This is called discovering boundries. Netnayahu is seeing if he can throw the Gilo issue into the faces of the Quartet and the EU and come away with only a scolding. If this works for him, he will be encouraged to take even more active anti-peace steps. Naturally, the Palestinians understand what is going on and will walk away at some point. This alows Israel to blame the failure of peace talks on the Palestinians. In order to save face, the western nations will not take issue with him. We have seen this routine before. We will continue to see it as long as it continues to work so well.
UN chief condemns Palestinian toddler killing, urges calm (Reuters)
from the article: Germany reprimands Israel over new Jerusalem construction