Settlements are a divisive issue and a major stumbling block in the peace process, both within Israel and between Israel and the United States and the Arab world. They will however be on the agenda for next week when Netanyahu travels to Egypt for talks with Egyptian President Hosni Mubarak. The two leaders are also expected to talk about the fate of Israeli soldier Gilad Shalit who was abducted by Hamas.

US President Barack Obama called for a freeze of settlements in the West Bank and East Jerusalem as a step towards jumpstarting the peace process, but Netanyahu’s refusal was a major blow to the US leader’s stated goal of achieving peace in the Middle East.

Israeli settlements are illegal under international law because they are built on occupied land and are in violation of the 2003 Road Map which called on Israel to stop expanding its colonies.

Conquered in the Six Day War of 1967, the West Bank and East Jerusalem are home now to almost half a million Israeli settlers, 280,000 in the West Bank and 190,000 in East Jerusalem.

According to the Israeli peace organisation, Peace Now, the settler population in the West Bank rose by 5-6 per cent since 2001.

In its recent report Israel’s Central Bureau of Statistics noted that from 2005 to the end of 2008, when the American demand to freeze construction was not yet on the agenda, 7,015 housing units were built in the West Bank settlements, an overage of more 1,500 a year, a number which will not change this year even if a freeze comes into place.

For Ghassan Khatib, head of the Palestinian Press Office, this is a “challenge” to the international community which “freezes” only the peace process.