More than 10,000 Israeli settlers demonstrated in Jerusalem today against something that is not happening – a supposed 10-month freeze on settlement building in the West Bank. As even FOX news reported, there is no construction freeze. "A construction freeze is when you stop building stuff," said Michael Tobin, FOX correspondent in Jerusalem. What has happened is a 10 month freeze on the issue of new building permits; work on existing settlement projects will continue. And the "freeze" does not even apply to the currently most contentious issue of East Jerusalem which the Palestinians claim as the capital of their future state.

An Israeli rightist shouts as thousands of right wing demonstrators hold a rally protesting against settlement freeze at Paris Square in Jerusalem, Dec. 9, 2009. [Yin Bogu/Xinhua]

The settler demonstration, with a nod and a wink from Israeli Prime Minister Netanyahu, who agreed to the phony freeze under equally phony pressure from the Americans, is in fact intended to underscore the settlers' determination, over time, to steal the land and property of every last Palestinian living under Israeli occupation, and expel or kill the owners. Despite the entirely unreasonable nature of these fanatics, who literally believe they have a God-given right to steal and kill, there is no sense that the rest of the world is prepared to put the necessary pressure on the Israeli government to curb their activities, which threaten not just peace in the Middle East, but in the entire world.

Given the chance to make a clear statement of policy on Israeli-Palestinian conflict, yesterday, the European Union fluffed the issue and issued a bland compromise that only underlines its irrelevance as global player. Sweden had proposed the EU recognize East Jerusalem as the capital of future Palestine and seemed to have gathered enough support from Britain, France and others to ensure agreement. But intense Israeli diplomatic pressure detached France and with Germany giving its usual automatic support to Israel, the final result was a statement calling on Jerusalem to be the capital of both states. This was still a qualified gain for the Palestinians. European public opinion was outraged by Israel's devastation of Gaza at the turn of the year, and some sort of payback had become inevitable. A Palestinian diplomat told me today "It's a step forward but it would have been much better if the EU had adopted the Swedish resolution without compromise."

The problem facing the EU and the world in the search for Middle East peace is that Israeli society and the Israeli government have moved so far to the right that there is virtually nobody left with whom a serious negotiation can be carried on. Netanyahu and Lieberman are determined to see no compromise. Opposition leader Tzipi Livni gave us the Gaza war. It is, in the phrase so often misused by the Israelis, difficult to see where the Palestinians and the international community will find a "partner for peace" within Israel.

Meanwhile Obama is stuck in dual domestic and Afghan quagmires. As a perceptive Israeli academic told me earlier this year, only the sustained personal commitment of the President of the United States could broker a workable and lasting Middle East settlement. With all his energies devoted to reviving the US economy and following his decision to escalate the Afghan-Pakistan war, there is little chance Obama will devote the necessary time and energy to finding a solution.

Faced with Israeli intransigence and international indifference, there is speculation that the Palestinians are preparing a unilateral move to declare independence within the 1967 borders, including East Jerusalem. They would then take their case to the United Nations and seek recognition of their state, albeit remaining under Israeli occupation. Should they decide to take this step the Palestinians would deserve the support of the world. It would simply mean recognizing the reality that negotiations with Israel within the Oslo Framework are nothing more than a fig-leaf covering the continual expansion of settlements and the theft of Palestinian land.

In the meantime, members of the EU and other countries need to somehow summon up the courage to face down the Israeli extremists. Yesterday's EU fudge on the Jerusalem issue was not a good start.