Published by Global Banking & Finance Review®
Posted on August 20, 2025
3 min readLast updated: January 22, 2026
Add as preferred source on GoogleIsrael's approval of the E1 settlement plan threatens the two-state solution, drawing international condemnation and complicating peace efforts.
JERUSALEM (Reuters) -A widely condemned Israeli settlement plan that would cut across land that the Palestinians seek for a state received final approval on Wednesday, according to a statement from Israeli Finance Minister Bezalel Smotrich.
The approval of the E1 project, which would bisect the occupied West Bank and cut it off from East Jerusalem, was announced last week by Smotrich and received the final go-ahead from a Defence Ministry planning commission on Wednesday, he said.
"With E1, we are delivering finally on what has been promised for years," Smotrich, an ultra-nationalist in the ruling right-wing coalition, said in a statement. "The Palestinian state is being erased from the table, not with slogans but with actions."
Restarting the project could further isolate Israel, which has watched some Western allies frustrated by its continuation and planned escalation of the Gaza war announce they may recognise a Palestinian state at the United Nations General Assembly in September.
"We condemn the decision taken today on expanding this particular settlement, which ... will drive a stake through the heart of the two-state solution," said U.N. spokesperson Stephane Dujarric. "We call on the government of Israel to halt all settlement activity."
The Palestinian Foreign Ministry also condemned the announcement, saying the E1 settlement would isolate Palestinian communities living in the area and undermine the possibility of a two-state solution.
British Foreign Minister David Lammy said on X: "If implemented, it would divide a Palestinian state in two, mark a flagrant breach of international law and critically undermine the two-state solution."
A German government spokesperson commenting on the announcement told reporters that settlement construction violates international law and "hinders a negotiated two-state solution and an end to the Israeli occupation of the West Bank."
Israeli Prime Minister Benjamin Netanyahu has not commented on the E1 announcement.
However on Sunday, during a visit to Ofra, another West Bank settlement established a quarter of a century ago, he made broader comments, saying: "I said 25 years ago that we will do everything to secure our grip on the Land of Israel, to prevent the establishment of a Palestinian state, to prevent the attempts to uproot us from here. Thank God, what I promised, we have delivered."
The two-state solution to the decades-old Israeli-Palestinian conflict envisages a Palestinian state in East Jerusalem, the West Bank, and Gaza, existing side by side with Israel.
Western capitals and campaign groups have opposed the settlement project due to concerns that it could undermine a future peace deal with the Palestinians.
The plan for E1, located adjacent to Maale Adumim and frozen in 2012 and 2020 amid objections from the U.S. and European governments, involves the construction of about 3,400 new housing units.
Infrastructure work could begin within a few months, and house building in about a year, according to Israeli advocacy group Peace Now, which tracks settlement activity in the West Bank.
Most of the international community considers Israeli settlements in the West Bank illegal under international law.
Israel disputes this, citing historical and biblical ties to the area and saying the settlements provide strategic depth and security.
(Reporting by Lili Bayer and Maayan Lubell in Jerusalem, Ali Sawafta in Ramallah, Rachel More in Berlin and Michelle Nichols at the United Nations; Editing by Aidan Lewis, Rod Nickel)
A settlement plan is a proposal for establishing residential or commercial developments in a specific area, often involving land that may be contested or sought by different parties.
The two-state solution refers to a proposed resolution to the Israeli-Palestinian conflict, envisioning an independent State of Palestine alongside the State of Israel, aimed at achieving peace.
Israeli settlements are communities established by Israel on land it occupied during the 1967 Six-Day War, which are considered illegal under international law by many countries.
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