A story with an ominous implication came to life Monday morning in the Israeli news media. And it went like this: Britain, France and Holland were so displeased with Israel's announcement on settlement expansion, they were considering recalling their ambassadors from Tel Aviv in protest. Subsequent reports said such a drastic response was off the table. But the episode still highlights the diplomatic bind Israel finds itself in right now. The condemnation was sparked by an Israeli announcement to restart a controversial settlement project east of Jerusalem in the West Bank. The concern is that Jewish settlement building in the so-called "E-1" area would make it impossible to create a viable Palestinian state. So far the Israeli government is showing no sign of backing down, despite facing what could be unprecedented diplomatic isolation. At Yizhak Alon's Jerusalem barber shop, they heard about the controversy on the radio. But as he worked on a customer's hair, Alon said that he's got full faith in Israel's prime minister, Benjamin Netanyahu. "Bibi," Alon said using Netanyahu's nickname, "there's no substitute for this prime minister." What he's doing is just fine, Alon said. Netanyahu is responding to the Palestinians. They went against the Oslo agreements by going to the United Nations. The barber adds that he has no problem with new Israeli settlement building in the West Bank, even if the Europeans complain about it. But here's a question. "Do you worry if the Americans get angry about the settlements more than if the Europeans get angry?" Alon was asked. "That's not good," Alon said. "Of course it's not good. The US is Israel's most important ally. The Americans were against the Palestinian president's trip to the United Nations too. So, if they're angry about settlement building, it's a problem, he said." The timing of this decision on settlement building is troubling, said Anat Kurz of the Institute for National Security Studies at Tel Aviv University. It comes after Israel received widespread support from the US and Europe during its recent military offensive in the Gaza Strip. And Kurz said it sends a message. "This was intended as a show of dedication to what the government sees as Israeli interest for the whole world to see," she said. Kurz said putting Jewish settlements in "E-1," an area east of Jerusalem, will be seen as an Israeli attempt to put obstacles in the path toward peace with the Palestinians. "Israel is isolated in the Middle East. The United States is also getting isolated regarding its Middle East policies," she said. The United Nations has condemned the settlement plan as "an almost fatal blow" to peace. Russia, Germany and the US State Department have expressed their opposition. And Monday, the UK, France and Sweden summoned Israel's ambassadors to protest the announcement. Jonathan Rynhold of Bar Ilan University said Prime Minister Netanyahu ought to take this seriously. The Americans, the Europeans, and the Palestinians, he said, have all drawn a red line at putting settlements into this part of the West Bank. "What Israel would gain by doing this is largely unclear to me. And what it would lose in terms of its diplomatic standing, it's relations in a deeper sense in Europe, it's relations with the US, is very, very clear," Rynhold said. But Netanyahu is standing firm. He's called the Palestinians' move at the UN a gross violation of previous agreements. And that he intends to "carry on building in Jerusalem and in all the places that are on the map of Israel's strategic interests."