ISRAELI PRIME Minister Benjamin Netanyahu’s decision to accelerate plans for settlement construction in a sensitive area known as E-1, as well as elsewhere around Jerusalem, is a potentially damaging move for Israel, for Palestinians, and for the United States. The plans were announced in the wake of Palestinian president Mahmoud Abbas’s successful bid for observer status at the United Nations. Previously, Israelis have justified building settlements on land the country has occupied since the 1967 war with arguments about the need for a security buffer between hostile states, and for more housing. But the E-1 announcement suggests that settlements can serve a political purpose, as well — as a tool to punish Palestinians, and as a way to ensure Israel will never have to share Jerusalem with a future Palestinian state.

The announcement of the E-1 settlement plans, which provoked a strong negative reaction among many Israelis and around the world, also shows the extent to which peace talks can be held hostage to politics. It is widely believed that Netanyahu gave E-1 the green light in order to gain the support of far-right parties before Israeli elections in January.

But his short-term gambit could have long-term consequences: Many people believe that a settlement in E-1 would make it difficult, if not impossible, to establish a viable Palestinian state. The area contains the only practical corridor for Palestinians to travel between the northern and southern parts of the West Bank, as well as the only route from the West Bank to East Jerusalem, which Palestinians hope will become their future capital.

This is the reason that the administrations of both George W. Bush and Barack Obama have urged Israel to refrain from building in E-1. It is also the reason 400 Jewish clergy members sent a letter imploring Netanyahu to cancel the plans for fear that E-1 construction “would be the final blow to a peaceful solution.”

The far-right parties that Netanyahu is courting have already made their choice. They believe Israel has a right to the entire West Bank or that Palestinians can’t be trusted with a state. They see no problem with depriving Palestinians of the rights of citizenship indefinitely. But taking Israel down that path would do great harm to Israel’s identity as a democracy, and to the chances for peace in the regionNow, it remains to be seen if the accelerated planning will translate into actual building of housing. But the announcement itself has served to further estrange Israel from its most powerful ally, the United States. It also endangers Israel’s long-term future. If Israel wants to retain its identity as a Jewish democracy, it needs a Palestinian state as much as Palestinians do. If a two-state solution is perceived as impossible, then Israel will have to choose between remaining a democracy — which means giving millions of Palestinians equal rights — and retaining its Jewish character.

.