As the US administration abandons its efforts to persuade Israel reinstate a partial settlement freeze in the occupied Palestinian territory, the ailing Middle East peace process suffers another setback.
Israel made its choice clear, Palestinians say -- in spite of a generous incentives package from Washington, the Netanyahu government chose settlements over resurrecting the peace process based on the two-state solution.
The notion that Palestinians and Jews could live side-by-side, in two states, was first floated in the 1947 United Nations partition plan that preceded Israel's establishment. Palestinians rejected the plan that gave the majority of historic Palestine to the Jewish minority, deeming it unjust for disregarding their right to self-determination. The two-state solution resurfaced in the early 1990s, when Israel and the Palestine Liberation Organization began earnest peace discussions.
For nearly two decades, a two-state solution was at the center of on-again, off-again talks. But now, as Israel expands settlement housing units and bypass roads in the occupied West Bank, two states may no longer be a viable option, warned Rashid Khalidi, the Edward Said Professor of Modern Arab Studies at Columbia University.
Indeed, "What has been done already may have made it impossible," said Khalidi, echoing warnings made earlier this year by John Holmes, United Nations under Secretary General for Humanitarian Affairs.
By building settlements and constructing a separation wall in the occupied West Bank, tightening the siege on Gaza and exacerbating the division between the West Bank and Gaza, Israel isolated Palestinian communities and gerrymandered Palestinian lands rendering a contiguous, viable Palestinian state impossible.
While the two-state solution has been losing ground in the past years, the one-state notion has been gaining popularity. A Palestinian Public Opinion poll in June, found that 27 percent of Palestinians support abandoning the two-state and demand a one-state solution instead.
Neither Palestinian nor Israeli officials, however embrace the one-state solution.
Palestinians remain skeptical of the one-state implications. They have fears of not being treated as equal citizens and concerns about preserving their national identity. Besides, the Israelis have a state, backed with 62-year-old international recognition; it's the Palestinians who don't have one and hence the demise of the two-state solution, as such, means they will not have the state they have long yearned for.
The official Palestine Liberation Organization policy remains ending the occupation and establishing a Palestinian state within the 1967 borders, said Ghassan Khatib, the director of the Palestinian Authority Government Media Center, "allowing an independent Palestinian state next to the state of Israel with East Jerusalem as its capital in addition to achieving the right of return for the Palestinian refugees."
In the Israeli media, the one-state solution is being increasingly mentioned, though often described as a worse case scenario, said Akiva Eldar, a chief political columnist at the Israeli daily, Haaretz.
Maintaining the state's 'Jewish' identity has always been Israel's priority. "The Israelis want their own state because they are Zionists," said Khalidi. "They don't believe in democracy more than they believe in Zionism."
A more stressing Israeli concern has been the increasing Palestinian population, which Israel perceives as a threat to securing a Jewish majority. It seems that the US administration is highly aware of this. In fact, the US Secretary of State, Hilary Clinton, has just cautioned Israel of the consequences of it own policy. In her latest address to the Saban Forum she reiterated the US position on illegal settlements. "We believe [settlement] expansion is corrosive not only to peace efforts and two-state solution," Clinton said. "But, to Israel's future itself.
According to the latest Israeli population count, out of 7.3 million Israelis, 1.5 million are Palestinians. Another 3.7 million Palestinians live in the occupied Palestinian territory. With a higher growth rate, projections estimate Palestinians will outnumber Israeli Jews between the Jordan River and the Mediterranean by 2016.
In the light of the cost -- or lack thereof, that Israel is paying to keep control of the occupied Palestinian territory, the current Israeli policy suggests that Netanyahu's government is not interested in changing the state of affairs.
"Negotiations are a product of American and European expectations," Dan Shiftan, the deputy director of the National Security Studies Center at the University of Haifa and an advisor to former Israeli Prime Minister Ariel Sharon said. "They are not a product of Israeli hopes."
Although maintaining the status quo implies keeping the situation intact, in the Israeli-Palestinian context, this concept can be misleading. The unbalance of power has been giving Israel the upper hand in changing the landscape in its favor.
Last February, Ehud Barak, the current Israeli Defense Minister and former Prime Minister warned in his remarks to the influential Herzliya conference, of the future. If Israel maintains control of Palestinians, Barak hinted, it inevitably is heading towards the one-state, where Israel will risk either its Jewish majority or democratic values. "If the Palestinians vote in elections, it is a bi-national state, and if they don't, it is an apartheid state," he added.
Apartheid, some argue, is a regime already in place.
"For the past 43 years, it's been one-state," said Gideon Levy, a columnist and editor for Haaretz. "It's an apartheid state."
The Israeli government appears to be left with two bitter choices. The first implies pursuing its policy of settlement expansion, embarrassing its biggest ally and crumbling its image further or changing its policy and jeopardizing the governing right-wing coalition.
Either case, the status quo is unstable. Israel can't keep some four million Palestinians in a limbo, leaving their destiny up to internal Israeli politics.