JERUSALEM AND WASHINGTON — Israel signaled its intention Friday to build hundreds of new homes for Jewish settlers in the West Bank, provoking a new clash with the Obama administration and complicating a U.S. effort to restart Middle East peace talks this fall.
Prime Minister Benjamin Netanyahu's decision, leaked to Israeli news media and confirmed by an Israeli official, drew a swift rebuke from the White House. It came as U.S. special envoy George J. Mitchell was trying to coax a package of concessions from Israelis and Arabs that would enable President Obama to launch a new peace initiative this month at the United Nations.
After months of resisting the administration's demand to halt settlement growth, Netanyahu will consider a limited, temporary suspension, the official said; but it would not cover the additional new homes or 2,500 housing units being built on West Bank land claimed by the Palestinians.
Nor will Netanyahu accept a U.S.-proposed halt to Jewish residential building in predominantly Arab East Jerusalem, the official said.
Palestinians want East Jerusalem as the capital of a future state.
The Israeli leader's stance underscores a weakness in the administration's strategy as it pursues one of its most ambitious foreign policy goals. U.S. officials had hoped that Netanyahu would yield to the popular new U.S. president's demand for a total settlement freeze, helping Obama win equally dramatic gestures by Arab states and swiftly improving the climate for a new round of Israeli-Palestinian peace talks.
Instead, Netanyahu dug in his heels and rallied Israelis behind his argument that stopping all construction would unjustly disrupt "natural life" in growing settler communities.
A stalemate ensued, and as Mitchell and Israeli officials struggled through the summer to find a compromise, Palestinian and Arab leaders sensed that Obama was backing down -- at a cost to his credibility and any tangible momentum toward a peace accord that would create a Palestinian state.
The White House expressed "regret" over Israel's new decision, saying such moves make it harder to create a climate for negotiations. The European Union's foreign ministers and the head of the 22-nation Arab League also opposed it.
"As the president has said before, the United States does not accept the legitimacy of continued settlement expansion and we urge that it stop," White House Press Secretary Robert Gibbs said in a statement.
U.S. officials, he said, "appreciate Israel's stated intent to place limits on settlement activity and will continue to discuss this with the Israelis as these limitations are defined."
Palestinian Authority President Mahmoud Abbas said the decision was unacceptable and suggested that he would not take part in what U.S. and Israeli officials still hope will be a three-way meeting in New York after Obama's Sept. 23 speech to the U.N. General Assembly.
"Everything will depend on the decisions that will be taken concerning the freezing of the settlements," Abbas told reporters Friday in Paris.
Settlements and armed Palestinian militants are perpetual stumbling blocks in peace talks, the most recent round of which broke off in December. A U.S.-backed plan, the 2003 "road map," called for steps to rein in both. Israel accepted it with reservations and continued to expand its settlements, which most countries consider a violation of international law.
Today, 300,000 Israelis live among 2.5 million Palestinians in the West Bank and an additional 180,000 Israelis live in East Jerusalem neighborhoods captured along with the West Bank in the 1967 Middle East War. Israel unilaterally evacuated its 8,000 settlers from the Gaza Strip in 2005, before Hamas militants took over the territory.
U.S. officials said privately that they never had expected to win a total settlement freeze and noted that Mitchell had avoided stating this as an objective.
But Obama's early focus on the issue and Secretary of State Hillary Rodham Clinton's public opposition to "natural growth" of existing settlements helped Netanyahu and his aides portray the U.S. position as an affront to cramped communities in need of new schools and housing.
"Obama, who correctly identified the settlements as Israel's weak spot -- and one that is difficult to publicly defend -- pushed a little too hard in too firm a tone and caused outrage, even among some Israelis who detest the settler movement," Shmuel Rosner, a veteran Israeli correspondent in Washington, wrote in the newspaper Maariv.
A recent Hebrew University poll of 600 Israelis showed 58% opposed to a total settlement freeze. In a separate survey of 512 Israelis by Tel Aviv University, 60% said they did not trust Obama "to safeguard Israel's interests." Both polls had a sampling error of plus or minus 4.5 percentage points.