British officials fear US President Donald Trump may formally recognize Israeli "sovereignty" over illegal settlements in the occupied West Bank, a move they warn would deal a serious blow to prospects for a "two-state solution".

The concern comes after Britain, France, Australia, Canada, and other states formally recognized Palestine in recent days, before and during the UN General Assembly in New York. UK Prime Minister Keir Starmer said the recognition aimed to “revive the hope of peace and a two-state solution.” French President Emmanuel Macron echoed the sentiment, telling the assembly, “The time has come.”

Trump’s potential response

Trump criticized the recognition of Palestine during a UN speech on Tuesday, calling it “a reward for these horrible atrocities, including October 7.” Government insiders in London now believe he may go further by endorsing Israeli control over West Bank settlements, which would undermine international consensus on Palestinian statehood.

Arab and European leaders have launched a lobbying campaign to dissuade him, warning that recognition of settlements would cross a red line. Anwar Gargash, senior advisor to the United Arab Emirates, said earlier this month, “Annexation is a red line and peace through a two-state solution must remain the path forward.”

Pressure from 'Israel', allies

Within “Israel", Prime Minister Benjamin Netanyahu is under pressure from his right-wing coalition to "annex" parts of the West Bank outright. Finance Minister Bezalel Smotrich has said expanding settlements would “bury the idea of a Palestinian state.”

Netanyahu said he will not decide until after meeting Trump next week at the White House. Meanwhile, Trump’s allies are divided: US Ambassador to “Israel” Mike Huckabee recently said European recognition of Palestine could embolden “Israel” to "annex" more territory, while Jared Kushner has urged Trump not to undermine the "two-state solution".

Blair's plan, regional pushback

Former UK Prime Minister Tony Blair has reportedly presented a plan for post-war Gaza governance under a UN-backed international transitional authority. British officials described it as “the only game in town.” However, recognition of West Bank settlements by Trump would risk collapsing Arab support for such an initiative.

Arab leaders, who will meet Trump privately in New York this week, are expected to press him not to endorse Israeli actions in the West Bank.

The UAE, a key signatory of the 2020 "Abraham Accords", views "annexation" as a direct threat to its normalization agreements with “Israel". Trump’s stance, therefore, could determine not only the future of the "two-state solution" but also the stability of the wider regional order.