Palestinian President Mahmoud Abbas is losing political ground to the terrorist group Hamas and is now striking a "no compromise" attitude with Israel.
Israeli Prime Minister Benjamin Netanyahu has warned Palestinian leaders not to declare their own state, but Abbas said there will be no negotiations until Israel stops all Jewish building in the West Bank and east Jerusalem.
He also warned he may ask the United Nations to recognize a state of Palestine.
However, he'll have to do it without European help. European Union Foreign Minister Carl Bildt said Tuesday that now is not the time for unilateral declarations.
Netanyahu also said such a move wouldn't be wise.
"There is no substitute for negotiations between Israel and the Palestinians," he said. "Any unilateral action would only unravel the framework of agreements between us and can only lead to one-sided steps on the part of Israel.
"The way to reach peace is by solving the problems around the negotiations table," Netanyahu added.
Some Palestinians claim they already have declared a state.
"Now it's time to transfer this declaration to a realistic political track and this begins with the recognition of the security council of the state of palestine of the '67 borders with east Jerusalem as its capital," said Chief Palestinian Negotiator Saeb Erekat.
Connecticut Sen. Joe Lieberman, who's in Israel this week, said the only solution will come from Israelis and Palestinians sitting down together.
"I call on our allies in the Arab world to stop this now because it's going to be a destructive waste of time," he urged. "Let's do everything we can to get Israel and the Palestinian authority back to the negotiating table. That's the only way to make progress here."
The U.S. is almost certain to veto any U.N. Security Council measure that would recognize a Palestinian state without Israel's consent.