Netanyahu to approve new West Bank homes in a snub to Obama

The White House issued a stinging rebuke to Israel last night over plans to approve the construction of hundreds of new homes for Jewish settlers in the occupied West Bank.

The decision comes as a major setback to Barack Obama's efforts to revive the moribund Middle East peace process. It was revealed by aides to Prime Minister Benjamin Netanyahu yesterday, who said he wants approval for the new construction to proceed before agreeing to any freeze on settlements. A complete freeze is the Palestinian precondition for the resumption of direct peace negotiations.

"As the President has said before, the US does not accept the legitimacy of continued settlement expansion and we urge that it stop," said White House spokesman Robert Gibbs. "We are working to create a climate in which negotiations can take place, and such actions make it harder to create such a climate."

The strongly-worded statement suggests that a serious rift remains between Israel and the US on the best way to proceed with the peace process. Mr Netanyahu's decision apparently reflects a commitment to expanding Israel's borders at the expense of a viable Palestinian state, as well as showing a desire to appease the increasingly vocal far-right, pro-settler politicians within his Likud party. It could also proceed from a belief that the Obama administration lacks the will or desire to compel him into observing the complete freeze on settlements demanded by the 2003 "roadmap".

News of the planned approvals came just days after talks over the freeze between Mr Obama's Middle East envoy George Mitchell and Israeli officials. The American hope is that agreement on the freeze can be reached to enable an announcement on the resumption of Israeli-Palestinian negotiations at the UN General Assembly in New York later his month.

The Palestinian President Mahmoud Abbas said the new construction was "unacceptable", adding: "We want a freeze on all settlement construction." While Washington has backed the demand that Israel halt construction, the Obama administration has, to the dismay of Palestinians, allowed itself to be drawn into months of bargaining with the Israelis over the details.

A Netanyahu aide said that, after the new construction is approved, Mr Netanyahu would be prepared to consider a freeze lasting a few months. Israel is also seeking to exclude from the moratorium 2,500 units already under construction in the West Bank, and to continue building in the East Jerusalem area it occupied in 1967.

All of the construction contravenes the Fourth Geneva Convention's prohibition on an occupying power settling its nationals in occupied territory.

Ophir Pines-Paz, a Labour member of the Knesset, said the decision "nullifies" the freeze: "These are two acts that neutralise each other. Netanyahu is trying to have his cake and eat it."

But Yuli Edelstein, a minister and Likud hardliner, yesterday expressed satisfaction at the announcement of new units, praising Mr Netanyahu's "steadfast" stand against Washington. "He is showing it is possible to put an end to give-aways," he said.

Danny Danon, another Likud hard-liner, sought to keep up the appearance of pressure on Mr Netanyahu, saying the party would resist any announcement of a settlement freeze. Mr Netanyahu hopes to use the hardline opposition to convince Mr Mitchell he is unable to accept a stringent freeze.

Advisers to Mr Abbas yesterday insisted there would be no return to peace talks unless a total freeze was declared, lasting until a peace agreement is reached. Nabil Shaath, a former Palestinian foreign minister, said bitter experience of negotiations with Israel showed there is no other way. "We've seen galloping settlement activity during the negotiations. The negotiations are supposed to be on the basis of land for peace, but the land is vanishing under our feet."

Mr Shaath accused Mr Netanyahu of trying to "vitiate any real freeze... He's trying not to deliver anything to the Palestinians, without losing the Americans."

The political scientist Galia Golan said Mr Netanyahu's move was a challenge to US credibility on the Middle East and a "serious blow" to the efforts to restart talks. Mr Obama may now have to water down his demands on settlements to secure progress on "the bigger issues", she said. Mr Netanyahu, she claimed, was "outsmarting" the US President.

Festival uproar: Anger at Israeli films

*The Arab-Israeli question is at the centre of a fierce row overshadowing next week's Toronto Film Festival, with a group of prominent artists and celebrities accusing the festival organisers of sponsoring "the Israeli propaganda machine."

Fifty actors, writers and directors – including Jane Fonda, Danny Glover, Naomi Klein and Ken Loach – signed a letter urging fans to boycott the prestigious festival over its plans to screen a series of films from Tel Aviv.

Ten movies were selected for the "city-to-city" programme but not one of them was made by, or features, a Palestinian. As a result, critics have likened the imitative to a celebration of apartheid-era South Africa.

"This programme ignores the suffering of thousands of former residents and descendants of the [Tel Aviv] area who currently live in refugee camps in the Occupied Territories," reads their letter. "We object to the use of such an important international festival in staging a propaganda campaign." The Canadian film-maker John Greyson has already pulled his documentary Covered out of the 35-year-old event in protest.

Guy Adams