Israelis Claim Secret Agreement With U.S. - Americans Insist No Deal Made on Settlement Growth

A letter that President Bush personally delivered to then-Israeli Prime Minister Ariel Sharon four years ago has emerged as a significant obstacle to the president's efforts to forge a peace deal between the Israelis and Palestinians during his last year in office.

Ehud Olmert, the current Israeli prime minister, said this week that Bush's letter gave the Jewish state permission to expand the West Bank settlements that it hopes to retain in a final peace deal, even though Bush's peace plan officially calls for a freeze of Israeli settlements across Palestinian territories on the West Bank. In an interview this week, Sharon's chief of staff, Dov Weissglas, said Secretary of State Condoleezza Rice reaffirmed this understanding in a secret agreement reached between Israel and the United States in the spring of 2005, just before Israel withdrew from Gaza.

U.S. officials say no such agreement exists, and in recent months Rice has publicly criticized even settlement expansion on the outskirts of Jerusalem, which Israel does not officially count as settlements. But as peace negotiations have stepped up in recent months, so has the pace of settlement construction, infuriating Palestinian officials, and Washington has taken no punitive action against Israel for its settlement efforts.

Israeli officials say they have clear guidance from Bush administration officials to continue building settlements, as long as it meets carefully negotiated criteria, even though those understandings appear to contradict U.S. policy.

Many experts say new settlement construction undermines the political standing of Palestinian Authority President Mahmoud Abbas -- who is to meet with Bush today at the White House -- and adds to Palestinian cynicism about the peace process. Palestinians view the settlements as an Israeli effort to claim Palestinian lands, and in a meeting yesterday with Rice, Abbas said settlement construction was "one of the greatest obstacles" to a peace deal.

U.S. and Israeli officials privately argue that Israel has greatly restricted settlement growth outside the settlements it hopes to retain in a peace deal with the Palestinians, and Olmert has said Israel has stopped building new settlements and confiscating Palestinian lands.

Housing starts -- not counting the Jerusalem settlements -- have declined 33 percent since 2003, according to the Israeli Central Bureau of Statistics. But officials say it is politically damaging for Olmert to admit that, so instead he publicly emphasizes that he is adding to the settlements, which now house about 450,000 Israelis

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