With nine months of negotiations in the rear-view mirror, Israelis and Palestinians are now left with unilateral options.
In Israel, Prime Minister Netanyahu will likely face calls for dramatic moves such as the annexation of West Bank settlements, while Palestinian President Mahmoud Abbas will be pushed to renew international bids for statehood recognition.
They have both warned of their willingness to abandon talks entirely, but despite the bravado, analysts expect the two leaders to move cautiously as they test the new political environment after the collapse of US-brokered peace talks.
"The unilateralism will build up slowly," said Nathan Thrall, an Middle East analyst for the International Crisis Group. "None of that will be the end of the world."
Much will be determined by the outcome of Fatah and Hamas's reconciliation deal announced earlier this week, which prompted Israel to suspend negotiations. The two rivals plan to form a unity government, but that will require lengthy negotiations over issues like the cabinet makeup, elections, and the future of the Palestinian Authority's security cooperation with Israel.
The Palestinians recently submitted applications to join 15 international treaties and conventions and indicated they are prepared to apply to more, stirring fears in Israel of rising international sympathy for the Palestinian cause. Mr. Thrall says there are hundreds to choose from.
Israelis' primary fear is that the Palestinians will join the International Criminal Court (ICC) and seek to bring war crimes cases against Israel, but Mr. Abbas is expected to postpone that effort to avoid friction with Washington. By law the US is required to defund United Nations agencies that admit the Palestinians as a member state without a peace deal.
Meanwhile, Israel has twice announced that it would reduce the transfer of some $100 million in tax revenue owed to the Palestinian Authority. This will be put to the test at the end of this month when Israel is due to make the next transfer. Although some Israeli government factions are eager to punish the Palestinians severely, others realize that withholding funds risks the collapse of the Palestinian Authority and chaos in the West Bank.
Mr. Netanyahu is facing calls for an altogether different kind of unilateral action from the center-left: withdrawal from several West Bank settlements. His pro-settler coalition partners will likely block this. Hardliners like Economic Minister Naftali Bennett have called on Israel to annex settlements in retaliation for Hamas and Fatah's reconciliation. In this case, Netanyahu is blocked by the threat of increased isolation.
Gershon Baskin, a peace activist and political analyst, says Netanyahu is not bold enough for peace or annexation.
"I don’t think that Netanyahu has the ability to make any kind of important unilateral steps," he says. "There’s such a heavy cloud over the politics. Everyone is walking around in the dark, and no one knows what will happen."