|Some 300,000 Israelis live in more than 120 illegal settlements across the West Bank [GALLO/GETTY]
About 20 Israeli suppliers are helping to build the first modern Palestinian city in the occupied West Bank, but only after agreeing not to use products or services from Israeli settlements.
The announcement of involvement by Israeli firms has angered Jewish settlers, who accused the suppliers of caving in to an international boycott of settlement goods and businesses.
Bashar Masri, the project's developer, refused to identify any of the Israeli companies which are supplying the project with construction materials, but their contracts were reported by Israel's Army Radio on Tuesday.
The West Bank city of Rawabi, being built 30km north of Jerusalem, is a key part of a plan by Salam Fayyad, the Palestinian prime minister, to lay the groundwork for a future Palestinian state, regardless of progress in peace talks.
Masri said that he tries to use Palestinian suppliers if possible, but when necessary turns to Israeli firms on condition that products and services from territories Israel occupied after the 1967 war - the West Bank, East Jerusalem and the Golan Heights - are not used.
"Settlements are diabolical. They steal Palestinian land and are an obstacle to an independent Palestinian state, and it's time for us to put an end to that harm," he was quoted by the AP news agency as saying.
The participation of Israeli companies in the construction of Rawabi is both an ironic twist on the use of Palestinian labourers in building illegal Jewish settlements, as well as a reminder of how much the 43 years of Israeli occupation has made the Palestinian economy dependent on Israel.
Dani Dayan, a settler leader, said that Israeli companies agreeing to the Palestinian conditions are "a capitulation to the boycott".
Palestinian activists and their supporters have launched a global boycott campaign to persuade investors to divest Israeli holdings and boycott Israeli companies over the illegal occupation.
The economic impact has been negligible, but for Israel the negative publicity has been unwelcome.
Israel accuses boycott advocates of trying to delegitimise it and argues that many foreign companies with ties to authoritarian regimes are not similarly targeted.
Palestinian Prime Minister Fayyad has publicly advocated the boycott of settlement goods in the West Bank and, earlier this year, his government passed a law imposing heavy penalties and jail time on Palestinians who work in settlements.
But there have been few alternative sources of employment for the estimated 21,000 Palestinians who work in settlement construction, agriculture or industry. As a consequence, the law is reportedly not being enforced.
Some 300,000 Israelis live in more than 120 illegal settlements across the West Bank - almost a threefold increase since the two sides launched their first round of peace talks 17 years ago.
An additional 180,000 live in occupied East Jerusalem, the section of the holy city claimed by the Palestinians as a future capital.
Meanwhile, Rawabi, which will have tall apartment blocks, shaded pedestrian walkways, a concentric road network and abundant trees, has come under criticism for being too similar in appearance to Israeli settlements.
Ahmed Moor, a Palestinian-American freelance journalist, said that when he first heard about the Rawabi plan, he was "repulsed".
In an article for the Mondoweiss website, he described it as "something so clearly alien, something so obviously conceived in an alien mind, masquerading as Palestinian".
'Their own land'
Moor also took exception to the fact that the Jewish National Fund (JNF), established by the Zionist Congress in 1901 to acquire land for Jewish settlement, had donated thousands of trees to be planted in Rawabi.
He said that while "Palestinians can barely secure permits to build on their own land", a forest on the edges of the new city was being funded by a Zionist organisation.
After this was brought to public attention by a story in Israel's Haaretz newspaper, Jewish and Zionist organisations criticised the move, arguing that JNF should be dealing soley with the advancement of Israeli projects.
Alon Badihi, an executive director of JNF, was subsequently quoted by The Jerusalem Post as saying: "The JNF was mandated by the Israeli government as the national forest service for the Land of Israel. This project was carried out under that mandate."
Financed with money from the Qatari government, Rawabi is eventually intended to house 40,000 people and to create 5,000 permanent jobs.