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Settler growth `death to peace'

Palestinian leaders and opposition Israelis last night predicted a new explosion of violence after Benjamin Netanyahu's right-wing government restored social and economic incentives for Jews to settle the West Bank that were abolished four years ago by the late Labour prime minister, Yitzhak Rabin.

They condemned the decision, taken yesterday in response to Wednesday's Palestinian killing of a mother and son from the Beit El settlement, as a death blow to the ailing peace process. Hamas, which rocked Israel with a series of suicide bombings early this year, is already threatening to resume its attacks.

Hanan Ashrawi, a minister in Yasser Arafat's Palestinian administration, denounced the Israeli decision as an aggressive act. "It's taking us back to the days of confrontation, to the days before the peace process," she told The Independent. "It's a very dangerous decision. It not only violates the integrity of the peace process, it removes any chance of peace."

Ephraim Sneh, a candidate to succeed Shimon Peres as Labour Party leader, criticised the settlement initiative as "a prescription for new outbursts of violence and the collapse of the interim arrangement with the Palestinians". Mr Sneh, a former military governor of the West Bank, accused Mr Netanyahu of wanting to turn it into another Bosnia.

Galia Golan, a spokeswoman for the Peace Now movement, argued: "Netanyahu intends to expand settlements. That means expropriating Arab land; that means more building; that means creating incentives for people to go and live there. Each one of these steps makes it more difficult for Arafat to negotiate."

The decision did not specify how many additional homes ministers would sanction. But the intention was clearly to consolidate and expand the Jewish presence in the heartland of the West Bank. It offers tax breaks to settlers and commits the government to invest more in social services in the settlements. It provides state loans of 60,000 shekels (pounds 12,000) to homebuyers there, with 50 per cent of that amount turning into a grant if they stay put. And it dangles incentives before firms to establish factories.