Responding to calls from President Barack Obama to extend an Israeli settlement freeze in the West Bank, Israeli Prime Minister Benjamin Netanyahu hinted this weekend for the first time that he's open to new limits on building after the Sept. 26 expiration.

"On the one hand, we won't build all of the tens of thousands of housing units that are waiting in the planning pipeline,'' he told Tony Blair, the envoy of the international "Quartet'' of peace process sponsors. "But on the other hand we won't freeze the lives of the residents of Judea and Samaria and we won't freeze construction," he said, referring to the West Bank by its biblical names.

The comment, however, annoyed both Palestinians and settlers, highlighting how seemingly intractable the issue of settlement building has become.

Israel's dovish Peace Now released a report saying that there are at least 2,000 housing units ready to be built when the settlement freeze expires Sept. 26. Palestinians, who see such building as undermining peace talks, have threatened to pull out of talks if the freeze is not extended. But leaders of the settlers' council threatened on Monday to bring down Mr. Netanyahu's government if he extends any limits on building.
One solution: Agree on a mutual border ASAP

In order to defuse the settlement dispute, some in Israel and the US have suggested that the sides immediately agree on a mutual border that would allow Israel to annex some larger "blocs'' of settlements while swapping other territory in return.

Such an agreement would delineate where future development is permissible and where it's off-limits. The Palestinians would get an idea of the contours of their future state, and the settlers would no longer live in limbo about their future. It would also build momentum for more difficult issues like control over Jerusalem and the the status of Palestinian refugees.

"Borders are potentially the issue that most lends itself to early agreement,'' says Yossi Alpher, coeditor of the online Israeli-Palestinian website bitterlemons.org. He noted, however, that there are "notable question marks" around the border through Jerusalem and a settlement that juts deep into the West Bank.

Indeed, even if the Palestinians were to agree on the swap, deciding which settlements to keep and which to evacuate could expose divisions among an oft-invoked Israeli "consensus'' about which areas to keep.

Israel has said that it doesn't want to discuss borders until an agreement on security is reached. Some who oppose prioritizing an agreement on borders see the settlements as bargaining chips that shouldn't be forfeited early.
Main blocs in Israeli 'consensus'

Ever since Israelis and Palestinians began discussing a peace agreement in the 1990s, negotiators toyed with the idea of redrawing the border to include swaths of densely populated Israeli settlements just over the current border. It is believed that about three-quarters of the more than 300,000 Israelis living in the West Bank live on a relatively small percentage of the territory adjacent to Israel proper.

The major settlement blocs most often referred to being in the Israeli "consensus'' are: Gush Etzion, a region to the southeast of Jerusalem; Maale Adumim, due east of Jerusalem; Modiin Ilit, located between Tel Aviv and Jerusalem; and Ariel, northwest of Jerusalem.

The contours of those blocs came into focus early in the first half of the last decade, when in response to the outbreak of the second Palestinian intifada in 2000, Israel built a separation barrier to prevent bombing attacks that traced out a line annexing the settlement blocs. But, highlighting the sensitivity surrounding the settlement blocs, some of that fence hasn't been built.
Why the blocs are valuable to Israel

The development of settlement blocs were driven by a mix of factors: Gush Etzion was settled by Jews before being captured and destroyed by Jordan in the 1948 war; Maale Adumim gives Jerusalem "strategic depth'' against an army coming from the east; Modiin Illit was founded as a housing solution for crowded ultra-Orthodox neighborhoods inside Israel; and Ariel is considered a strategic bulwark protecting Israel's narrow middle.

But ultimately, they are all valuable to Israel because it allows it to keep the maximum number of settlers in place while annexing the smallest amount of territory over the 1949 armistice line between the West Bank and Israel.

"It minimizes the prospects of social unrest," says David Makovsky, co-author of a book on the peace process, "Myths, Illusions, and Peace." A small minority of settler evacuations, including those in Gaza five years ago, have turned violent.

It could also remove a bone of contention between the Obama administration and the Netanyahu government.

"This has been a flash point in US-Israel relations,'' says Mr. Makovsky of the Washington Institute for Near East Policy, a think tank that supports a strong US-Israel alliance. "Once there's a border, there's no more ambiguity."
Average Israelis can't find them on the map

But there is no consensus on the exact contours of the settlement blocs. When some moderate cabinet ministers in Netanyahu's Likud Party suggested that Israel continue building in the settlement blocs while freezing development east of the barrier, the proposal kicked up opposition from hard-line ministers who said that it is too early to decide exactly where the blocs are.

"Ask any citizen what the settlement blocs are and they'll immediately respond: Ariel and Maale Adumim… But is Ariel really a bloc or just a city??'' wrote Haggi Huberman in the Sept. 2 edition of the settler magazine B'sheva. "The answers to these questions are foggy to this day."

What's more, the average Israeli – both on the left and the right – rarely travels to the West Bank to visit the settlements and is largely unfamiliar with their geography or their size.

"People don't know where Ariel is like they know where Beersheva, the Golan heights or Eilat is," says Carmelit Gotlieb, a resident of Tel Aviv. "If you look at the weather map, where are they on they on the map?"