'Expanding Jewish settlements will destroy peace process'

"The Palestinian Authority strongly criticises the American position regarding the expansion of Israeli settlements," Palestinian leader Yasser Arafat's top advisor, Nabil Abu Rudeina, told AFP.

"The American position is harmful to the peace process and the roadmap and ... encourages the Israeli government to accelerate its aggressions and its war against the Palestinian people."

The US-backed roadmap peace plan requires Israel to freeze all construction in the West Bank and Gaza Strip, including natural growth.

But a US diplomatic source confirmed Sunday a report in the New York Times that Washington had now adopted "a covert policy decision toward accepting natural growth".

US officials declined last week to condemn Israeli Prime Minister Ariel Sharon's decision to approve the construction of 1,000 new homes in four of the largest exisiting West Bank settlements, a move widely interpreted as a bid to placate opponents of his plan to pull settlers out of the Gaza Strip.

"It looks like the official policy is now catching up with the reality," the diplomatic source said, adding that it should not be interpreted as carte blanche to expand the settlements.

Palestinian negotiations minister Saeb Erakat declined to criticise the US government but said that settlement activity in direct contravention of the terms of the roadmap would only serve to wreck the chances of a peace deal.