Updated

For Israel, President Obama’s announcement of basing a Palestinian state on the 1967 borders creates not only huge strategic and tactical issues, but practical ones as well.

About 6 percent of Jewish Israelis live outside the ’67 borders in the West Bank. Of the 350,000 Jews in the West Bank, about 270,000 live in the so-called "settlement blocks," which are on land relatively close to Israel’s original borders and would almost certainly be included in the “land swaps” the president touched on in his address Thursday. The land swaps essentially mean that Israel would give up some land on its side of the 1967 borders in return for keeping its West Bank settlements.

Many of these settlements are far closer to suburban towns in America than outposts on the Wild West. In settlements like Maale Adummin, there are 10-story apartment buildings, schools and shopping centers, which would most likely stay put and become part of a post-peace process Israel.

Now comes the more complex question of what to do with the roughly 80,000 settlers who live outside the settlement blocks, and would thus have to leave their homes to create the president’s vision of a Palestinian state.

While it's not impossible to move 80,000 people -- many of whom believe they are performing God’s work by settling the West Bank -- it will prove to be a very expensive, politically difficult and time-consuming process.

The precedent for such a move can be found on the other half of land the Palestinians claim for their state: Gaza.

In 2005, then Prime Minister Ariel Sharon ordered a unilateral disengagement in Gaza, withdrawing all Israeli troops and forcing 8,000 settlers from their homes. To say it proved a messy process would be an understatement, and six years later it still remains an open wound in Israel.

First, the cost of relocating the 8,000 people was expensive, as they had homes, schools and infrastructure that had to be left behind. Next came the very messy domestic political situation for Sharon. The vast majority of settlers in Gaza didn’t want to move from their homes and many had to be forced out by the Israeli Army, and pictures flashed around the world of violent clashes between religious settlers and soldiers.

Most settlers are on the far-right of Israeli politics and believe the West Bank should be part of the Israeli state, and they see themselves as fulfilling their religious duty by living there. It makes things far more difficult than sending over a moving van and asking or even ordering them to pack up.

In the past, when Israeli prime ministers discussed giving up part of the West Bank and withdrawing settlements, some settlers promised to fight to the “last drop of blood” to stay on their land, even if that meant fighting their own soldiers. Depending on the exact borders negotiated, Israel will have to resettle roughly 10 times as many citizens as in Gaza.

Not only would the 80,000 West Bankers have to be moved out, finding homes for them inside the borders would be difficult, especially since Israel already experiencing a housing crunch. Homes, schools, roads and infrastructure have to be built inside the new Israeli borders to accommodate all the people.

In addition to moving people and settlements, its assumed as part of any peace deal, the Israelis would have to move their security barrier to coincide with the new border. While an expensive undertaking -- just ask lawmakers in the U.S. who wanted to build a big wall along the Mexican border -- much of the barrier was built along the ’67 line as the Israeli’s have acknowledged during past peace negotiations in 2000 and 2004 they were willing to give up huge parts of the West Bank for a deal.

Also in question is what do with Israel's existing army bases and security facilities that dot the entire West Bank. The Israelis have long held that part of a final deal would be a demilitarized Palestinian state, and the retention of Israeli soldiers on the border with Jordan.

That demand is rooted in recent history. Since the withdraw of the Israeli Army and settlers from Gaza, Hamas militants inside the strip have launched thousands of rockets into southern Israel, and last month they used a laser-guided, anti-tank weapon to blow up a school bus inside southern Israel. The tactical and strategic military situation of the West Bank makes it much more dangerous for Israel to give up than Gaza, as the West Bank is the literal high ground overlooking the country’s major population centers.

Bankers have a favorite line at the bottom of loan documents, “all of the above not withstanding," and it applies wonderfully here.

Assume for the moment that the 80,000 settlers leave willingly, money is found to compensate the settlers and build them new communities and the two sides agree on a way for Israel to ensure it doesn't have the same threat from a new Palestinian state that it does from Gaza. That phenomenally optimistic assumption still leaves two huge problems:

First is the so-called "Palestinian right of return," or the basic question of what to do with Palestinian refugees who left their homes when Israel was created. The general agreement between observers here is that a final deal would mean they would be allowed to return to the new Palestine, but not Israel.

And the second major problem inherent with the '67 border requirement: the entire Old City, including the most holy site in the Jewish religion, the Wailing Wall, sits on the other side of that border.

Both the Palestinians and Israelis claim Jerusalem as their capital and the Wailing Wall is on the Palestinian side of the “Green Line,” which is diplomatic speak for the border before the Six-Day War broke out in 1967.

In any final status agreement, both sides would have to agree about what to do with Jerusalem and the holy sites of both religions, which has proved thus far to be an uphill battle, with the Israelis demanding a undivided capital and the Palestinians refusing to make a deal without large parts of the Old City and East Jerusalem.

No one said making peace was easy.