U.S. Criticizes Israeli Plan for Settlement Expansion

The United States chided Israel on Friday for its plans to build 600 more homes in West Bank Jewish settlements, saying the move was “unhelpful” to the peace process.

“We think that continued settlement activity is unhelpful in terms of the process of movement on peace, as well as the achievement of the president’s vision of two states living side by side,” State Department spokesman Richard Boucher said.

His remarks were slightly tougher than the U.S. reaction Thursday, when Secretary of State Colin L. Powell expressed only “concern” about the settlement expansion. Boucher said Powell had not telephoned Israel to express his displeasure over the policy, but other officials said calls to the Israeli government would be made soon.

By law, the Bush administration must deduct from Israel’s $9-billion package of loan guarantees any money Israel spends on nonmilitary expenditures in the West Bank and Gaza Strip Palestinian territories, and must inform Congress of the amount of the deduction by Sept. 30. This year, the State Department missed that deadline because it was still negotiating with Israel.

On Friday, Boucher hinted of a reduction, saying, “We ... have decisions to make on loan guarantees and deductions, and we’ll have to take into account the settlement activity that does occur as we make those decisions.”

Administration officials have suggested that they might also deduct funds Israel was spending on its controversial security barrier. On Wednesday, the Israeli government approved extending the barrier deep inside the West Bank to protect settler communities. There will, however, be gaps in the fence, which has already cost Israel more than $1 billion.

An investigation published in the left-leaning Haaretz newspaper found that Israel was spending an estimated $550 million a year on settlement activity, roughly twice the official Israeli figure. In the past, the most the U.S. has deducted for settlement activity has been $437 million, according to Americans For Peace Now, a group that opposes settlement construction in the West Bank and Gaza.

Even if the administration reduced the loan guarantees by the higher figure, it would be largely symbolic, said Lewis Roth, the group’s assistant executive director. But it would “send a strong public message to Israeli voters that [Prime Minister Ariel] Sharon does not necessarily have the White House in his back pocket,” Roth said.

Several of the 600 new homes are planned in the sprawling settlement of Ariel, where nearly 20,000 Jewish settlers live and which has been at the center of the dispute over whether to include such neighborhoods on the Israeli side of the security barrier.

The Israeli government maintains that the new construction is in line with its policy of allowing “natural growth” in the settlements. But a U.S.-backed Middle East peace plan does not allow for such growth, calling instead for a freeze on all expansion and the dismantlement of new outposts.

Ahmed Korei, the incoming prime minister of the Palestinian Authority, accused Israel of trying “to sabotage the possibility for establishing a viable Palestinian state.” The decision to allow more homes “proves that the Israeli government is not serious about peace and that its goal is to draw the borders unilaterally,” Korei said Thursday after the decision was announced.

Only a few days earlier, the Israeli Housing Ministry put out a call for bids to build 400 more units in another West Bank settlement called Har Homa, outside Jerusalem, Haaretz reported Friday. Since the start of the year, the government has issued bids for more than 1,900 new homes in the settlements, the newspaper said.

Efron reported from Washington and Chu from Jerusalem.