Israel has free will, to build where it wants, or not to build. Abbas, however, has no possible way to ever deliver on his obligation to end all hostilities, including rocket and mortar fire from Gaza - and he objects hysterically every time Israel does something about it. And the Abbas states the PA will "never" meet its obligation to accept "2 states for 2 peoples" - a Jewish State and an Arab State (the UN Partition language). Peace process is frozen permanently until the PA stops hostilities and recognizes Jewish Israel. Israel has repeatedly acceptes an "Arab State". Until there is intent and practical action to reciprocate on the Arab side, Israel can build in settlements where it likes. With no Quartet plan to compel PA reciprocity, they have no standing to demand anything more of Israel. Up to Abbas to stop Hamas rocket fire, or no moves to create a PA state will happen. Bush has no support on this without Congress agreement that Israeli security isn't compromised.
10 arrested at Israeli Arab protest in Ramle (Haaretz)
from the article: Officials: Israel to allow construction in existing W. Bank settlements