian state, and no to a return to the pre-Six Day War borders. And because it was clear that Israel would not be able to hold on to territories where millions of Palestinians live, the conclusion was that it must reach an arrangement with Jordan.
The advantage of such an arrangement over the establishment of a Palestinian state is clear: Jordan would not have demanded Jerusalem as its capital. It has its own capital. Jordan would have easily agreed to a complete demilitarization of the West Bank, which makes up a small part of its territory, just like Egypt agreed to the demilitarization of Sinai (on the other hand, demilitarization as far as a Palestinian state is concerned means demilitarizing the entire country, something which a state will not find it easy to agree to). Jordan would not have demanded that Israel implement the Palestinian refugees' right of return nor a return to the partition borders. I also believe that Jordan would not have threatened day and night to turn to the UN and the International Criminal Court against Israel.
Although it was clear that reaching an agreement with Jordan on the West Bank was essential, there was not a single prime minister in Israel who was determined enough (or even interested) to do so, and in the meantime the settlement in the Wes Bank continued with all its strength. The issue of an agreement with Jordan was off the agenda after the London Agreement, which was reached in 1987 between then-Foreign Minister Shimon Peres and King Hussein, was torpedoed by Yitzhak Shamir, who was prime minister on behalf of the Likud.
It's clear that any agreement signed with the Palestinians now will be much worse than an agreement Israel could have reached at the time with Jordan. Nonetheless, if an agreement is not reached with the Palestinians and we continue to control large parts of the West Bank, we will soon find ourselves in a much worse situation than the situation which would have been created had we reached some arrangement with them. And just like there is good reason to regret the missed opportunity with Jordan, there will be good reason to regret the other missed opportunity, although not as good, of an arrangement with the Palestinians.
But despite the missed opportunities of the past, it's worth rechecking whether Jordan can be included in the arrangement in any way. Only recently, Jordan voiced its objection to an Israeli annexation of the Jordan Valley, claiming that it allegedly contradicts the peace treaty between the countries. The annexation is anyway a mad idea which is not probable, but the Jordanian argument, even if it’s insubstantial, shows that Jordan has not completely lost interest in the West Bank. We should see things in this light. Any inclusion of the Jordanians in an agreement on the West Bank – an inclusion which is now much more difficult and complicated than in the past – will only be for the best.