The insistence by the Palestinian President Mahmoud Abbas that he will present a request for full UN membership for Palestine in its 1967 borders to Secretary General Ban Ki-moon at the General Assembly meeting later this week - although telegraphed months in advance - has sent shock waves through international relations, and Israeli and US domestic politics as well.
Mr Abbas could have announced that he had already submitted this letter and that it is a fait accompli. Instead, he gave world leaders another week to act. So far Israel, the United States, the European Union and the Middle East Quartet have provided him with virtually nothing he can present to the Palestinian public as a plausible alternative.
Renewed negotiations, a new framework for talks or a statement clearly outlining the contours of a two-state solution might have sufficed. None of these have been forthcoming, but the window of opportunity is still open.
There are genuine reasons of state for this Palestinian move, no matter how risky and even potentially disastrous it might prove.
Palestinians simply cannot live with a status quo involving continued occupation and expanding settlement with virtually no prospects of a serious resumption of bilateral talks with Israel. The negotiating process brokered by the United States looks incapable of overcoming the impasse between the two sides and the sense that something drastic is required to communicate the level of Palestinian desperation is widely shared.
There are also domestic political considerations. The secular, nationalist Palestinian leadership in Ramallah knows that if this deadlock continues indefinitely, at some point Palestinian society will conclude their strategy of achieving Palestinian independence through negotiations with Israel, diplomacy and institution-building has permanently failed. They will then look for an alternative, and an Islamist one is already ruling in Gaza.
But the potential damage to the Palestinian national interest and project can hardly be overstated. The Republican-controlled US House of Representatives has made its willingness to slash or even eliminate US aid, the single biggest external source of PA revenue, crystal clear.
Israel too has threatened unspecified "harsh measures" in response. If the Palestinians are gambling that the US and Israel will ultimately conclude they need the Palestinian Authority as much as it needs their cooperation, they may be in for a nasty surprise.
As Mr Abbas himself has repeatedly acknowledged, a negotiated agreement is the only choice for the creation of a Palestinian state. And there is no alternative broker other than the United States. A crisis in relations with the Americans by provoking a veto in the Security Council is unlikely to enhance the prospects for genuine, rather than virtual, Palestinian statehood.
If Palestinians are confident that Arab states will make up any shortfall from a cut in western aid or Israel withholding Palestinian tax revenues, they may face another serious disappointment. In The New York Times, Saudi Arabia's Prince Turki Al Faisal said that his country had "earmarked $2.5 billion [Dh9.2 billion]" for the Palestinians since 2009. That may be true, but no such figure has actually been delivered. Palestinians can expect generous pledges from Arab states, but must doubt the extent to which they will be fulfilled. And aid, if it is provided, would certainly come with significant political strings attached.
The United States and Israel are plainly not going to provide the Palestinians with any real alternative. The European Union, however- which collectively gives more than twice what the US does to the PA annually - finds itself uncomfortably divided among three camps: those inclined to support, those which oppose and those that are ambivalent about the Palestinian UN bid.
In its own interests, the EU has been working to find an alternative formula in the General Assembly that it can unite behind and also provide Palestinians with a significant upgrade in status. The major stumbling block has been that upgrading Palestine to a non-member observer state in the UN might give it access to the International Criminal Court and other forums in which it could pursue charges against Israel, which is unacceptable to some key European powers.
There has even been serious consideration of creating a new legal status for Palestine that would make it a non-member state, or something extremely close, but without access to these international legal enforcement bodies. The Middle East Quartet has also been working on a compromise to avoid a universally damaging confrontation.
It is still possible for Palestinians to make both their point and advance their international status without a crisis in relations with both the United States and much of Europe. Moreover a Palestinian bid for full membership could be bogged down in the UN apparatus for months or even indefinitely. A reasonable compromise is in everyone's interests.
Most important is the day-after scenario that will follow whatever takes place at the UN this week. The worst thing that Israel, the US Congress and others could do is cut funding to the PA, leaving Palestinians on the ground tangibly worse off than they were before.
Frustration and despair could provoke an outburst of anger and even violence, turning a difficult diplomatic mess into an unmanageable political and security nightmare for Israel and the PA alike.
Any such move designed to "punish" the Palestinians is also likely to backfire on Israel and the United States. Cooler heads should prevail at the UN, but what is more important is to prevent an irrational overreaction that takes a bad situation and makes it potentially catastrophic.
Hussein Ibish writes regularly on Middle East affairs for numerous US publications, is a columnist for Now Lebanon and blogs at www.ibishblog.com