Published by Global Banking & Finance Review®
Posted on August 14, 2025
3 min readLast updated: January 22, 2026
Add as preferred source on GoogleIsraeli settlements in the West Bank are a contentious issue, affecting the Israeli-Palestinian conflict and the two-state solution.
By Tala Ramadan and Ali Sawafta
(Reuters) -Israeli settlement building, a point of contention at the heart of the Israeli-Palestinian conflict, has come back into focus after Israel's far-right finance minister revived a plan that would divide the West Bank and cut it off from East Jerusalem.
WHAT IS A SETTLEMENT?
An Israeli settlement is made up of housing units built for Jewish Israelis on land captured by Israel from Jordan in the 1967 Middle East war, primarily in the West Bank and East Jerusalem.
The land is home to Palestinians who seek a future independent state.
Prime Minister Benjamin Netanyahu's nationalist government has backed settlers, and building and settler incursions have ramped up since the Hamas attack on Israel in October 2023 triggered the Gaza war.
Palestinians have accused heavily armed Israeli settlers of stealing their land and destroying their olive trees, a symbol of Palestinian identity.
Palestinians say Israeli forces do not protect them from settler violence. The Israeli military says soldiers are often dispatched to deal with any trouble.
WHAT DOES ISRAEL SAY ABOUT SETTLEMENTS?
Israel says it has historical and biblical ties to the area that it calls it Judea and Samaria, though most world powers consider all the settlements illegal.
Numerous UN Security Council resolutions have called on Israel to halt all settlement activity, but Israel says settlements are critical to its strategic depth and security.
In 2019, during U.S. President Donald Trump's first term, the U.S. dropped a long-held stance that deemed settlements illegal. President Joe Biden restored that stance in line with international consensus.
In January, in his second term, Trump rescinded sanctions imposed by the former Biden administration on far-right Israeli settler groups and individuals accused of being involved in violence against Palestinians in the occupied West Bank.
HOW SETTLEMENTS AFFECT THE IDEA OF A TWO-STATE SOLUTION
A 1993 agreement between Israel and the Palestine Liberation Organization (PLO), known as the Oslo Accords, was designed to pave the way for the establishment of a Palestinian state in the West Bank, East Jerusalem and Gaza Strip alongside Israel.
The U.N. and most world powers say settlement building is eroding the viability of that two-state solution by fragmenting Palestinian territory.
Israel's allies, including France, Britain and Canada, have said they may move to recognise Palestinian statehood in September.
WHAT IS THE CURRENT STATUS OF SETTLEMENTS?
Israel has expanded and consolidated settlements in the West Bank as it continues its war with Hamas in the Gaza Strip, according to a UN report that was based on research between November 1, 2023 and October 31, 2024.
About 700,000 Israeli settlers live among 2.7 million Palestinians in the West Bank and East Jerusalem, which Israel annexed in a move not recognised by most countries.
Israel refuses to cede control of the West Bank, a position it says has been reinforced since the Hamas-led militant attack on its territory, launched from Gaza October 7, 2023.
It says the future of the settlements should be resolved in peace negotiations.
(Reporting by Tala Ramadan and Ali Swafta, Writing by Tala Ramadan and Nayera Abdallah; Editing by Michael Georgy and Andrew Heavens)
An Israeli settlement refers to housing units built for Jewish Israelis on land captured by Israel during the 1967 Middle East war, primarily in the West Bank and East Jerusalem.
The two-state solution is a proposed framework for resolving the Israeli-Palestinian conflict, envisioning an independent State of Palestine alongside the State of Israel.
Settlement expansion refers to the process of increasing the number of Israeli settlements in occupied territories, which is a contentious issue in the Israeli-Palestinian conflict.
The United Nations has passed numerous resolutions calling for Israel to halt settlement activity, viewing it as illegal under international law.
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