The sprawling Jewish settlements built on war-won land in defiance of much of the world emerged Thursday as the key friction point in President Barack Obama's talks with the Palestinians.
The Palestinians argue that they can't return to talks on drawing a border between Israel and a future Palestine while Israel unilaterally shapes that line through accelerated settlement expansion.
Obama, meanwhile, made clear that he's not willing to pressure Israel to halt construction _ something he briefly tried at the beginning of his first term, before backing down when Israeli Prime Minister Benjamin Netanyahu resisted.
Asked about a possible freeze Thursday, Obama said that "if the only way to even begin the conversations is that we get everything right at the outside, or at least each party is constantly negotiating about what's required to get in the talks in the first place, then we are never going to get to the broader issue" of achieving sovereignty for the Palestinians and security for Israelis.
Abbas openly disagreed with the U.S. president, saying the Palestinians are sticking to their position. He noted that it's the view of the international community, not just the Palestinians, that settlements are illegal.
With the road to negotiations apparently blocked and settlements growing steadily, time for a partition deal may be running out, Israeli settlement monitors and European diplomats have warned.
"We are reaching the tipping point," said settlement watcher and Jerusalem expert Daniel Seidemann, an Israeli lawyer.
"A year from now, if the current trends continue, the two-state solution will not be possible. The map will be so balkanized that it will not be possible to create a credible border between Israel and Palestine," he said.
Palestinians also argue that after two decades of intermittent negotiations, the contours of an agreement have widely been established and it's time for decisions, not endless rounds of diplomacy. They suspect Netanyahu is seeking open-ended negotiations to give him diplomatic cover for more settlement-building, while being unwilling to make the needed concessions.
Netanyahu has said he is willing to negotiate the terms of a Palestinian state. He reiterated Wednesday, with Obama by his side, that he is ready to return to talks but also said there should be no "preconditions" _ his term for the Palestinians' insistence on a settlement freeze.
The Palestinians want a state in the West Bank, the Gaza Strip and east Jerusalem _ territories Israel captured in the 1967 war _ but are ready for minor adjustments to accommodate some settlements closest to Israel.
The parameters of a deal outlined by then-President Bill Clinton in 2000 envisioned a partition of Jerusalem along ethnic lines and an Israeli withdrawal from most of the West Bank.
Since 1967, Israel has built dozens of settlements in the West Bank and east Jerusalem that are now home to 560,000 Israelis _ an increase of 60,000 since Obama became president four years ago, settler officials say.
In Gaza, Israel dismantled nearly two dozen settlements ahead of its pullout in 2005. The Islamic militant group Hamas then seized the territory, and Gaza militants have fired hundreds of rockets on Israeli towns, including two on Thursday. Such attacks have given rise to a widespread belief among Israelis that withdrawing from more territory will not bring peace.
Netanyahu, meanwhile, has adopted a tougher starting position for negotiations than his predecessors. He refuses to accept the 1967 frontier as a baseline for border talks and says he will not relinquish east Jerusalem, an area Israel expanded into the West Bank and annexed immediately after the 1967 war.
Since that war, Israeli governments have built homes for Jews in east Jerusalem, creating a ring of settlements that increasingly disconnects its Arab-populated core from the rest of the West Bank. Some 200,000 Jews now live in east Jerusalem, almost even with the Palestinian population in the city, which overall has about 800,000 residents.
In recent months, the Netanyahu government has approved construction plans for thousands more settlement apartments on Jerusalem's southern edge that would further isolate Arab neighborhoods in the city from the West Bank, including the nearby biblical city of Bethlehem.
European diplomats warned in an internal report last month that if the current pace of settlement activity on Jerusalem's southern flank continues, "an effective buffer between east Jerusalem and Bethlehem may be in place by the end of 2013, thus making the realization of a viable two-state solution inordinately more difficult, if not impossible."
The Israeli anti-settlement group Peace Now said in a report earlier this year that the government has "opened the floodgates" of planning approvals and future building in east Jerusalem.
An Israeli official said Israel is mainly building in areas it expects to keep in any future peace deal.
The Palestinians say settlements are a major obstacle. Mainly, they cannot envisage a final peace settlement while their state is cut off from Jerusalem and does not include any of the city.
It's not clear if the new Israeli government sworn in on Monday _ although its makeup is more centrist _ will change course from the outgoing one which was heavily stacked with settlers and their supporters.
The main coalition partner of Netanyahu's rightist Likud Party is the centrist Yesh Atid, which has called for a resumption of negotiations but whose leader, Yair Lapid, says Israel must keep all of Jerusalem.
The third largest party, the Jewish Home, opposes Palestinian statehood and wants to annex 60 percent of the West Bank.
Henry Siegman, a leading critic of Israeli policy in the American Jewish community, said he believes Obama is fully aware of the corrosive effect of settlements. Time for a deal is slipping away and Obama cannot make do with four more years of just managing the conflict, he said.
"They (U.S. officials) know that if they do nothing, they are sealing the doom of the two-state solution if it has not already been sealed," said Siegman. "It cannot survive another four years, given the rate of colonization that is taking place."
Laub is the AP chief correspondent in the Palestinian territories. She has covered the Israeli-Palestinian conflict since 1987.
Associated Press writers Daniel Estrin and Josef Federman in Jerusalem contributed to this story.