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Update: Late Wednesday night, the Amona settlers rejected the compromise offered by the Israeli government, and prepared to resist evacuation. The decision is likely to lead to a major confrontation between settlers and police at the mountaintop outpost and to a crisis in Israel's government coalition-or to a diplomatic crisis, depending on how Prime Minister Benjamin Netanyahu responds.

December 25 is usually an ordinary day in Israel. This year, though, it has been marked prominently on Israeli Prime Minister Benjamin Netanyahu's calendar. It signifies a deadline he has sought to delay and a reckoning on his West Bank policy that he wants to postpone-if possible, forever.

Netanyahu's policy is to protect and expand settlements. He thereby shows that he regards Israeli rule as permanent. All the while, he aims to maintain the facade of a temporary, reversible military occupation. Outright annexation would enrage allies and erase any justification for not giving the full rights of citizens to Palestinians in the West Bank.

On the ordinary day of December 25, 2014, Israel's Supreme Court gave the government exactly two years to demolish the settlement of Amona, on a mountaintop near Ramallah. This was a very long grace period, since the government conceded that Amona was built on the property of the Palestinian landowners. But the two years are almost up, and 41 families are still living in mobile homes at Amona, according to Hagit Ofran, head of Peace Now's Settlement Watch project. To make matters messier for Netanyahu, the Amona deadline falls when Barack Obama is still president, and when a Palestinian resolution against settlements could be on the Security Council agenda. December 25 is a most inconvenient date.

Amona is one of the oldest and largest of the so-called "outpost" settlements established after the Oslo Accords. In contrast to earlier settlements, the outposts were set up without government approval. So they're not only illegal under international law, but under the laws by which Israel governs the West Bank. Many were built partly or completely on privately owned Palestinian land, a straightforward violation of property law.

But the Israeli army's Civil Administration didn't enforce the law. Sometimes it issued demolition orders, then did nothing. A 2005 government-commissioned report by attorney Talia Sasson found that state officials, up to the cabinet level, aided and abbetted outpost building. With limited time, Sasson wasn't able to trace a paper trail all the way to then-prime minister Ariel Sharon. But the outposts just happened to fill in gaps in the settlement blueprint that Sharon created back in the late 1970s, which was designed to prevent creation of a Palestinian state.

Amona was also the subject of one of the first major legal battles over outposts. In 2005, as nine real houses were going up at Amona, the Peace Now movement went to court, demanding that Civil Administration demolition orders be carried out. In Israel, legal challenges against government actions are fast-tracked to the Supreme Court, and the court ruled for Peace Now. In February 2006, acting Prime Minister Ehud Olmert sent police and troops to fight their way through thousands of young protesters and knock down the concrete shells of the houses. For settlers and their supporters, the battle became one of those mythic events that inspires pride, anger, righteous victimhood, and fantasies of a remake with a different ending.

The next suit on Amona was filed in 2008 by the Palestinian landowners with the help of Yesh Din, an Israeli human rights group. Their demand was straightforward: Remove the settlement; give us our land back. The court ruled for them. Now, at last, the government has exhausted all stalling tactics. "Amona will not fall again!" has become the slogan of the outpost's residents and supporters. The political party most closely tied to settlers, Jewish Home, is a member of Netanyahu's coalition and his main rival for right-wing votes. Netanyahu doesn't want a second battle of Amona.

Amona, though, is merely the flashpoint for the much larger issue. An Israeli army database, leaked in 2009, listed more than 30 settlements built at least in part on private Palestinian land. More lawsuits are pending. Right-wing politicians want a sweeping measure to protect the settlements-that is, to legalize the land theft. In parliament, Jewish Home is pushing legislation known as the Regularization Law. It would allow the state to grant settlers the right to continue using other people's land. The state would pay compensation to the owners. In all but name, this is expropriation.

This is a radical measure, as Cambridge University professor of international law Eyal Benvenisti explained to me. "For the first time, the Knesset would be legislating for ... the West Bank." Until now, Israel's declared legal framework for ruling the West Bank has been that of "belligerent occupation," meaning that it's outside the territory of the state and governed by the military. Countries don't normally pass laws for land outside their borders. The law would also would violate the 1907 Hague Convention, which among other things protects the property rights of the occupied population. And it would further weaken Israel's argument that its settlements don't violate the Fourth Geneva Convention of 1949, which says that an occupying power must not "transfer parts of its own civilian population into the territory it occupies." Israel maintains that it merely allows its citizens to move to the West Bank. "The moment the Knesset takes an active step that helps settlement," says Benvenisti, it weakens this argument.

Let me put this differently: Pass a law like that, you're saying "annexation" in a loud stage whisper. That's fine with hard-liners in Netanyahu's coalition, who at a minimum would like to annex the settlements.

Netanyahu, as I said, wants to maintain the more defensible facade of occupation. He also wants to maintain his coalition. So he flip-flopped on the bill. The Amona crisis upped the pressure. Last week, with Netanyahu's backing, the bill passed a major hurdle-a preliminary vote in the Knesset that sends it to committee. But due to a compromise with coalition moderates, the latest version doesn't supersede previous court rulings. That is, Netanyahu got the diplomatic damage of a step toward annexation-but still had to evacuate Amona.

In the latest twist, the government has offered Amona's residents to move them to land right next to the existing settlement, in return for a written commitment not to resist the evacuation. As I write, the settlers are weighing the offer. The catch is that the neighboring land is also privately owned, so the deal could collapse in court.

All this would be much easier for the prime minister if the Amona deadline had been just a few weeks later. Right now, Palestinian President Mahmud Abbas is seeking a Security Council resolution condemning Israeli settlements. A Palestinian delegation is about to hold talks in Washington aimed at agreeing on language that the outgoing Obama administration would not veto. The window of opportunity for the resolution closes on January 20 when Donald Trump is sworn in as president.

Even with the expropriation bill still in committee, says long-time Israeli diplomat Oded Eran, "I'm fairly sure that the very attempt to legislate it will cause the [Obama] administration to abstain, which means the resolution will pass." Eran, now at the Institute for National Security Studies in Tel Aviv, says that to get to a yes in Washington, the Palestinians will need to submit the resolution under Chapter 6 of the UN Charter. That means it won't include sanctions. Even so, he says, "it will change the atmosphere. It creates tools [for the Palestinians] to turn to other bodies, such as the International [Criminal] Court in The Hague. You can't know how far it will snowball."

It's possible that Netanyahu will succeed in turning December 25 back into an ordinary day, without police and protesters fighting in front of TV cameras on a hilltop. It's possible that he'll make it past January 20 without a Security Council resolution. The settlers' allies in parliament will still want to pass the Regularization Law. The irresolvable contradiction between "temporary" occupation and permanent settlement will remain.

In the face of this, the Netanyahu Doctrine will remain the same: to delay, to postpone, to put things off-and to hope that the world is distracted enough by problems elsewhere to ignore creeping annexation.