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The ministerial committee on settlement affairs voted after Friday night's terror attack in Itamar to approve construction of 400 housing units in four West Bank settlements.

The Palestinian Authority and the United States condemned the plan.

Defense Minister Ehud Barak, deputy prime minister Moshe Ya'alon, Minister Benny Begin and Defense Ministry officials who deal with construction in the West Bank attended the meeting on Saturday night, which was called by Prime Minister Benjamin Netanyahu. Discussion of the proposal took less than 30 minutes.

Israel informed the United States of the scheme before publicizing it.

A day after condemning Friday's terror attack in Itamar, in which five members of the Fogel family were murdered by two Palestinian terrorists, the U.S. State Department issued a statement saying the United States was deeply concerned about continued Israeli construction in West Bank settlements, which it said is not legitimate and contravenes efforts to renew direct negotiations.

Associates of Netanyahu noted yesterday that the construction would take place in settlement blocs that will remain in Israeli hands in any future peace agreement. However, among the settlements expected to benefit from the plan is Kfar Eldad, a prefab neighborhood southeast of Bethlehem and some 10 kilometers east of the separation fence.

At first about 400 units will be built: some 100 in Ariel, to house evacuees from Jewish settlements in the Gaza Strip; 60 in Ma'aleh Adumim; and another 200 in Modi'in Ilit/Kiryat Sefer, considered a Shas stronghold. In a few weeks, another 100 units at least are expected to be approved.

A number of alternatives were reportedly discussed as responses to the murders in Itamar on Friday night. One was to establish a completely new settlement in the West Bank - which would be in direct violation of Israel's pledge to the U.S. administration. Ya'alon proposed expanding Itamar and other isolated settlements in the area. Eventually, Netanyahu and Barak's proposal prevailed: to authorize construction in the settlement blocs of projects that had been awaiting approval since before the building freeze imposed in November 2009.

Interior Minister Eli Yishai said at yesterday's weekly cabinet meeting that a few hundred homes was not enough. "There should be at least 1,000 new housing units for every murder victim," he said, referring to the five members of the Fogel family who were stabbed to death.

Also at the cabinet meeting, Strategic Affairs Ministry director general Yossi Kuperwasser noted that incitement against Israel in the Palestinian Authority was on the rise. Netanyahu told the ministers that he was going to inform the United States and the European Union of incidents of incitement, so they would pressure the PA to deal with the matter.

"I've never heard the PA say a good word about Israel," he said, citing several examples of incitement, such as naming a village square after a terrorist.

Kfar Eldad, where some 48 homes are to be built according to the new plan, is adjacent to the settlement of Nokdim, where Foreign Minister Avigdor Lieberman lives.

Just a few weeks ago, Netanyahu and Barak paid a condolence call in Kfar Eldad at the home of the chairman of the Knesset coalition, MK Zeev Elkin, after his father died. Elkin has been living for the past two years in an old prefabricated dwelling. Not far away is similar structure, where Lieberman lived until he moved into his permanent home a few years ago.

Kfar Eldad was founded in the 1980s on state land, and plans for its development were finalized some years ago. Some 60 percent of its residents hail from the Former Soviet Union.

The old access road to Nokdim and Kfar Eldad, which is a short distance from Har Homa on the southern outskirts of Jerusalem, had been a target of frequent terror attacks, which caused many residents to leave. However, after a new road was built leading from Har Homa to the Herodium National Park near Nokdim and Kfar Eldad, the settlements began to flourish.

Most of the families in the vicinity moved in the early 1990s into permanent homes in Nokdim. A few families who could not afford to build a permanent house remained in the prefabs, not far away.