They lost that land by going to war in '67. Israel can now build anywhere they please. If the Arabs are foolish enough to start another war, they will lose the remainder of their land. Besides, there's no place called Palestine. If anything, Israel should be negtotiating with Jordan, the party that lost the land in '67. Who the heck are the "Palestinians"??
Police disperse hundreds in brawl in Kafr Manda, northern Israel (Haaretz)
from the article: Israel approves 227 new homes in West Bank settlement of Ariel