In a letter addressed to George Bush, the US president, the New York-based Human Rights Watch (HRW) requested that the US administration deduct direct aid to Israel the amount equal to what Israel spends on its the settlements and on the construction and maintenance of the separation wall inside the West Bank.
The HRW letter cites figures from the Israeli Central Bureau of Statistics that in the first half of 2005, there was a 28% increase in settlement housing starts compared to the same period in 2004.
According to the Israeli settlement watchdog group Peace Now, there are 121 official settlements in Israel and 101 unofficial outposts.
The settlement areas occupy more than 40% of the West Bank. There are 240,000 settlers residing in the settlements amid some 2.5 million Palestinians in the West Bank.
"We urge you to use US diplomatic and financial influence to stop this trend in 2006," read the letter, signed by Sarah Leah Whitson, executive director of HRW's Middle East North Africa Division.
"Israel's continuing settlement activity is a violation of international humanitarian law, United Nations Security Council resolutions, and Israel's own commitments under the US-sponsored road map of April 2003"
Sarah Leah Whitson,
HRW Middle East North Africa Division
"Israel's continuing settlement activity is a violation of international humanitarian law, United Nations Security Council resolutions, and Israel's own commitments under the US-sponsored road map of April 2003," it continued.
Largest aid recipient
Israel has been the largest annual recipient of US foreign assistance since 1976, and the largest cumulative recipient since World War II, according to a report published by the Congressional Research Service (CRS) in Washington DC.
US direct aid to Israel was nearly $2.6 billion in 2005, with an additional $3 billion provided by way of loan guarantees.
It is now known exactly what amount of that money is spent on settlements and their expansion or on constructing and maintaining the wall.
Unlike other recipients of US aid, Israel is not required to report on how it spends any of the money it receives from the US, nor is it required to pay back the loans, according to the CRS report.
Israel estimates that it will spend
$3.4 billion on the separation wall
The Israeli newspaper Haaretz found in an investigative report that Israel spends about $550 million for the non-military aspects of settlement maintenance and expansion.
The Israeli Knesset estimates that Israel will spend about $3.4 billion on the separation wall, 80% of which is to run inside the occupied West Bank.
The Israeli Foreign Ministry denies the money spent on settlements comes from US financial aid, a practice that would be in contravention of US stipulations.
Lior Ben Dor, a spokesperson for the ministry, said: "We know how to run our budget. The construction of a new apartment or housing in these existing settlements does not necessarily mean that the money for it is taken from this foreign aid.
"Sometimes it comes from private enterprises. But in any case it doesn't have to do directly or necessarily with foreign aid.
"Israel is not building any new settlements. Any expansion is taking place according to the natural growth of the population and within building plans for these settlements.
"So therefore we see no need to cut American aid," Ben Dor told Aljazeera.net, adding that Israel was "ready to dismantle" a number of West Bank settlements based on "progress" in the road map.
Under the US sponsored road map peace plan, Israel agreed to freeze all settlement activity, including "natural growth", and to dismantle all settlement outposts created since March 2001, according to Human Rights Watch.
Groups such as Peace Now believe the Israeli administration circumvents its promise not to build new settlements by expanding existing ones beyond their natural growth, by annexing Palestinian land, and by creating a system of contiguous illegal outposts.
"Israel is not building any new settlements. Any expansion is taking place according to the natural growth of the population and within building plans for these settlements. So therefore we see no need to cut American aid"
Lior Ben Dor,
Israeli Foreign Ministry spokesman
It is the first time a major human-rights group has asked for a cut in direct aid to Israel, as opposed to a reduction in loan guarantees or other grants, according to Lucy Mair, head of HRW's Jerusalem office.
Washington has previously reduced loan guarantees to Israel - most recently in 2003 - but never direct foreign aid.
Reducing loan guarantees means that Israel has to pay higher interest on money it borrows. Cutting aid would have more severe implications.
"The US has reiterated many times its position that Israel should freeze all settlement building, including natural growth, but it needs to put its money where its mouth is because Israel is clearly thumbing its nose at US requests," Mair told Aljazeera.net.
Human-rights organisations often shy away from openly calling for a cut in foreign aid to Israel, for fear it may jeopardise their standing with donors.
Stephen Zunes, professor of politics at the University of San Francisco in California, explains: "It is an important step in that it underscores the need for the US government to do something concrete to back up its stated commitment to the provisions of the road map.
"Having a mainstream and reputable human-rights organisation directly address the sensitive topic of US aid to Israel helps move the settlements issue away from divisive ideological debates and places it squarely on the human-rights agenda where it belongs.
"As the largest bilateral donor to Israel, the US has a special responsibility to make sure that its aid is not directly or indirectly used to support violations of international humanitarian law such as settlement building or the construction of the wall"
HRW's Jerusalem office
"It will force American politicians to choose between defending the human rights community and backing a right-wing expansionist government in its blatant violations of international law," Zunes said.
Attempts to get a response from US officials in Israel and at the State Department were unsuccessful.
Mair said HRW does not expect to receive a response, but are "confident" that the administration individuals concerned are reading their interventions.
"As the largest bilateral donor to Israel, the US has a special responsibility to make sure that its aid is not directly or indirectly used to support violations of international humanitarian law such as settlement building or the construction of the wall inside the occupied Palestinian territories," she said.