The Jewish residents of Palestine would be forced to go somewhere else. That somewhere else would likely be the United States. This would make the Americans despise the Arabs for generations to come. If they were to fall under the USSR's sphere of influence that hatred only gets more pronounced.
The result would likely ultimately be a similar situation that the US has with Cuba right now - a small, but extremely virulent minority making sure the US wants absolutely nothing to do with the Arabs. Turkey, Iran and Saudi Arabia would probably be armed in order to keep the UAR from gaining much influence. The UAR socialism would likely play down the important of Islam in daily life, something that would likely also be the case in ultra-conservative Saudi Arabia and very liberal Turkey. Iran sits in the middle of that.
By the 1970s, The US would putting pressure on the Saudis for reforms, especially if Turkey stays secular and democratic and Iran's White Revolution is successful in turning Iran into an economic powerhouse. The UAR would have immense oil reserves, but the US wouldn't be buying - they'd be buying from Saudi and Iran. Turkey and Iran would rise towards first-world status, and when reforms come Saudi Arabia quickly does the same. The UAR sells oil to Europe, the USSR and China, and uses that money to build an elaborate social network. The 1980s see the Saudis liberalize their social and economic systems, and unheard-of prosperity floods the Islamic world.
But that system has reached limits by the mid-1980s, and as the USSR opens its doors and changes, the UAR economy starts to struggle. Infighting begins to damage the economy and the country's stability. By 1990, the battle has become an open civil war, and the radical zionists begin to gather their forces to go to the UAR, and begin doing so in 1991. The Jews find plenty of government resistance but very little from the local residents. By 1994, there is 2.3 million Jews compared to 3.7 million Arabs in the land called Palestine. In 1995, the Jews declare the state of Israel, but this time the troubled, strife-ridden UAR is unable to do much to stop the creation of Israel. Israel formally becomes real on July 31, 1995, as a secular state, with a slight Palestinian majority that rapidly fades as Jews come to Israel. The local Arabs don't have a problem with the Jews, as they have brought new prosperity with them. By 2000, the Jewish population is the largest population at 4.4 million, compared to 4.2 million Arabs and 1.2 million Christians and handfuls of Druse, Ba'hai and others. Israel owns all of OTL Israel and Lebanon, as well as the western half of the Sinai, the Jordanian port city of Aqabah and the Golan heights. Jerusalem straddles the border between Israel and the UAR.
The UAR finally splits in 2001, leaving the broke, dirt-poor Jordan behind. Iraq, Syria and Egypt are unwilling or able to help them out. The provisional government reccommends a "merger" with Israel, which the Israelis enthusiastically go for it - it will give them access to Jerusalem.
Jordan exists only a year before Israel takes over on September 1, 2002. A month later, Israeli's moderate politics are tested by rabbi Meir Kahane, when a bunch of his supporters in the Israeli National Police cause a mess at Temple Mount when they refuse to leave, claiming the land belonged to the Jews as a sign form God. The Arabs are furious and the Christians aren't pleased either, and many secular Jews aren't impressed either. The INP is unwilling to remove Kahane's supporters bu force, but the IDF is perfectly willing to do so. The Orthodox and Hasidic Jews are furious from this, but the majority of Jews in Israel are unwilling to support the extremist views of Kahane and his supporters.
Turkey joins the European Union in 2004, and this gives Israel the idea of also doing so, since a great many of its Jewish residents are of European descent. The EU agrees, and in 2007 agrees to hear Israel's case for EU membership. The idea flies, and Israel joins the EU in 2015.
By 2007, Israel has the Arabs as the largest population group at 7.6 million people, with 6.8 million Jews and 2.1 million Christians. It's a first world nation, and a major agricultural exporter. Jerusalem is its capital, and a massive number of Arabs visit Jerusalem's Muslim holy sites regularly. It has its own economic association, the Middle Eastern Development Agreement, with Turkey, Cyprus, Saudi Arabia and the Gulf States and Iran. A high-speed rail system hooks Jerusalem, Tel Aviv, Amman, Beirut, Aqabah, Beersheba and Dimona to Riyadh, Jeddah, Mecca, Medina and the Gulf capitals. Israeli Arabs are the best-educated in the Muslim world, though their Saudi, Turkish, Iranian and Cypriot counterparts aren't far off.