What are the implications of the Palestinians' achieving non-member observer status at the United Nations, and the Israeli response announcing more settlements, including in areas east of Jerusalem delineated in maps as possibly part of a future Palestinian state?

There are two scenarios.  In one word: Nothing. In one acronym: A LOT, meaning A Lot Of Trouble.

The "Nothing" scenario is based on either a peace process that would defuse this tension, or, in the absence of a process, an eventual, post -January, post-election Israeli refrain from actually building in "E1," the small area stretching east of Jerusalem and northwest of the settlement town Maale Edumim.

Israel can later cite legal complications, bureaucratic problems or security considerations leading to its decision to "maintain the right to build" but not exercise it.

Alas, both possibilities are unlikely to happen, given the predictable outcome of the Jan. 22 elections.

This brings us to the "A LOT" scenario. If the unbridgeable gap between Israel and the Palestinians was wide, it now seems beyond reach in the foreseeable political climate.

 A Palestinian quasi-state can claim that Israel is legally an occupier since the West Bank is no longer "disputed." Palestinians can then press charges against imaginary "atrocities" and real grievances in the International Court of Justice (ICC). This not only isolates Israel internationally, beyond the self-inflicted isolation of the current government, but also poses major policy challenges to the Obama administration because, by extension, the US will be isolated too or will be impelled to get involved in an intractable situation.

While the legal, diplomatic and public relations dimensions are significant and vexing, the issue that seems to gain most political traction is the future, feasibility and viability of the two-state solution or model. This is where "A Lot Of Trouble" can get serious, even if no one intended it to be.

The Palestinian Authority's appeal for a UN status upgrade to non-member state was expected. In fact, the Palestinians have been discussing this ever since their failed bid to be granted full statehood by the UN last year.

The overwhelming majority that voted in favor was expected. In fact, the blind could more clearly see the evolving majority that Israel refused to see.

The Palestinian celebrations were expected, as were Israel's cries of foul play and the immediate knee-jerk punitive measures. This was all so boringly unsurprising that it was like watching a rerun of a seriously bad movie — and finding out that even the end is the same.

So why then, given this predictability, is the world reacting so vociferously and forcefully to Israel's countermeasures and are why many in Israel declaring the end of the two-state solution?

Because they all live in denial.

The simple reason for these questions is that since there is no substitute for the two-state model, anything that is perceived to diminish its viability seems worthy of outburst.

 A savvy expert, Daniel Seidemann, called the Israeli announcement to build in E1 a "binary settlement." Either you build in E1 or you adhere to the two-state model. The two are irreconcilable. Yet no less a savvy expert, Meron Benvenisti, called the Israeli settlement checkered map in the West Bank "An irreversible reality" two decades ago. And if you want to understand the foundations of this intractability, read Gershom Gorenberg's The Accidental Empire, detailing and analyzing the origins of the settlement policy. It's grown exponentially, irreversibly, since.

 Yet the proponents of the two-state solution claim, rightly, that based on the 2001 Clinton Parameters, a revised and tighter package of the 2000 Camp David summit negotiations, a territorially contiguous and political viable Palestinian state can be established even given the reality on the ground. Building in E1 interferes with contiguity and thus makes a Palestinian non-viable.

Not really. If there will be a Palestinian state as an outcome of and amicable agreement, "E1" will not be the deal breaker.

The impediments to the two-state model are not about 3,000 apartments, as objectionable as some find the decision to be. It lies first with the divide between the West Bank and the Hamas-controlled Gaza Strip, an issue discussed and dissected enough.

It lies second with the current and future government of Israel.  

Benjamin Netanyahu does not believe in the two-state model. The Israeli prime minister usually evinces the Hamas, Iranian influence, fears of a "failed state" — all valid reasons that should not be dismissed.

Netanyahu is genuine in his arguments. Yet he has consistently failed to come up with a substitute initiative, a different idea, a set of confidence measures that could serve both sides in three-four years assuming it is not ripe now. He has failed miserably to engage US President Barack Obama or the rest of the world in a dialogue about what is feasible if a "more of the same" process is not.

In fact, by building in E1 (if he will) he is doing the exact opposite. He is incontrovertibly and irrevocably making sure that reality is indeed "irreversible," that the Palestinian resort to the international community only to say later "We told you they do not want to negotiate and that peace is unattainable."

Furthermore, as former Prime Minister Ehud Olmert told me, the decision is nothing short of "a slap in the face of a friendly, supportive and committed Obama administration." Netanyahu's political merger with Foreign Minister Avigdor Lieberman and the Likud party Knesset list, a collection of right-wing, slightly more right-wing and extremely right-wing individuals makes the prospects of Netanyahu engaging in any type of meaningful process remote if not fictional.

But imagine this:  Netanyahu, ostensibly committed to a "peaceful Palestinian state living side by side with Israel" and sensitive to US and world concerns shuffles the deck.

He projects power rather than hollow, sanctimonious electoral considerations and states that Israel would be the first to support the Palestinian quest for an upgraded status.

"We have issues and differences, but I think Palestinians deserve to maintain hope and I want them to believe in the process".

 Was that so difficult to do? It could have been priceless and costless -- which raises the question of whether Netanyahu is willing, capable and politically equipped to recalibrate. My answer is an unambiguous "no." He doesn't believe in the two-state model, is incapable of making the adjustment and is politically paralyzed even if he wanted to. For him, it is all about Iran. Regrettably, he will find out that failure to provide ideas on the Palestinian issue severely diminish his latitude when entering a dialogue with the world on Iran.