The settlements have made the two-states-"solution" (mind the quotes) as good as uinfeasable. The only way the Palestinians can be given a dignified existence, is full membership of the state which controls Israel and Palestine. Some form of confederation, like Bosnia-Hercegovina, is probably the most realistic option. It will not be easy, but no one can blame the Palestinians for the settlements.
Law expanding definition of terrorist activity passes first Knesset reading (Haaretz)