Israel builds more settler homes with US nod

JERUSALEM - Israel is building 100 new homes in a settlement outside Jerusalem, political sources said on Monday, after Washington signalled it could accept growth in Jewish enclaves on occupied West Bank territory.

Construction of the new neighbourhood at Har Gilo, already home to some 120 settler families, began earlier this month and is due to be completed by the end of the year, the sources said.

It was not clear if the new project would expand Har Gilo onto undeveloped land. The United States, the key Middle East mediator, hinted on Saturday it could accept construction within the existing boundaries of settlements, after previously insisting on a building freeze.

Palestinians said the US move undermined the peace process and their dream of a viable state in the West Bank and Gaza Strip.

The Bush administration said it was amenable to some limited growth in West Bank settlements to help embattled Israeli Prime Minister Ariel Sharon push through his plan to withdraw from occupied Gaza amid opposition from his far right.

Washington had long called on Israel to suspend settlement building in accordance with a US-led "road map" to peaceful Palestinian independence in the West Bank and Gaza.

But the "road map" has been stymied by persistent violence. Israel blames Palestinian leaders' failure to rein in militants waging an almost 4-year-old revolt. Palestinian leaders blame constant Israeli army raids which they say provoke violence.

Witnesses and medics said Israeli troops patrolling the Gaza border overnight shot dead an unarmed Palestinian in Rafah, a refugee camp known as a militant stronghold. Military sources said soldiers had opened fire at a suspected gun nest.

Palestinians, who fear uprooting Gaza settlers is a cover for strengthening Israel's hold on bigger West Bank enclaves, accuse the United States of tearing up its own peace plan.

"I do not believe that America says now that settlements can be expanded. This thwarts and destroys the peace process," Palestinian Prime Minister Ahmed Qurie said on Sunday. His censure was echoed by Arab League Secretary-General Amr Moussa.

While the White House denied any official change in the US stance, an official said efforts were under way to clarify with the Israelis what "settlement activity" means.

Based on this new understanding, US officials said Washington could agree to new construction provided it did not take place outside the boundaries of existing settlements.

Palestinians are especially concerned that Israel will seal its hold on Arab East Jerusalem -- captured along with the West Bank and Gaza in the 1967 Middle East war -- by increasing settlement around the holy city. Israel annexed East Jerusalem as its capital in a move not recognised internationally.

A senior Israeli source said there was a clear understanding that the United States was trying to help Sharon see through his plan for "disengagement" from conflict with the Palestinians.

It has stirred rebellion within Sharon's right-wing Likud party, which last week barred him from forging a coalition with centre-left Labour opposition he needs for a reliable parliamentary majority in favour of withdrawing from Gaza.

"Disengagement" entails evacuating all 8000 settlers from tiny Gaza while holding onto several blocs of West Bank enclaves where the bulk of the 240,000 settlers live.

Accepting limited construction within existing settlements could also benefit President George W. Bush, who is reluctant to upset Jewish-American voters who back settlements, and other conservative backers of Israel, ahead of the November election.

- REUTERS