Not that it’s out of character for Bojack, but the joke is that it’s a surprisingly nuanced take for his character, which makes me think this is the most “reasonable” thing the writers could think of.
Putting the blame solely on Arafat is some lib shit. I don’t think anyone here would go read the Israeli demands at the 2000 Camp David Summit and come away with the take that they broke down solely because Arafat was recalcitrant on the issue of various holy sites. The western media blamed the Palestinian rioters and by proxy Arafat, who they said should have calmed them.