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Israel to Expand West Bank Settlements With 600 Homes

By Greg Myre

and Steven R. Weisman

The New York Times -- JERUSALEM

Israel indicated on Thursday that it intends to build about 600 new homes in three large West Bank settlements, a move that Bush administration officials in Washington said would undercut the Middle East peace plan and could bring a cut in American assistance to Israel.

The Housing Ministry placed an advertisement seeking bids to build the homes one day after Prime Minister Ariel Sharon’s government took another step that American officials said was opposed by the administration: approval of the construction of barriers deep inside the West Bank to guard Jewish settlements.

Palestinians expressed anger at both decisions, with the Palestinian leader, Yasser Arafat, calling the barrier a “wall of racism.”

“What does the wall mean?” he said at his badly damaged headquarters in the West Bank city of Ramallah. “It means that this government is destroying and ending the peace process. How long will this silence in the face of Israeli crimes last?”

The American-backed Middle East peace plan, known as the road map, has stalled as violence has continued; neither side is meeting obligations listed in the first phase of the plan.

Under the first phase of the plan, Israel is supposed to halt all settlement activity. But Israeli officials take the position that Israel is not required to do this until the Palestinian leadership cracks down on violent Palestinian factions.

The latest Israeli moves have put President Bush in a difficult position, American officials said, adding that despite American displeasure it was not clear that the administration would engage in a public confrontation over the steps on settlements and the barrier.

While the administration has backed Israel in charging that the failure of the Palestinians to crack down on terrorism is the main cause of the breakdown in the peace plan, American officials appear to be increasingly impatient with Israeli steps.

A measure of the administration’s current dilemma is that John Wolf, the special administration envoy assigned to monitor progress on the peace plan, has returned to the United States. That is a sign that there is no progress to monitor, administration officials say.

One way to pressure Israel that the United States is considering is to threaten to reduce loan guarantees by whatever sum that Israel spends on expanding the barrier or the West Bank settlements. Top American officials discussed the issue at the White House on Thursday but did not decide to take such a step, administration officials said.

“We’re willing to use our leverage,” said a senior administration official. “We will be examining what Israel is doing closely and take it into account.”

Israel’s decision to allow the new homes in settlements was made clear in an advertisement published in the Haaretz newspaper inviting bids from construction firms for the building of the homes in various parts of the West Bank.

The plan calls for 530 additional houses in Betar Ilit, a fast-growing settlement south of Jerusalem, along with 50 new homes in Maale Adumim, to the east of Jerusalem, and 24 more in Ariel, a settlement to the north of Jerusalem.

In the government decision on Wednesday, Ariel was one of the settlements to be shielded by the new barrier.