Israeli leaders are still quietly celebrating (more on that later) President Donald Trump's declaration that the United States now recognizes Jerusalem as Israel's capital, and plans are now underway to move the U.S. embassy from Tel Aviv to the Holy City.

Some are asking, however, whether Trump's reversal of decades of U.S. foreign policy is yet another example of the president's tendency to shoot from the hip, or will the Israelis now have to pay a political price?

Trump's shift on Jerusalem — the issue long considered perhaps the most complex in any negotiations — is an attempt to shake things up after decades of failed efforts by his predecessors in the White House.

"We cannot solve our problems by making the same failed assumptions and repeating the same failed strategies of the past," Trump said in his Dec. 6 speech. "Old challenges demand new approaches."

Israelis welcome new approach

"Twenty-five years of adhering to the same paradigm led to an impasse," wrote Amos Yaldin, a former Israeli military intelligence chief, in the Israeli newspaper Yedioth Ahronopth. "Trump's course of action has the potential of shuffling the deck and encouraging creative thinking outside the familiar parameters."

One immediate problem with that thinking is the Palestinians are not in the mood right now for negotiations. Instead, they continue to vent their fury through demonstrations and violent clashes with Israeli forces, as the Americans are seen as having chosen to support the Israelis without offering specific gestures to the Palestinians.

"This is a historical moment, and we must act," said Mahmoud Abbas, the president of the Palestinian Authority. "The U.S. can no longer function as a diplomatic sponsor and mediator."

U.S. Vice President Mike Pence stands by as U.S. President Donald Trump signs a proclamation that states the United States recognizes Jerusalem as the capital of Israel and will move its embassy there. (Kevin Lamarque/Reuters)

In addition to the offering recognition for Jerusalem, Trump's policy shift last week was also significant as the president didn't specifically say the two-state solution is the only path to peace between the Israelis and Palestinians. Instead, Trump said the United States would support the two-state solution "if agreed to by both sides."

Education Minister Naftali Bennett, who also chairs the Jewish Home party, is a staunch opponent of the two-state solution, declaring it a "dead end" earlier this year.

"Never in the history of Israel have so many people put so much energy into something so pointless," Bennett said, adding that Israelis must demand that the West Bank belongs "to the people of Israel."

Pressing Israelis on settlements

Bennett, who also heads the hardline nationalist Jewish Home party, wants the Israeli government to "build and build and build" more settlement units in the West Bank. The international community, including Canada, views settlements as illegal under international law, although Israeli disputes this.

Some Israeli political commentators think Trump is "giving" Jerusalem to the Israelis, then could later give the Palestinians the West Bank without the large Israeli settlement blocs, along with U.S. recognition.

"If President Trump now submits a request to Israel to do this and that, in order to restore trust, it becomes more difficult for the Israelis to say 'no,' because that request comes from a hostile president," said Ofer Zalzberg, a senior analyst for the International Crisis Group.

Palestinians have demonstrated against Trump's declaration in protests that have often turned into clashes with Israeli forces. (Reuters)

Israeli political journalist Udi Segal warns that Israeli Prime Minister Benjamin Netanyahu could be painted as "the rejectionist" if he says no to future demands made by the U.S., adding that "Trump may be giving Israel a gift with a price tag that is too high for Netanyahu to pay."

The Palestinian leadership, still seething from Trump's shift, does not expect to see any gestures from the Americans, viewing them now as dishonest brokers in the whole affair.

'Historic day'

So, there is a view that Trump's speech could be chalked up as another example of the president stirring things up on the world stage, as he's done with climate change and global trade.

Netanyahu called Trump's shift on Jerusalem a "historic day," adding that it was "a long overdue step to advance the peace process."

The Israeli and American flags were projected onto the walls of the Old City of Jerusalem following Donald Trump's declaration that the city is the capital of Israel. (Ronen Zvulun/Reuters)

The municipality of Jerusalem quickly hung the Stars and Stripes along major streets in the city, and the American and Israeli flags were projected onto the stone walls of the Old City.

But according to a report from Reuters, Washington asked Israel to restrain its celebrations after Trump's declaration, in order to not provoke a violent response from Palestinians and Muslims around the world.

Some political analysts also suggest restraint, for another reason: Trump's declaration stressed that U.S. recognition of Jerusalem did not outline the boundaries of the city, which will be left up to final status negotiations.

"If Netanyahu enters into negotiations, he is liable to discover a different Trump," wrote Yedioth Ahronoth columnist Shimon Shiffer, "one who accepts the approach that … the Israeli-Palestinian conflict is primarily a real estate dispute.

"And Trump is unsentimental when it comes to real estate."