If Israel had thought that it could get away with a unilateral annexation of the settlements then it would have done so long ago. Heck, it actually has a much better claim to East Jerusalem than it does to any other part of the West Bank, and it is still no closer to getting its "annexation" recognized now than it was 42 years ago. Israel can "annex" Area C tomorrow, and there is a very good reason why it doesn't do so. And that reason has NOTHING to do with Israeli "reasonableness" or any zionist concept of "fair play" and EVERYTHING to do with a recognition that it would be an exercise in pointlessness as well as being a self-inflicted wound.
Ex-FM Lieberman: Firebomb attack in Jerusalem a reminder that norm is Arab terror against Jews (Haar
from the article: Palestinians under world pressure not to declare state unilaterally