It's a deadlock between Washington and Jerusalem. This is the gist so far:
The Obama administration is wary of allowing natural growth in settlements because past Israeli governments used that as a pretext for rampant building, said Martin Indyk, a former U.S. ambassador to Israel. "Washington has a strong enough memory of what Netanyahu did with natural growth last time he was prime minister, which is basically drive a settlement truck through that loophole," he said...
After his return from meeting with Mr. Obama in Washington last week, Mr. Netanyahu ordered a few structures built by teenage settlers on private Palestinian land in the West Bank razed. But none of them were among the 26 [illegal settlements], and settlers quickly started rebuilding some of them. Meanwhile lawmakers from Mr. Netanyahu's party responded coldly to his proposal. "The message from the party was clear: We were not chosen by voters to evacuate Jews from their property," a Likud lawmaker said after a party meeting Monday.
Israel Matsav's Carl notes:
As I tried to explain to someone in the US last week, what people outside Israel don't understand is that even though Netanyahu managed to push Moshe Feiglin out of the 'realistic' 19th slot into an unrealistic 36th slot on the Likud's slate, Feiglin was the big winner of the Likud primary. Netanyahu had attempted to fill the party slate with the likes of Uzi Dayan and Assaf Hefetz. But Feiglin endorsed people like Boogie Yaalon and Benny Begin and Michael Ratzon and those are the people who took the top positions in the Likud's slate. Netanyahu has very little room to maneuver within his own coalition.
Peter Juul wants more economic development on the West Bank if a two-state solution is going to fly.