Jerusalem - Benjamin Netanyahu's announcement of a 10-month suspension of Israeli construction in the occupied West Bank - and his earlier endorsement in June of a demilitarized Palestinian state - may be a giant leap for the right-wing in Israel. But it is a small step for bitterly disappointed Palestinians.
Nonetheless, Washington welcomed the announcement as a "positive step," prompting some analysts to say that Palestinian President Mahmoud Abbas, despite his initial rejection, may have little choice but to eventually bow to US pressure, take the deal and revive long- stalled peace negotiations.
Netanyahu's settlement moratorium comes with a lot of small print:
Excluded are under 3,000 apartments whose construction has already begun, in addition to public buildings such as synagogues, schools and kindergartens.
Most importantly for the Palestinians, it excludes East Jerusalem, or Jewish settlements built within the city limits but on occupied land, beyond the "green line" separating Israel from the West Bank.
When the 10 months are up, Netanyahu will return to the policies of the previous governments of former premiers Ehud Olmert and Ariel Sharon, who made no secret of their continued building in settlement blocks which they wanted to keep as part of a future peace deal.
So what is the difference? The Netanyahu government will not allow new constructions of residential buildings - as opposed to public ones - to start even within those settlement blocks.
In that sense, US President Barack Obama's envoy to the Middle East, George Mitchell, was right when he said the announcement "falls short of a full settlement freeze, but is more than any Israeli government has done before."
As Ben-Dror Yemini, a commentator for the Ma'ariv daily noted on Thursday, "Had someone said before the elections that a right-wing government would decide on a settlement freeze and that (hardline Likud ministers with classic nationalist outlooks like Benny) Begin and Bugi Yaalon would support this, it would have sounded like castles in the air."
He called the move "historic" and an "important milestone."
But for the embattled Abbas it is far from enough.
The offer adds only one month to the nine-month moratorium he had already been offered in behind-the-scenes mediation by Mitchell, which he rejected.
That prompted cynics to suspect that the public announcement was little more than a public relations exercise, especially after Netanyahu told ministers before a vote on it that the step "allows us to place before the world a simple truth: the government of Israel wants to enter into peace negotiations with the palestinians."
If Abbas refuses, the message would be: It is not the Israelis who are preventing the revival of peace talks.
Whether Israeli "propaganda," as chief Palestinian negotiator Saeb Erekat thundered, or a genuine gesture, for the Palestinians a full freeze is a basic demand made already in the 2003 "road map," the confidence-building plan by the quartet of Middle East peace sponsors: the US, Europe, United Nations and Russia.
They have angrily watched the number of settlers grow since then from some 220,000 in the West Bank and around 170,000 in East Jerusalem, to almost 300,000 in the West Bank and nearly 200,000 in East Jerusalem.
The issue of ongoing growth in the settlement blocks was slightly less urgent for the Palestinians under the previous Israeli government, because the centrist Olmert had accepted a clear, one- year deadline to the negotiations. At the time, Abbas therefore did not insist on a total freeze as a precondition for negotiations.
But Abbas looks with suspicion at Netanyahu, who took office eight months ago following elections in which the right-wing bloc of parties headed by his Likud won a majority of mandates.
The weakened Palestinian moderate has no interest in entering open-ended negotiations with a hardline Israeli premier, who has publically ruled out any concessions over Jerusalem, while in the mean time settlement expansions in and outside the city continue.
Netanyahu's acceptance of a two-state solution and a settlement moratorium, even if limited and partial, does point at a gradual psychological shift in Israeli society, where also the mainstream right wing has come to accept positions already taken on board years ago by the left and centre.
But his public refusal to discuss dividing Jerusalem indicates that the right-wing in Israel still has to internalize what for Palestinians is a simple fact. As senior Fatah official Sufian Abu Zaideh put it: "There is not a single Palestinian who would be willing to make peace without Jerusalem."
Which is why, for Palestinians, including East Jerusalem in the settlement moratorium is so essential.
Some critics said Abbas should at least keep his pride, openly express his disillusionment with Obama and make good on his threat to throw in the towel, but Abdul Sattar Qassem, a political scientist at Najah University in Nablus, believed he would eventually cave in:
"I don't think Abu Mazen can refuse to negotiate for a long time."
