"Maybe they are worried in (Netanyahu’s) Likud that right-wing voters will opt instead for (the far-right religious) Habayit Hayehudi party," Sheafer said.

One of Netanyahu’s opponents in the upcoming election, Tzipi Livni, said Netanyahu was bluffing over E1, though she said he was doing irreparable damage to Israel’s image abroad. “We will have lost the support of the entire world and Israel’s closest friends,” she said.

Publicly, Israeli officials have argued that the settlement that was announced was a “natural step” after Palestine won recognition last month as a nonmember observer state at the United Nations.

“From our perspective, Israel is responding in a very measured way to a series of Palestinian provocations,” said government spokesman Mark Regev. Israeli officials have claimed that by going to the U.N. and seeking a unilateral step, the Palestinians violated previous truce agreements with Israel.

Palestinians, in turn, said Israel was trying to destroy any chance of a peaceful resolution through a two-state solution, the idea of an Israel and a Palestine co-existing.

“Settlement building directly harms any chance for real progress towards a two-state solution,” said Palestinian government spokesman Xavier Abu Eid.

The United States, in a statement Monday from deputy State Department spokesman Mark Toner, has made it clear that it agrees with the Palestinian view.

“The United States opposes all unilateral actions, including West Bank settlement activity and housing construction in East Jerusalem, as they complicate efforts to resume direct, bilateral negotiations, and risk prejudging the outcome of those negotiations,” he said. “This includes building in the E-1 area, as this area is particularly sensitive and construction there would be especially damaging to efforts to achieve a two-state solution.”

But Hanan Ashrawi, a senior Palestinian lawmaker, said the international community had to go further than calling in diplomats and voicing complaints.

"We have to move to concrete steps, so Israel knows it has something to lose and will be held accountable, in accordance with international law," Ashrawi said.