For the last 30 years Israel has been frustrated by the situation left by the Six Day War. Israel did not wage that war to take land. It ended up holding land when the war ended because where it stopped were pragmatic and natural defense lines. Revisionists took control of Israel when Begin took power. This led to the goal of not only occupying the West Bank and Gaza, but of populating it with eventual annexation as the ultimate goal. The Problem was that the Fourth Geneva Convention left Israel unable to simple force the Palestinians to leave. Rather because it is the Legal Occupying Authority Israel has made itself responsible for the well-being of the Palestinians. The Unilateral Declaration of Independence by Palestine would change all of that. Israel would be able to wage war without restraint against Palestine and the Settlements would be come the means of portraying it as a defensive rather than aggressive war. Mr. Netanyahu's not so veiled threat is clear and obvious.
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from the article: Netanyahu: If Palestinians act unilaterally, so will Israel