Under International Law ALL settlements in Occupied Territory are illegal. They are violations under the Fourth Geneva Convention which Israel signed agreement to and violate the Road Map agreement Israel also signed agreement to. Build on the Israeli side of the green line...plenty of unbuilt land there. It's what Israel was gifted their land for. No need to use Palestinian Land.
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Jordan foreign minister says to speak with Kerry on Israel-Palestinian conflict (Reuters)
from the article: NYT retracts claims that E-1 construction plans would divide West Bank