By Elliott Abrams, Council on Foreign Relations, August 16, 2011.

If there is a single issue that explains the failure of Obama policy toward Israel, it is settlements. And this week the Administration once again indulged itself in a knee-jerk reaction that displayed incomprehension in a way that harms U.S.-Israeli relations without doing the slightest bit of good for the Palestinians.

This week Israel announced a plan to construct 277 more housing units in Ariel, a settlement that is a town of 18,000. The new units are to be constructed in the center of the town, it was also announced. This is a significant fact, for construction of new units at the edges of the town would mean that the security perimeter would need to be extended to protect the new housing and the people in it. But this will not happen, and Ariel will expand in population but not in land area. It is not, in the usual Palestinian Authority parlance, “taking more Palestinian land”.

When I worked on these issues in the Bush Administration, we discussed settlement expansion thoroughly with the government of Israel and (as I have explained elsewhere) reached agreement on some principles. These were that Israel would create no new settlements and that existing settlements would expand in population but not in land area. New construction, that is, would be in already-built-up areas, and the phrase we used was “build up and in, not out”.

The usual complaints about new construction in the settlements were that “it is making a final peace agreement impossible” or at least more and more difficult by “taking more Palestinian land” that would have to be bargained over in the end and whose taking would right now interfere with Palestinian life and livelihoods. We understood that there would never be a long construction freeze even if there might be some brief ones, for the settlements – especially the ‘major blocks’ that Israel will keep – are living communities with growing families. So we reached that understanding with the Israelis: build up and in, not out. That way whatever the chances of a peace deal were, construction in the settlements would not reduce them.

This agreement the Obama Administration ignored or denounced, suggesting at various times that it never existed or that, anyway, it had been a bad idea and all construction must be frozen – even in Israel’s capital, Jerusalem. (To be more accurate, construction by Israeli Jews was to be frozen; construction by Palestinians could continue). No Israeli government could long accept such terms and though the Netanyahu government did agree to a short and partial freeze, when that failed to bring the PLO back to the negotiating table the freeze was ended.

This Obama fixation with a construction freeze proved disastrous because the President and his Secretary of State took the view that it was a precondition for negotiations without which the Palestinians could not be expected to come to the table. Of course once that American position was announced the Palestinian leadership had to adopt it, lest they appear weaker in asserting Palestinian ‘rights’ than Washington.

The argument over the construction freeze embittered U.S.-Israel relations and killed any chance of negotiations in 2009 and 2010. Late in 2010 the policy was finally abandoned. Nothing has replaced it, and no one really knows what Administration policy is these days beyond getting past September’s expected UN General Assembly vote on Palestinian statehood.

But if the fixation on freezing construction in settlements is no longer the main pillar of Obama policy, those old sentiments and statements linger on. Thus did the announcement that new units were to be built in Ariel evoke a new denunciation from Washington. To be sure, it did not come from the President himself and was a pretty low-key affair; it did not suggest that new a crisis in bilateral relations loomed. But this was a reminder that the Administration appears to have learned nothing, and still does not understand the difference between expanding a settlement physically and expanding the population of a settlement by building in already-built-up areas.

Why not? Without dealing with the question of which individual policymakers are responsible for this foolish policy, it does seem that the policy is based on the view that every square foot of land controlled by Jordan before the 1967 war is rightly part of ‘Palestine’, so that every Israeli action on that land is wrong. This view also explains why the President believes peace negotiations should start from the “1967 borders”.

But there are no “1967 borders”, just the 1949 Armistice lines that all sides agreed in 1949 were not to be regarded as permanent. It is reasonable to have the 1949 map on the table when negotiations begin, and to have next to it the 2011 map, and to seek a compromise. It is not reasonable to view it as a violation of international law and a threat to a peace agreement every time bricks and studs and drywall show up at the center of an Israeli settlement in the West Bank. In the real world those new units in Ariel do not make a final peace agreement harder.