There is no viability for a Palestinian state if they keep Ariel, warned Palestinian negotiator Saeb Erekat.

Twenty kilometers (12 miles) may not sound like much, but the distance is critical in the argument over territory. Ariel is midway into the West Bank, while heavily populated mid-Israel to the west is also just 20 kilometers (12 miles) wide.

And Ariel isn't alone. Its satellite settlements house 30,000 people — 10 percent of the Jewish population of the West Bank.

Nachman dismisses the notion of Palestinian statehood, calling it a security threat, and he believes no Israeli government can afford to dismantle his town. And even though he laments the current freeze on settlements imposed by Netanyahu, he dreams of tripling Ariel's population to 60,000 within a generation.

There is precedent for uprooting settlers — Israel evacuated several thousand when it returned the Sinai Desert to Egypt in 1982, and another 8,500 when it left Gaza in 2005. But Ariel poses a unique dilemma — its size makes it difficult to evacuate, but its location makes it hard to annex.

And as Ariel grows, so does the dilemma.