Answer

There are two important points before making a decision:
1. First of all, we need to decide what we want, and only afterward think about how to implement it.
2. You can’t discuss one step or another in isolation from an overall policy. Like during the disengagement, when people asked me whether I was for it or against it, I said the question wasn’t well defined. Beyond the question of whether to disengage, you also have to decide what we’ll do in every scenario that develops. Talking only about disengagement has no meaning at all. The same is true of the general question you raised: you have to decide on the overall policy, and within that framework decide whether to annex or not. Deciding on annexation in isolation from an overall policy is meaningless.
 
In general, I would handle the matter in two steps:
A. First, we should announce that we are severing ties with the Palestinians and are not willing to talk with them about anything, on any issue, until they decide who represents them—that is, until they choose a body that represents all of them. There is no point talking with the Palestinian Authority while Hamas is waiting on the other side, and vice versa. You reach some agreement with the Authority, then Hamas attacks, and when we respond the Authority joins the action against us, and so it goes in circles. It’s ridiculous. There’s no point talking with anyone who is not their agreed-upon representative. If we announce this, in my opinion the world will absolutely understand and accept it.
Obviously they can’t reach an agreed-upon representative, because if they unite with Hamas then clearly there will be no agreement to conduct negotiations with us. And if they don’t reach an agreed representative, we won’t agree to talk. But then, in either of those two possibilities, it will be clear to the whole world who is to blame for the situation being stuck, unlike today when they blame us.
B. If they do not arrive at an agreed-upon representative (and that is probably what will happen), we should announce what we are going to do and do it unilaterally within a set time frame. I am in favor of dividing the territory in a way that seems reasonable to us, forcibly evacuating every isolated settlement, and setting up a Berlin Wall (monetary as well. Let them choose their own currency, generate electricity, and disconnect from us completely) and not letting anyone pass. Just do everything unilaterally. That’s all. After that, respond with full force and without any restraint to any step they take.