For starters, the tax exempt donations don't only include the West Bank - but Jerusalem as well. And as I keep pointing out ad nauseum, the construction of housing is not an impediment to peace. Housing can always be sold or transferred. It's been done before by Israel - twice. Israel withdrew from Sinai and returned thousands of houses built for settlers there in multiple communities. Israel again withdrew from Gaza in 2005 and transferred those communities to the Gazans, who promptly used them as terror training camps and destroyed the infrastructure, including greenhouses donated by US businessmen for providing an incubator for Gazan economic development.
Other reports indicate that the US will demand that Israel move to a two-state solution immediately. Such reports deny reality and again show the folly of diplomats trying to invent facts instead of taking the situation as it truly is - psuedoreality.
The fact is that Hamas and Fatah continue to refuse Israel's existence and deny a 2-state solution. That is the impediment to peace. When you have Fatah honoring a mass murderer who killed Israeli athletes at Munich in 1972 as conquering hero, your priorities are wrong.
Palestinian Authority Chairman Mahmoud Abbas has euologized Abu Dauod, the mastermind of the massacre of 11 Israeli athletes at the Munch Olympics in 1972 and who died Saturday. “He is missed. He was one of the leading figures of Fatah and spent his life in resistance and sincere work as well as physical sacrifice for his people's just causes,” said Abbas.Dauod's life's work was focused on murdering Israelis.
Focusing on housing is a distraction from the real problems - that Israel simply does not have a partner in peace. It doesn't matter how many concessions Israel makes, it will never be sufficient and the Palestinians will not accept any such deal because they will always demand more.
Mind you that the PA never even bothered with counterproposals to the two Israeli peace deals made - one with Arafat in 2000 and later with Abbas.
Now, who exactly is Israel to make peace with when the Palestinians themselves can't agree on who is their representative - Hamas that continues to seek Israel's destruction openly and obviously, or Fatah, which is content to let other terror groups do their dirty work while continuing to indoctrinate another generation to hate Israel's very existence. Neither terror group can dominate the other, and each has its own territories to operate from.