ISRAEL TO BUILD 750 HOMES IN E JERUSALEM

Analysis by Peter Hirschberg

(IPS) JERUSALEM -- The decision this week by Israeli Prime Minister Ehud Olmert to allow resumption of the construction of hundreds of housing units in a West Bank settlement is yet another blow to already faltering Israeli-Palestinian peace talks.

Incessant Hamas rocket attacks on communities inside Israel, and Israeli retaliation for those attacks has hardly produced a climate that is conducive to peacemaking since Olmert and Palestinian President Mahmoud Abbas agreed to head back to the negotiating table three months ago. Now, Israel's plans to build hundreds of housing units around East Jerusalem, which the Palestinians claim as the capital of a future state, has drawn sharp international criticism and accusations it is undermining renewed peace efforts.

Olmert's decision will allow for the construction of 750 homes in the West Bank settlement of Givat Ze'ev near Jerusalem. The ultra-Orthodox Shas party, which has campaigned strongly for renewed building in the area, took credit for the decision. Party leader Eli Yishai has promised there will be more building in the settlements, and he is now pressing the Prime Minister to allow construction in an East Jerusalem neighborhood.

"After eight deaths, for every victim 100 housing units should be built," Yishai said, suggesting the decision to build was connected to the attack last week in Jerusalem when a Palestinian gunman shot dead eight teenage students in a Jewish religious seminary in Jerusalem. Government spokesmen have denied any linkage between the attack and the settlement construction.

But Yishai's comments are testament to Olmert's political weakness. The Prime Minister has stated that the government will not build in West Bank settlements, but he is aware that if Shas bolts his ruling coalition, he will be robbed of his parliamentary majority and could face an election he doesn't want. Olmert's decision to allow the construction followed a Shas threat to abstain in a no-confidence vote against the government.

A few weeks earlier, Olmert told the Palestinians that the issue of the status of Jerusalem would not be on the agenda in negotiations. The Israeli leader's announcement came after Shas said it would leave the coalition if Jerusalem was discussed.

"For years governing coalitions have been using the excuse (of political survival) to continue with the settlement policy," says Akiva Eldar, co-author of 'Lords of the Land: The War over Israel's Settlements in the Occupied Territories, 1967-2007'.

Eldar, who is strongly critical of the settlement policy, says the international community -- the U.S., UN and EU -- does not exert enough pressure on Israel when it comes to the ongoing expansion of settlements. "Let's assume that the U.S. said to Israel, 'We're not interested in what Shas has to say'," he told IPS. "How would the government react then? It's a question of who applies more pressure on the government. Where is the international community?"

Olmert and Abbas renewed peace talks following a U.S.-led summit in Annapolis, Maryland (in the U.S.) last November, and the sides pledged to reach a deal by the end of 2008. They also agreed that all issues, including Jerusalem, borders, settlements and the fate of Palestinian refugees would be on the negotiating table.

The road map peace plan, which the sides committed to in 2003 but which has never been implemented, calls on Israel to halt all settlement construction and to dismantle dozens of settlement outposts that have been set up in the West Bank in recent years. The plan also requires that the Palestinians end violence and that the Palestinian Authority dismantle armed groups.

But Israel argues that it is not barred from building inside existing settlements, especially the ones it wants to keep in any future peace agreement with the Palestinians -- a position that is at odds with the international community. "We never promised a freeze on all construction in the West Bank," Housing Minister Ze'ev Boim, a close Olmert associate, declared this week.

"In no way did we commit to freeze construction in the settlement blocs," said Mark Regev, a government spokesman, using the term Israeli governments have adopted to describe those settlement areas it wants to keep in a final agreement with the Palestinians. "The Prime Minister said publicly before, during and after Annapolis that construction will continue in the large settlement blocs."

Eldar says that the Palestinians have never accepted the "settlement bloc" idea and that continued Israeli settlement construction "sends a message to the Palestinian man in the street that Israel is not committed to agreements."

Israeli Foreign Minister Tzipi Livni broke with the government line this week, telling students during an address at Harvard University that the expansion of settlements was "unhelpful".

Describing the construction approved by Olmert as "not dramatic", Livni insisted that it was "not the Israeli government policy to expand settlements these days."

The Palestinians are unconvinced. For them, settlement construction is a direct threat to their aspiration of building a viable state in the West Bank that is territorially contiguous and is not a patchwork of disconnected cantons. They see construction in East Jerusalem, which was captured by Israel in the 1967 Mideast war, as an attempt to undermine their presence in the city and their claim to it.

Saeb Erekat, a senior aide to Abbas, labelled the settlement construction decision as "another slap in the face of the peace process." He said it was "harming and destroying" the credibility of the Palestinian Authority in the eyes of its own people and was also "undermining all efforts being exerted to revive the negotiations."