As Israel moves towards annexing more than 30 per cent of the occupied West Bank next week, Palestinians fear they are entering an era where hope for a two-state solution and independence may vanish for good.
Palestinian President Mahmoud Abbas announced on May 19 that he would withdraw from all agreements with Israel in response to the plan.
And leaders of the Palestinian Authority, which has limited self-rule over the territory, said they would dissolve the body if Israel proceeded.
“The implementation of the annexation plans in the occupied Palestinian territories is an illegal step that will entail that Israel assume all responsibilities for the occupied land, according to the Fourth Geneva Convention as the occupying power," Mr Abbas said on Wednesday.
Israeli Prime Minister Benjamin Netanyahu has repeatedly pledged to annex West Bank settlement areas on July 1.
After swallowing occupied East Jerusalem, Israel aimed to take the Jordan Valley and the scattered settlements nearby.
The Israeli design was tied to the US Middle East peace plan released in January, which designated land in the occupied West Bank as part of Israel.
The annexation will end any hope for a Palestinian state and will leave Palestinians with nothing but isolated pockets of land and a form of apartheid, analysts said.
The Palestinians would be left with no choice but to consider their most serious response to Israel's policy: dissolving the authority.
“We have informed all countries, including the US and Israel, that if Israel moves forwards with annexation, Israel will have to bear its full responsibilities as the occupying power,” said senior Palestinian official, Hussein Al Sheikh.
“We are not agents for the Israeli occupation. We will never accept to play this role under any circumstances.
“The existence of the Palestinian Authority is one of the outcomes of the Oslo Agreement which is now dissolving.
"We will never agree the PA to be reduced to providing services. We don’t want to do this but Netanyahu is leaving us no choice.”
A financial crisis within the PA increased the likelihood that it would be dissolved.
The economic problems were caused by the coronavirus pandemic, which has devastated an already weak Palestinian economy, and a standoff between the authority and Israel on tax revenue.
Last month, the PA rejected revenue Israel collected on its behalf, after Israel made the transfer of money a condition of security co-ordination with the Palestinian body.
This has left the PA with of one of its most severe financial crises since its inception. Tax revenue represents 63 per cent of its budget.
As a result, the it was unable to pay its 180,000 employees their salaries in May and the Ministry of Social Affairs could not pay out monthly benefits for the poor.
The PA was expected to introduce drastic austerity measures in the weeks ahead.
After threatening to dissolve the authority, PA officials reportedly told the Israeli military liaison office that in the event of annexation, Defence Minister Benny Gantz was responsible for the salaries of Palestinians employees.
Tareq Baconi, the International Crisis Group's analyst for the Palestinian-Israeli conflict, told The National that the official Palestinian response to annexation was deterrence.
"Pre-emptively ending security co-ordination and revoking agreements with Israel are both an attempt to show Israel what the cost of annexation might be, and to attempt to influence the Israeli leadership not to proceed with these steps," Mr Baconi said.
In recent years, the calls from Palestinians for a single binational state as opposed to the conventional two-state solution have increased.
But the PA’s leaders said on many occasions that they wanted to stick to a two-state solution because it was "more realistic" and "the solution that’s consistent with international resolutions".
While Palestinian officials talked of dissolving the PA, Israel continued to prepare for annexation.
On June 18, the Israeli army placed concrete blocks on roads that lead from occupied West Bank villages to the Jordan Valley.
All Palestinian factions condemned the Israeli plans and agreed to a campaign of non-violent resistance across the West Bank.
Protesters will have to strike a balance between taking to the street and avoiding a sharp increase in the number of coronavirus cases in the West Bank and East Jerusalem.
Palestinians have also appealed to the international community for support.
Last week, there were calls from politicians across Europe for punitive measures against Israel and a recognition of the state of Palestine.
Ahmed Majdalani, a member of the Palestine Liberation Organisation’s executive committee, called on the international community and "specifically all countries that have economic relations with the occupation" to cut business ties with Israel.
Mr Majdalani said countries should "withdraw all investments in response to its violation of international law, especially in the ongoing process of annexation of the Palestinian territories".