Israeli Prime Minister Binyamin Netanyahu isn't expected to extend a 10-month freeze on settlement building imposed under intense pressure from the administration of U.S. President Barack Obama, and scheduled to expire Sept. 26.
The 200 settlements in the West Bank, where some 300,000 Israelis live, and the ever-expanding Jewish enclaves in East Jerusalem, where another 200,000 live, are a critical factor in the stop-and-start peace process that began in 1993.
The West Bank settlers' leadership body, the Yesha Council, said Wednesday it will resume expanding their communities, whether the government ends the freeze or not, to protest Tuesday's killings by Palestinian militants near the flash point city of Hebron.
Maj. Gen. Avi Mizrahi, head of the Israeli military's Central Command that covers the West Bank, recently voiced concern that mounting violence mainly by religious settlers could ignite a third Palestinian uprising.
"I don't think anything will happen any time soon," he said. "Most of the settlement movement is fine, very normal, but a mosque set on fire and another mosque set on fire adds up."
The Palestinian Authority of President Mahmoud Abbas has warned it will withdraw from the peace talks that began in Washington Thursday if the settlement freeze isn't extended.
The last peace talks session collapsed in December 2008 when Israel launched a 22-day invasion of the Gaza Strip, ruled by the hard-line Islamist Hamas movement to halt rocket attacks.
Following Netanyahu's reluctant imposition of the settlement freeze in July 2009, hard-line settlers have been up in arms. They see the freeze as the start of a process that will lead to their enforced removal from the West Bank as part of a peace deal to make way for a Palestinian state.
They have stepped up attacks on Palestinians and launched a campaign of sometimes violent incursions into Palestinian towns and villages, ostensibly to pray at long-abandoned synagogues, in a bid to re-establish access to Arab areas controlled by Abbas' Palestinian Authority.
But Palestinian deepening frustration at Israel's refusal to dismantle all West Bank settlements has been intensified by Israelis' constant encroachment in East Jerusalem, which has been accompanied by the expulsion of Palestinians from that part of the city.
Jerusalem is the emotive center of the territorial dispute and has become one of the most sensitive and potentially explosive issues, possibly the most intractable, in the entire peace process.
Both sides claim the holy city as their capital. Israel captured Arab East Jerusalem in the 1967 war and declared the reunited city their eternal capital.
Palestinian frustration and anger has been compounded by a sharp escalation in a right-wing Israeli campaign to curb the rights of the country's estimated 1 million Palestinian citizens.
The Association of Civil Rights in Israel says 14 bills aimed at Israeli Arabs currently before parliament are considered anti-democratic. They include one that demands Arab citizens swear loyalty to the Jewish state.
Another criminalizes any commemoration of the Nabka, the Arabic word for "catastrophe" used by Palestinians to describe the founding of Israel, and proscribes imprisonment or financial sanctions for violators.
Abbas's failure to make any progress toward a comprehensive peace settlement, as well as losing Gaza to the Hamas hard-liners in 2007, has seriously undermined his authority and credibility among Palestinians, opening the way for more radical leaders to take over.
The first intifada broke out in 1987, triggered when an Israeli motorist killed Palestinians in a road accident. It lasted until the Oslo peace accords were reached in 1993 -- and undoubtedly influenced events that led to those historic agreements.
The second intifada erupted in September 2000. Palestinian frustration at the failure to secure an independent state burst into violence when Ariel Sharon, shortly to become prime minister, made a highly provocative incursion into the Al-Aqsa Mosque compound, Islam's third holiest shrine.
Thousands of Palestinians and hundreds of Israelis were killed in these uprisings.
The eruption of a new revolt now, amid high-octane tension across the Middle East, largely because of the confrontation with Iran, and the failure of Obama's increasingly desperate attempts to rekindle peace talks, could be extremely dangerous.