Under mounting pressure from the United States, Israel's prime minister will give a major policy speech on Sunday.
Israeli Prime Minister Benjamin Netanyahu convened his Cabinet ahead of a speech that will address two key U.S. demands: a halt to Jewish settlement activity and the creation of a Palestinian state.
Mr. Netanyahu has repeatedly rejected both, creating a rare rift between Israel and the United States.
The prime minister is keeping his cards close to his chest: He did not give his customary public remarks at the start of the Cabinet meeting.
He has been walking a diplomatic tightrope. He does not want to harm Israel's all-important ties with the U.S., but his coalition partners have warned him not to cave in to U.S. pressure.
Danny Denon is from Mr. Netanyahu's Likud party, which won national elections in February.
"The Likud won the election not to create a Palestinian state," Denon said. "We believe it is dangerous for Israel. The coalition that we formed is a coalition of people who are against a two-state solution."
Therefore, Palestinians expect Mr. Netanyahu to set down conditions that will be an obstacle to peace. Palestinian legislator Mustafa Barghouti.
"All the nice words that he could say will not change the real fact, and the fact that with this policy Israel is destroying the potential for (a) Palestinian state," Barghouti said.
Mr. Netanyahu's aides say he will set out his vision for peace and reconciliation. But he will say that Israel cannot make concessions alone without reciprocity from the Palestinians.