It isn't dumb. It's just being realistic. Similarly, if they had enough power to stop the building, would they be negotiating at all? Negotiation is always dependent on current power and long term goals. The best is done based on enlightened self interest. That should include not only short term building or not buiding, but what kind of relationship do you want to have between Jews and Palastinains. Not having a relationship is just not an option. The place is too small and too interconneted, and no amount of Israeli start-ups and venture capital from the West, and no amount of Islamic fundamentalism is going to change that. Mutual respect and mutual understadning mean mutual salvation. Jews and Palastinans together will either heroically gain or meanly lose the ultimate peace.
Police disperse hundreds in brawl in Kafr Manda, northern Israel (Haaretz)