Israel Analysis: Defying Obama, Defying Netanyahu --- The Latest on Settlement Expansion

Palestinian Authority leader Mahmoud Abbas, addressing United Nations members on Monday, called Israel's West Bank settlements a "time bomb that could destroy everything accomplished on the road to peace, at any moment".

On Wednesday, defying President Obama's "unhelpful" warning, the Jerusalem District Planning and Building Committee announced its plan to build 625 new housing units in the Pisgat Ze'ev neighborhood of East Jerusalem.

There may be an issue of timing here, releasing the statement while Washington is trying to cope with the leaks of its diplomatic cables, but we need to go back to see the underlying reason for a decision which put the US package of incentives to Israel on hold.

Just over two weeks ago, the same committee delayed 1,300 new housing units in the Gilo neighborhood on fifteen days ago. So what happened to bring the committee's latest change of course?

A senior American official has told Haaretz that Washington was going to ask Israeli Prime Minister Benjamin Netanyahu to accept a de facto freeze on settlement expansion and a halt in the demolition of Palestinian houses in East Jerusalem alongside a formal declaration of moratorium in the West Bank for 90 days. This was enough for Defense Minister Ehud Barak and Netanyahu to knock on the door of Shas chairman Eli Yishai, ensuring he would not go public with opposition to their move.

They failed. Yishai responded that he wished to know precisely what U.S. policy was on East Jerusalem, insisting that the Americans should "not be surprised" by construction there during the moratorium in the West Bank. The Shas leader also demanded that Barak permit massive building in all major settlement blocs at the end of the freeze. The meeting ended without agreement, and the inner cabinet did not convene to vote on the proposal.

Senior figures in the Shas party are continuing their challenge, saying they are very concerned that they have yet to receive clarification from Netanyahu on the issue of construction in East Jerusalem. They insist they had given Netanyahu substantial leeway despite their reservations, but they would be forced to vote against the freeze in the inner cabinet unless there are assurances that the US "will not be surprised" if construction in East Jerusalem continues. 

And so the local initiative of the Jerusalem Committee: despite the Prime Minister's wishes, it will continue to build.

Israel's envoy to the UN, Meron Reuben, responded to Abbas on Monday, "It takes two to tango, Israel cannot reach peace on its own." That statement can be taken a step further: within Israel, Netanyahu "cannot reach peace" on his own. Facing the resistance both at local level and within the Cabinet, he is dancing with himself. 

On Wednesday, talking to Israel Radio, Foreign Minister Avigdor Lieberman may have given the game away. There is no two-stepping towards a resolution: 

The impossibility of reaching a permanent peace agreement within a year is becoming more widely understood and we need to think about a long-term intermediary agreement instead. Also on the issue of the freeze - we've seen that it did not lead to any breakthroughs in negotiations, it's not the answer. I think that's clear today. There are no more freezes. We should remove that word from the lexicon.