By Jeffrey Heller
JERUSALEM (Reuters) - Israel announced on Thursday plans to build some 3,000 more settler homes in occupied territory in response to the inauguration of a Palestinian unity government backed by Hamas Islamists opposed to the Jewish state's existence.
Housing Minister Uri Ariel said he had issued notices inviting bids to construct 1,500 housing units. Israeli officials said that in addition, Prime Minister Benjamin Netanyahu had ordered planning to proceed for a further 1,500 settler dwellings.
"When Israel is spat upon, it has to do something about it," Ariel told Israel Radio, adding that construction tenders had been issued as a response to what he termed a Palestinian "terrorist government". Asked who had insulted Israel, Ariel, a far-right member of Netanyahu's cabinet, replied: "Our neighbors, and to a certain extent, the world."
Netanyahu has already expressed "deep disappointment" over a decision by the United States, Israel's main ally, to talk to the Palestinian administration despite Israeli calls to shun it, although the unity cabinet is comprised solely of technocrats.
A spokesman for Palestinian President Mahmoud Abbas, whose reconciliation deal with Hamas yielded the new government, said: "The Palestinian leadership will respond to this new settlement activity in an unprecedented manner." He did not elaborate.
Ariel did not cite locations but Israeli media said the new homes for which bids had been solicited would be erected in seven settlements in the occupied West Bank, some in areas Israel annexed to Jerusalem after the 1967 Middle East war.
Most countries regard settlements that Israel has built in territory it captured in 1967 as illegal. Their fate is a central issue in talks on an eventual independent Palestinian state - negotiations that collapsed in April.
Israel's announcement drew widespread rebuke from international powers including its main ally in Washington. "As we have consistently said, these actions are unhelpful and counterproductive to achieving a two-state outcome... We continue to view settlements as illegitimate and urge both parties to refrain from unhelpful actions that increase tension and undercut the efforts to find a path forward to a two-state solution," U.S. State Department spokeswoman Marie Harf told reporters in Washington. "It is very difficult to understand how these settlements contribute to peace," she added. The United States said on Monday it would work with the new Palestinian unity government as needed but would monitor its commitment to a peace process and security cooperation with the Jewish state.
Ariel accused Washington of breaking an understanding with Israel that it would not talk with the new government.
On Sunday, Netanyahu had urged the world not to rush to engage with a Palestinian administration he said was a front for Hamas, a group classified as a terrorist organization by the United States and European Union.
But Abbas's formation of a government of technocrats and his pledge to adhere to principles of non-violence and pursuit of peace paved the way for international acceptance that seemed to have left Netanyahu outmaneuvered.
British Foreign Secretary William Hague said he "deplored" Israel's settlement move and a French statement said: "Settlements are illegal in the eyes of international law and constitute an obstacle to peace based in a two-state solution.”
A European Union statement in Brussels expressed deep disappointment saying the move was "unhelpful to peace efforts." "We call on the Israeli authorities to reverse this decision and to direct all their efforts towards an early resumption of peace talks," part of the statement said.
Despite Netanyahu's appeal, the EU has also said it would work with the new Palestinian government, on condition it stuck to the principle of peace based on a two-state solution.
Hanan Ashrawi, a member of the Abbas-led Palestine Liberation Organization's Executive Committee, said the "government of national accord ... has been universally welcomed, with the exception of Israel in its blatant distortion of facts in order to destroy the chances for peace”.
Israeli Justice Minister Tzipi Livni, in an indirect rebuke of Netanyahu, called the first issuing of settler house tenders since the peace talks collapsed "another diplomatic mistake".
Livni, head of a centrist party in the Netanyahu government and its chief peace negotiator, told Israel Radio it would now be harder "to enlist the world against Hamas".
Israel froze U.S.-brokered peace talks with Abbas when the unity deal was announced on April 23 after numerous unsuccessful attempts at Palestinian reconciliation since Hamas seized the Gaza Strip from Fatah forces in fighting in 2007.
Some Israeli political analysts predicted Israel's campaign against the foreign aid-dependent Palestinian government would now shift to lobbying allies in the U.S. Congress to withhold funding, which typically runs at $500 million a year.
(Additional reporting by Ali Sawafta in Ramallah and Arshad Mohammed in Washington, Adrian Croft in Brussels, John Irish in Paris and Kylie MacLellan in London, Editing by Ori Lewis/Mark Heinrich)