The policy of the Prime Minister, Yitzhak Rabin, has fallen far short of the significant curbs which were understood to be his intention when the US released the first dollars 2bn (pounds 1.4bn) slice of dollars 10bn in loan guarantees after he was elected in June, according to Western analysts, Palestinian leaders and human rights monitors.
The US undertook to guarantee commercial loans for building homes for new Jewish immigrants from the former Soviet Union, so long as these homes were not built in the occupied territories. Although no written conditions were attached to the US decision to release the loan guarantees, analysts say the new US administration does have discretion to lop loans 'dollar for dollar' if Israel spends them on settlements. The US administration will have to decide ahead of the new financial year in October whether to penalise Israel for continued building by holding back sums from the next dollars 2bn instalment.
US loan guarantees were frozen when the previous Likud government was in power, in order to put pressure on Israel to halt its settlement drive in the lands seized during the Israeli-Arab war of 1967. A new dispute over US loan guarantees would be highly embarrassing to Mr Rabin, who counts Israel's improved relations with the US as the prime achievement of his first months in office.
Evidence of continued building, and plans for building, suggest that Mr Rabin has not entirely repudiated the Likud policies. Rather, he has rationalised and refocused settlement, concentrating less on building in remote West Bank areas which he calls 'political' settlements, and continuing efforts to settle Jews on West Bank lands nearer Jerusalem.
Mr Rabin has promised not to build any new settlements. But Western observers say this pledge is a smokescreen. 'With 144 settlements, many tiny, and scattered all over the West Bank, there is no need to build new ones. What we are watching is expansion of existing ones,' said one analyst. Observers criticise Mr Rabin's new settlement policy on three grounds: first, it is 'delayed' not immediate; second it is 'partial' and does not cover all occupied territories; and third, it is only a 'slowdown' and not a halt.
It is 'delayed' because even in areas to which curbs will eventually apply, there is no evidence yet of any change. The Prime Minister made clear last summer that before he introduced any new curbs he would allow completion of 11,000 buildings which he says were started under the previous government and must be finished.
The number was less than the 16,000 planned by the Likud, Labour said, but it nevertheless constitutes the largest single chunk of construction carried out by Israel in the occupied territories since 1967.
'The result is that at the moment it seems like a massive building boom out there,' said one Western diplomat. Just filling the 11,000 units will increase the Jewish population in the West Bank and Gaza by 60,000. It is currently about 110,000.
The buildings are going up mostly in large settlements. But tiny settlements in remote areas are being quadrupled in size. The Jewish settlement of Eli, for example, near Nablus in the north, has 70 lived-in units, and another 400 are under construction, according to figures produced by Peace Now, the Israeli pressure group.
Labour ministers describe this building as 'residual.' However, according to Peace Now, new building has also begun in several remote West Bank areas since June: in Itamar, near Nablus; in Naale near Ramallah in the central West Bank, and in Telem, near Hebron to the south.
It is not only the house building but road building which has continued. An 8-kilometre (5-mile) road has been completed since June between Eli and its neighbouring settlement of Shilo. A new road is being completed between the main road and Shilo. Peace Now says all this work is a waste of government funds because there is no demand to live in these remoter settlements. As the government has promised to reduce incentives for people to live in these areas, the units will not be sold.
The intended cuts are only 'partial' because they do not apply to large tracts of the West Bank around Jerusalem or to annexed East Jerusalem. Here large-scale construction is continuing unabated, and the housing minister, Binjamin Ben-Eliezer has made clear that he intends to intensify settlement in this area as soon as there are funds available.
Since he was elected, Mr Rabin has defined a new Jerusalem boundary, which goes far wider than the existing municipal boundary, calling it 'greater Jerusalem'. It stretches from Ramallah to the north to near Hebron in the south.
On average this arbitrary boundary traces a 10-mile radius around the existing municipal boundary - although in some places it goes out even further. Inside it are the majority of the big West Bank settlements, and 70 per cent of the settler population.
According to Peace Now, as much as dollars 600m is being spent on house construction and infrastructure in settlements, not including building in East Jerusalem and not including the cost to the government of financing incentives and security.
Finally, the settlement curb is only a 'slowdown' because even in areas to which it does apply, it only applies to building activities that are using government funds. Private or municipal money can still be used to start new building, if the land is made available. Peace Now say there is already strong evidence of private house building in several West Bank settlements.
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