Part I on the settlement moratorium can be found here

As Israeli and Palestinian negotiators sat down for the second round of peace talks today in Sharm el Sheikh, their meeting was overshadowed by the imminent expiration of the settlement moratorium on Sept. 26. Many pundits continue to argue that a compromise on the settlement moratorium -- one that permits Israel to pursue some new settlement construction -- is the only thing that can get the parties past this hurdle. Many continue to suggest, too, that a "reasonable" compromise on settlements is easy to define. They are wrong on both counts.

It also seems safe to predict that a corollary to these arguments will soon emerge, to the effect that President Abbas' continued refusal to accept a compromise proves he is weak or, more damning, not serious about making peace. The irony is that this analysis makes as much -- if not more -- sense applied to Prime Minister Netanyahu. 

First, let's be clear: a compromise on the moratorium is not necessary. Netanyahu has the political wherewithal to extend the moratorium if he wants to. Given the absence of widespread opposition to the moratorium in the first place, it seems unlikely that such a decision would topple his government now, especially with Kadima party waiting in the wings. Such a move would also pay significant dividends in terms of Israel's global standing -- something of tangible value to Israelis who today are deeply concerned that Israel is being delegitimized internationally.

Nor is a compromise good for Israel. Today Netanyahu has the opportunity to do something heroic and historic: to wrest control of the country's future away from the settlers. 

For decades Israeli governments have let the settlers lead the country down a self-destructive path. They have let the settlers hijack Israel's political agenda, define the diplomatic debate, shape Israel's public image, and divert precious resources away from Israeli society at large. 

Extending the moratorium could begin to stop this, and it would improve the chances that the newly-launched negotiations will reach an agreement that brings peace and security to Israel and ultimately renders the debate over settlement construction moot.

So why is Netanyahu stubbornly insisting on building in settlements? Is it because he is a weak leader -- lacking in courage and doubting his own ability to maneuver politically in order to stay in power if he makes tough decisions? Or, more damning, does it demonstrate that he is insincere in his embrace of peace talks and only too happy to use settlements to torpedo them?

Regardless of the answer, Netanyahu is insisting that Israel must build, and Abbas is holding firm in his demand that the moratorium continue. Faced with this stalemate, there will almost certainly be pressure on them both to come to some kind of mutually-acceptable compromise. Precisely what such a compromise might consist of, assuming one is possible, is not clear. What is clear is that it could not be based on the kind of constructive ambiguity and total indifference to the facts that have been the hallmark of all the "compromises" suggested thus far. 

Because when talking about settlements and "compromises," the devil is in the details -- and most pundits seem blissfully ignorant of the details.

Like the idea that Israel could extend the moratorium, but only in settlements located outside of the so-called settlement "blocs" -- defined as those settlements located west of Israel's West Bank barrier. Or that Israel could extend the moratorium, but only to construction that is outside the built-up area of settlements -- allowing settlements to grow "vertically." As explained here, the former would open the door for a settlement construction boom that could threaten the two-state solution; the latter is a dangerous trap that the Bush administration nearly fell into.

Some are now suggesting that the moratorium could be allowed to expire, but Prime Minister Netanyahu could then quietly impose a de facto moratorium by not issuing new permits, or issuing only very few. Here, again, the devil is in the details. 

The Israeli Peace Now movement just issued a new report examining the settlement construction pipeline -- those units that have already been fully or partly approved for construction in settlements. 

Peace Now found that there are around 38,000 units in this pipeline, of which 13,000 units have been fully approved by the government of Israel. Construction of them can go ahead once the moratorium expires, regardless of any de facto moratorium. Of these, construction of more than 2,000 would start literally the moment the moratorium expires, while the remaining 11,000 could start whenever there is demand and the relevant settler authorities issue the final permits. 

Meaning that a de facto moratorium would, in reality, be no moratorium at all.

And as noted previously, swapping an incomplete moratorium for new rules of the game that permit even more settlement construction would not be a good-faith way to start peace talks.

What it would be is an excellent way to threaten the prospects for a peace agreement and to weaken President Abbas and Prime Minister Fayyad. It would be a surefire signal that the Netanyahu government isn't serious about peace. And it would almost certainly undermine the Obama Administration's credibility as a steward of Middle East peace.

Lara Friedman is director of policy and government relations for Americans for Peace Now.