How long will the two-state solution be stalled?

In what appeared to be a backlash to the U.N. General Assembly's decision to upgrade the Palestinians' status in the world body from “observer entity” to “non-member state” on December 01, Israel has announced its intention to construct 3,000 more homes in East Jerusalem and occupied West Bank. The decision has brought widespread condemnation from the United States, the UK and a host of other European nations which view the move as particularly damaging to the prospects of establishing a two-state solution which would envisage East Jerusalem as Palestine's capital.
The Israeli move reeks of a colonial mindset of a bygone era. It reminds us of apartheid and the message Israel is giving out to the rest of the world is one of pure negativity. A unilateral decision of this nature, should the government of Israel choose to pursue till the end will in effect, put a final nail in the coffin for a negotiated settlement of one of the longest running troubled spots of post-World War II history. Settlements in the “E1” zone have effectively been on hold for many years primarily due to opposition from the US, which happens to be the country's staunchest ally. Yet today, we see a belligerent Israel led by an equally belligerent Netanyahu brushing aside protestations by the world largest powers to commence what has been stated by U.N. Secretary-General Ban Ki-moon as “an almost fatal blow” to the two-state solution.
Not content with merely embarking on a housing programme, Israel intends to withhold US$100 million in Palestinian tax revenues from the Palestinian Authority as a punishment. Needless to say, it is time for the international community to stand united in telling Israel “enough is enough”. Such schoolboy shenanigans cannot be condoned, much less tolerated. The world's democracies have demonstrated in the past that they are willing to go the extra mile to hold rogue states accountable for their irresponsible actions. Will it be different for Israel?