ARAB-US RELATIONS - Aug 22 - Palestinians Say US Destroys Hope Over Settlements.

Palestinians accuse the US of destroying the Middle East peace process after US signalled it could accept some growth of Israeli settlements in the West Bank. Until now, the US had demanded the freezing of all building on land occupied in the 1967 Middle East war and which are seen as illegal by most of the world-though Israel disputes this. But the Bush administration signalled flexibility on Aug 22 on some limited growth in West Bank settlements to help embattled Israeli PM Ariel Sharon as he tries to get a plan for withdrawal from occupied Gaza past his far right. Palestinian PM Ahmad Qurie says: "I do not believe that America says now that settlements can be expanded. This thwarts and destroys the peace process". Palestinians, who fear uprooting the Gaza settlers is a cover for strengthening Israel's hold on bigger West Bank enclaves, said the US was tearing up its own peace "road map", a blueprint for a Palestinian state that has been stalled by violence. A senior US administration official, commenting on Israel's plan to build 1,000 more settler homes, said: "There is some flexibility there". 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, officials said US could agree to new construction provided it did not take place outside the boundaries of existing settlements, in undeveloped parts of the West Bank. A senior Israeli source said there was a clear understanding that the US was trying to help Sharon push through his plan for "disengagement" from nearly four years of conflict with the Palestinians. The senior source said: "This is crucial for Sharon to get through the disengagement plan. He needs it for the Israeli public and his party. The Americans understand that". Accepting limited construction within existing settlements could also benefit Pres Bush, who is loath to cross Jewish-American voters who back settlements and other conservative supporters of Israel in the run-up to the November election. Sharon's unilateral initiative involves removing all the 8,000 settlers from Gaza and four of the 120 settlements in the West Bank by the end of next year. The West Bank is home to more than 230,000 settlers. The change in US attitude was unable to save Sharon from an embarrassing defeat last week by right-wing Likud party members, who voted down a possible coalition with dovish Labour that would have made it easier to implement the pullout. Hardliners in Likud, which was long opposed to ceding any land, say giving up Gaza would "reward Palestinian terrorism". Israeli sources said Sharon would now pursue contacts on forming a coalition with ultra-Orthodox Jewish parties, but might woo Labour at a later date. Labour leader Shimon Peres has toned down the call he made for early elections after the Likud vote against letting Labour join the government.