By Luke Baker
JERUSALEM (Reuters) - The day before Israel's election, with polls showing he could lose, Prime Minister Benjamin Netanyahu declared that the Palestinians would never have their own state on his watch.
It was a sweeping statement that flew in the face of his own past commitments and 25 years of international efforts to arrive at a two-state solution to the conflict: Israel and an independent Palestine living side-by-side.
The reaction from the rest of the world was rapid and predictably outraged.
France and Germany called on the new government to stick to the two-state goal and the European Union counseled calm at a "crucial moment". The United Nations said the only way for Israel to remain democratic was to stick to the peace process, which sees two states as the final objective.
White House spokesman Josh Earnest reaffirmed President Barack Obama's commitment to the two-state solution and said based on Netanyahu's comments, the United States "will evaluate our approach to this situation moving forward".
The question is whether Netanyahu - who shifted sharply to the right in the last days of his campaign, using messages such as the 'no-state' pledge to successfully draw right-wing votes away from ultranationalist parties - really meant what he said. And if so, what it means for the Palestinians, international relations with Israel and the future of the peace process.
Speaking on BBC radio, one of Netanyahu's closest confidants, Defense Minister Moshe Ya'alon, backed the prime minister, saying the very idea of two states was unworkable.
"Can you imagine a viable Palestinian entity, economic wise? What about infrastructure, electricity, water?" he said. "They are connected to us like a Siamese twin, so the whole idea of full separation is not viable."
Around Netanyahu and on the right-wing of Israeli politics - including party leaders likely to be in his next government - it is common to hear that the two-state solution is dead, with no way of reconciling Israel's security demands with Palestinian independence and no willingness on Israel's part to share Jerusalem, which the Palestinians seek as a capital.
Instead, right-wing leaders like Naftali Bennett, the head of the pro-settler Jewish Home party and a candidate for a top post in the next government, advocate Israel's annexation of most of the West Bank, while granting the Palestinians "enhanced autonomy" within the rump 40 percent of the territory.
Even under a two-state scenario, Israel talks about retaining major settlement blocs and control of the Jordan Valley, where the West Bank borders Jordan, leaving a patchwork behind, although land swaps with Israel would provide some compensation. The idea of dividing Jerusalem is dismissed.
The impression that emerges is that Israeli leaders on the right would ultimately prefer a model in which the Palestinians have a high degree of self-rule but Israel's military retains control in a form of "benign occupation" of the West Bank.
There is no active discussion along those lines, or of a two-state solution, because the last peace talks broke down in April 2014 and Netanyahu has said repeatedly that he does not see Palestinian President Mahmoud Abbas, who has struck a unity deal with Hamas Islamists, as a partner for peace.
As long as Abbas remains in power - he was elected in 2005 and should have faced re-election in 2009 - that situation is unlikely to change. As a result, there is no process through which a negotiated two-state solution can emerge anyway.
If the Palestinian leadership changes - Abbas has talked about elections but no dates have been set - Netanyahu would find himself under intense pressure to reengage. But for now, even U.S. diplomats acknowledge that getting Abbas and Netanyahu back together to negotiate is highly improbable.
Instead, Netanyahu's dismissal of a two-state solution will encourage the Palestinians to again seek recognition via the United Nations as well as bilaterally - 135 of 193 UN members already recognize the State of Palestine, including several EU member states, even if the EU itself does not.
"We will not backtrack from our position in demanding that international legitimacy be achieved," Abbas said on Thursday, adding that Netanyahu's words were worrying but not new.
The shift may come from the United States. In the past, including last December, Washington has stood in the way of Palestinian efforts to get a U.N. resolution recognizing its statehood, including threatening to use its veto.
But the New York Times cited Obama administration officials as saying they may now allow a Security Council resolution to proceed, a move that would alarm Netanyahu's government.
"We are now in a reality where the Israeli government no longer supports direct negotiations," the paper quoted a senior White House official as saying. "Therefore we clearly have to factor that into our decisions going forward."
For the Palestinians, Netanyahu's intransigence - and his honest acknowledgement that he doesn't want a Palestinian state - may end up bolstering their cause while further isolating Israel internationally, particularly among its chief trading partners, the European Union and United States.
An EU diplomat suggested on Wednesday that if Netanyahu sticks to his line, the EU will consider pushing ahead with trade restrictions and other measures against Israel.
(Additional reporting by Nidal al-Mughrabi in Gaza, Ali Sawafta in Ramallah, Kylie MacLellan in London and Adrian Croft in Brussels; editing by Anna Willard)