This is a bit misleading, but indeed Israel does most of the damage to itself. There are hundreds of thousands of Israelis living in East Jerusalem, and tens of thousands in Ma'ale Adumim. There is no way they'll be moved, not even in the case of a peace agreement. This was acknowledged by Bill Clinton in his dictated directives for making peace, 7 years ago today, and it was even accepted by both sides of the Geneva Accord, who agreed that the largest Jewish settlements in the West Bank would remain in place and Israeli territory along Gaza and the southern West Bank would be transferred to the Palestinians instead. So if you want to be precise, Israel adding additional apartments to territories everyone knows will not be part of Palestine should not be such an obstacle to peace negotiations, and if they are this tells something about the sincerity of the Palestinian negotiators who are more interested in winning points than in winning peace.
In a separate development, an Israeli cabinet minister confirmed that Israel had new plans to build apartments in two settlements in East Jerusalem and in the occupied West Bank. The announcement brought quick condemnation from Palestinian leaders and presents a new obstacle to attempts to revive peace talks between the two sides.
Israel's construction ministry has budgeted plans to build 740 new settlement apartments next year: 500 in Har Homa, in East Jerusalem, and another 240 in Ma'ale Adumim.
HOWEVER... this would all be acceptable if Israel was building only in those few areas it's clear she's not leaving and might even pay for with alternate territory. Unfortunately, there is quite a bit of building activity in settlements we all know are eventually going to be disbanded, not to mention the ongoing construction of brand new settlements. This is a waste of money, to say the least, and it's also bad tactics, bad strategy, and generally a bad idea. Why do we persist? Mostly because the settlers have figured out how to manipulate the system, but that's a rather feeble excuse. A solid majority of Israelis know we're never going to stay in most of the West Bank, and most of the far-flung small settlements aren't going to stay there. Since we know this, we should find a way to have our government act accordingly.