1. As with most things UN/International Law, there is more sound than fury. The practical implications may extend no further than the next news cycle.
2. If one is genuinely interested in a peaceful resolution, taking the question of settlements off the table is a tactical error, albeit one that Obama made many years ago. Settlement expansion is the primary incentive the PA has to negotiate a final agreement, as opposed to simply holdout and enjoy international aid and sympathy. By freezing the settlements, Obama/UN essentially puts the future Palestinian state in escrow, which is ideal for Palestinian leadership because they can enjoy the fruits of perpetual conflict without suffering any costs. It is not a coincidence that the three Palestinian preconditions for negotiation are non-starters for the Israelis: Right of Return; Divided Jerusalem (including the Temple Mount) and ’48 Armistice Lines. That position tailor-made for perpetual conflict. So-called “anti-normalization” efforts, also known as “anti-peace” efforts, fall into the same bucket.
3. The resolution may backfire for the Palestinians (and the UN), insofar as it provokes a response from Trump/US. Sympathy for the Palestinians (correctly) tends to ebb and flow with sympathy for Arab/Muslims generally, and that sympathy is currently quite low. The victims of car-ramming attacks in Berlin are more likely to sympathize with the victims of car-ramming attacks in Tel Aviv and Jerusalem than their perpetrators. The UN’s stature will be harder to erode, but as with the EU, progressive technocracy and its adherents aren’t winning any popularity contests. At the very least, the resolution is a stick Israel no longer has to fear.
4. In general, reference to “international illegality” is specious. Law is made, and not found. When it comes to public international law, there are few (if any) prior rules with sufficient specificity and precedential value that can be reliably applied in any particular case, or shape the reasonable expectations of the parties. There simply isn’t enough case law, and each new case is simply too complex and distinct to be determined by prior cases. Every issue is more or less sui generis. In other words, if there is any “law” to speak of, it is no better than guesswork and there is very little reason it ought to be followed as good or useful law. When international technocrats declare the settlements “illegal” they are simply expressing their preference for their own technocratic authority: “we told you to stay on that side of the line, and you’re not listening to us!” Whether technocratic say-so is or ought to be authoritative, however, is a different question (that I suspect most people answer in the negative, at least when it applies to them). Likewise, when people cite the “international consensus” on the “illegality” of the settlements, it says nothing about whether the “law” ought to be followed. It’s effectively the same as observing the consensus among international technocrats that international technoracts ought to be listened to. That’s what the kids call “Breaking News.”
5. The most charitable interpretation for Obama is that a reaction from Trump is precisely the thing he is counting on. Obama may well understand that perpetual conflict favors the Palestinian leadership, and while he lacks the political capital or courage to change that equilibrium by turning off the international aid spigot, that does not apply to Trump. Properly motivated, Trump may well end the conflict by giving the Palestinians a take-it-or-leave-it state, while supporting partial annexation and incentivizing normalization. At the same time, he (and Putin) can provide cover for Gulf countries, Egypt and Jordan to say “sorry, our hands are tied and we’ve got bigger fish (Iran and ISIS) to fry.” The strongest push back will come from the humanitarian industrial complex in Europe and (to a lesser extent) the US, but again, their cause celebre faces a healthy dose of skepticism from ordinary Westerners who now have firsthand experience with Israel’s neighbors.