Why President Obama's approach to settlements is better for Israel than Benjamin Netanyahu's is.

The settlements became Israel's largest ongoing public project. But the costs are scattered through the national budget, woven into outlays for the ministries of Defense, Housing, Education, Interior, and others. There is no overall total available. The lack of transparency not only prevents informed debate of the costs, it is another blow to democracy.

From the start, settlement activists and supportive officials have put their cause above the law. A Cabinet minister funded the very first settlement in occupied territory—in the Golan Heights in 1967—with money designated to give jobs to the unemployed. A recently leaked Israeli army database shows that more than 30 government-approved settlements are built partly on privately owned Palestinian land. Since the mid-1990s, in a massive rogue operation, more than 100 so-called "outpost" settlements have been established without legally required government approval—but with funding and other assistance from multiple government agencies.

Through settlement, the state of Israel has reverted to an acre-by-acre struggle between Jews and Palestinians for control of land. The settlement enterprise has reversed history, turning Israel from a state into a national movement. And the dilemma remains: Israel cannot be a democracy with a Jewish majority and at the same time rule the West Bank. The solution today, as it was when the United Nations debated the Palestine question in 1947, is partitioning the land between two states.

Netanyahu, looking backward, does not see this. Settlers, he said Sunday, are a "pioneering, Zionist community with values." His choice of language is revealing: It was during the pre-independence struggle that "pioneering" was the highest ideal. Obama, looking forward, recognizes that an end to settlement growth is an essential step toward division of the land. When that division takes place, it will not only bring the establishment of a Palestinian state. It will bring the re-establishment of Israel.