The Palestinian Authority on Wednesday condemned Prime Minister Ehud Olmert's decision to approve moving the separation barrier near Modi'in Ilit away from the Green Line in order to take in two settlements, as was first revealed by security sources and a brief submitted by the state to the High Court of Justice.

Saeb Erekat, the chief Palestinian negotiator with Israel, said the Israeli move "undermines everything we're doing to revive the peace process."

"The wall is the continuation of unilateralism and dictation, and destroys the prospects of any real negotiations," he added.

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According to the sources, Olmert approving the moving of the barrier at least five kilometers eastward from the Green Line in the area of Modi'in Ilit, in order to take in the settlements of Nili and Na'aleh.

The new route will create two Palestinian enclaves containing about 20,000 people. Nili and Na'aleh together have some 1,500 residents.

Olmert approved the change in response to pressure from residents of the two settlements, both of which would have been left outside the barrier, according to the route approved by the cabinet last April. The new route will lengthen the fence by about 12 kilometers, which will cost an estimated NIS 120 million.

If the cabinet approves Olmert's decision, it will be the first time part of the fence has been moved eastward after receiving cabinet approval. Hitherto, all such changes have moved the fence westward, toward the Green Line, the pre-1967 border that separates Israel and the West Bank.

Nili and Na'aleh, both secular settlements, are located some five kilometers from the Green Line. Originally, they were supposed to be surrounded by a "double fence" - one along the Green Line and one to their east - that would have trapped five Palestinian villages, with some 17,000 residents between them.

In June 2004, however, the High Court ordered a section of the fence near Jerusalem dismantled on the grounds that it caused disproportionate harm to local Palestinians, and the defense establishment feared that the court would do the same to the Nili-Na'aleh section.

It therefore proposed a new route that eliminated the eastern fence and left Nili and Na'aleh outside the western fence, and in April 2006, the cabinet approved this route.

Rani Hernik, chairman of the Na'aleh local council, said that leaders of both settlements then began intensive lobbying in an effort to get the route changed again. Their main argument, he said, was that both settlements are on state land and would thus not interfere with the Palestinians' "fabric of life," and therefore, the court would be likely to approve a route that included them.

Colonel Danny Tirza, then the official in charge of planning the fence's route, was the main person pushing to include Nili and Na'aleh, Hernik said. (The Defense Ministry subsequently removed Tirza from his position, because of an inaccurate affidavit he submitted to the High Court.)

Hernik said that the proposal to include the two settlements within the fence ended up on Olmert's desk, "and as far as I know, received his authorization." Security sources confirmed that Olmert approved the change in principle last November and asked the defense establishment to prepare a formal proposal for the cabinet.

And in response to a petition against the route approved by the cabinet last April, the Justice Ministry recently told the High Court that "a proposal to change the route of the security fence to include the Israeli settlements of Nili and Na'aleh and part of the road connecting the Nili-Na'aleh Junction to Kiryat Sefer (Modi'in Ilit) is due to be presented to the Israeli government."

Hernik said that a new road is also due to be paved, which will connect Modi'in Ilit, Nili and Na'aleh with the settlement of Ofarim. Palestinians will not be permitted access to this road, but two tunnels will be built under it to allow Palestinian traffic to transverse it.

The result is that some 17,000 Palestinians will be stuck in an enclave bounded by the fence along the Green Line to the west, and the road and the Nili-Na'aleh fence to the east. Another village, with some 2,000 residents, will be enclosed by the new fence route on three sides.

Olmert's office said in response that he has received a proposal to connect the defenses around Nili and Na'aleh to the barrier and is currently studying it. When he finishes, he will bring it to the cabinet for discussion.

The Defense Ministry and the Israel Defense Forces said that the defense establishment "is currently engaged in staff work to examine the various alternatives," including proposals to encompass the two settlements with a security fence and to protect the access road connecting them with Kiryat Sefer.