Netanyahu urged to keep illegal outposts

Report denying Israeli occupation of West Bank could unsettle talks with Palestinians

A panel appointed by Benjamin Netanyahu has recommended that the Israeli government legitimises and maintains Jewish settlement outposts illegal even under Israeli law, while also issuing a startling denial that the West Bank is under occupation.

Its report, lavishly praised by settlers and the political hard right, and greeted with anger and derision by Palestinians and the Israeli left, seeks to overturn decades of international declarations, demands by the US Bush administration to dismantle the outposts, and decisions by Israel's own Supreme Court.

According to widespread leaks in the Israeli media yesterday the report reaffirms the long-held Israeli view – rejected by almost all of the international community – that Jewish settlements are legal, on the grounds that Jordan did not have sovereignty over the West Bank when it was occupied by Israel in the 1967 Six Day War. That argument was rejected in a landmark 2004 non-binding ruling by the International Court of Justice.

But the panel, headed by a pro-settlement, right wing former Supreme Court justice Edmond Levy, reportedly goes further. It not only declares that Israel is not an occupying power, but also rejects a 2005 report, accepted by the then prime minister Ariel Sharon, that unauthorised outposts – designed to get round a decision dating from the 1990s that no new settlements would be built – are illegal and should be demolished.

It was partly to negate the earlier report, authored by Talia Sasson, that the Levy panel was convened. Ms Sasson, who was among the fiercest critics of the panel's findings yesterday, was a respected government lawyer when she was commissioned by Mr Sharon to review the outposts. But because she was subsequently affiliated with the left-leaning Zionist party Meretz, the settlers have retrospectively tried to depict her as having been politically motivated.

The new report, which the Israeli government has not yet accepted, follows settler anger over Supreme Court rulings that two outposts built on privately owned Palestinian land be uprooted. But it remains unclear what, if any, will be the practical effect on government policy, or whether the report will further complicate the intense behind-the-scenes efforts by the US and the international Middle East envoy Tony Blair to restart talks between Mr Netanyahu and the Palestinian President Mahmoud Abbas. The mediators are trying to prevent Mr Abbas from carrying out his threat to return to the UN in September – this time to seek Vatican-style "non-member state" status in the UN General Assembly – if serious negotiations are not underway. Mr Abbas has officially been holding to the position that such negotiations cannot start unless Mr Netanyahu re-institutes a freeze on settlement building.

The Palestinian President had indicated, however, that he would be prepared to hold preliminary talks if Israel releases 123 mainly Fatah prisoners detained before the 1993 Oslo accords, many of whom are now more than 50 years old.

While Israel has expressed some interest, it has so far insisted that prisoners will have to be released in phases, which Mr Abbas has rejected, fearing that Israel might rethink the release programme after an initial step.

Israel, meanwhile, fears that if the prisoners were released at once, Mr Abbas might still seek UN membership anyway, despite its own threat to withhold the customs duties it collects on the Palestinian Authority's behalf as a reprisal for such a UN bid.