Peace talks have been suspended and their future in jeopardy since the expiration of Israel’s partial settlement freeze on Sept. 26. President Mahmoud Abbas confirmed his stance repeatedly this week that the PA could not continue negotiations while settlements were under construction while Israeli Prime Minister Benjamin Netanyahu continued to reject a formal extension of the moratorium saying construction could be reduced to the minimal possible level but without an official freeze.

Abbas met Oct. 2 with officials from the PLO seeking support for his position to hold off continuing negotiations until an Oct. 8 Arab League meeting. Earlier in the week, he said he would announce an “historic decision” regarding the negotiations at the meeting, but declined to elaborate. The meeting, originally scheduled for Oct. 4, was delayed to give the US more time to pressure Israel into extending the settlement moratorium.

Israeli reports surfaced Sept. 29 of a letter to offer a list of American guarantees in exchange for Netanyahu’s concession to extend the settlement moratorium for 60 more days. Netanyahu reportedly rejected the agreement, drafted jointly between American and Israeli officials, which would have promised US diplomatic support in the UN, delivery of advanced weapons systems on the eve of a final agreement, and a guarantee to leave any further demands on settlement construction to final status talks, among other security guarantees.

"We're not buying the excuse of political difficulties anymore," a senior U.S. official told his Israeli counterpart.

"The Americans said Netanyahu's conduct is humiliating the president," said a senior European diplomat who met with senior U.S. officials in New York last week. During the week-long drafting of the letter, US Secretary of State Hillary Clinton reportedly briefed Abbas on an agreement between Israel and the US to extend the moratorium and he resisted the idea.

Meanwhile in New York, the Israeli Foreign Minister Avigdor Lieberman’s UN General Assembly speech directly contradicted Netanyahu’s plans for an agreement with Palestinians within a year. He said peace would require an interim agreement lasting “decades” and a final agreement should be based on the exchange of land and populations. The proposal would redraw borders putting the largest settlements on the Israeli side in exchange for Arab-majority areas near the West Bank that are currently within Israel. For settlements too far from the proposed border, the residents would move to Israel ostensibly in exchange for Palestinian Arab citizens of Israel who would move to the new Palestinian state.

Netanyahu’s office quickly released a statement distancing him from Lieberman’s speech while offering muted approval of the exchange proposal. Many Israeli and U.S. Jews voiced strong opposition to Lieberman’s speech and several American Jewish leaders called for him to resign.

Meanwhile, settlers celebrated the expiration of the building moratorium with bulldozers and concrete mixers with work beginning within hours of the Sept. 26 deadline. Work on housing units began in earnest the following morning in Ariel, Revava, Yakir, and Kochav Hashachar and many others began over the following days. In all, plans have been laid to begin construction of about 2,000 units the West Bank, with about 500 already with approval to begin immediately.

So far the number of housing units put up in the West Bank has been the lowest under Netanyahu than any prime minister since the first Yitzhak Rabin government in the 70s. Now that the freeze has expired though, Netanyahu is expected to be under redoubled pressure to approve a rash of new construction projects across the West Bank.

The third attack in the past month on Israeli settlers took place on Sept. 26 near the Jewish settlement of Teneh Omarim near Hebron in the West Bank. The attack happened hours before the midnight deadline of the partial settlement freeze. Two cars were shot at injuring two in the first car, with no injuries reported in the second according to the, Israeli Army. No one claimed responsibility for the attack.

Sept. 28, the Israeli Navy intercepted a boat carrying nine Jewish activists attempting to break the blockade of Gaza bringing carrying humanitarian supplies. The activists, some of whom are Israeli citizens, reported facing strong force though they offered no resistance. Israeli officials claimed the takeover of the vessel was “peaceful” and without incident.

But the activists countered the official Israeli story with former Israel Air Force pilot Yonatan Shapira saying that there were "no words to describe what we went through during the takeover."

The same day, the Israeli high court sided with Jewish settlers in a decision that would result in the eviction of dozens of Palestinian families from their homes in the Sheikh Jarrah neighborhood of east Jerusalem.

Reconciliation talks between rival Palestinian factions Fatah and Hamas seemed to have taken a turn for the worse again this week with a Hamas official saying the progress that has been made has only concerned the relatively simple disagreements, while the most complex and contentious issue, control of security services, might derail the discussions.

Foundations and roads for four settlement outposts were under construction Sept. 30 near Hebron. They would be linked to the Kiryat Arba settlement, the largest in the district, and together would constitute one third of the city of Hebron.

An Israeli district court rejected the appeal to deport Irish Nobel Peace Prize laureate Mairead Corrigan-Maguire who has been held at a detention facility at Ben-Gurion International Airport. She was denied entry and has been fighting deportation since she landed there earlier this week. She took part in the June blockade busting attempt by the Irish-flagged Rachel Corrie ship. She was arrested and deported along with the other activists who took part, but beforehand she signed a statement that she was prohibited from entering Israel for 10 years. Corrigan-Maguire said she was misled and had not agreed to such a condition.

Islamist groups organized rallies on Oct. 1 in Gaza to commemorate the 10th anniversary of the start of the Second Intifada. Within Israel, the Palestinian Follow-up Committee announced a comprehensive strike including all Palestinian towns and cities.