Despite encountering a wall of opposition from both the Obama administration and Congress during his recent visit to Washington, Israeli Prime Minister Benjamin Netanyahu insisted he would nevertheless expand existing settlements in the West Bank to account for "natural growth." But as the Israelis again made clear, they are relying on a secret 2004 agreement with President Bush which, contradicting his administration's public statements, gave a greenlight to new settlement activity.
To be sure, the line from Washington has been consistent. President Obama told Netanyahu during their White House meeting, "Settlements have to be stopped in order for us to move forward." On Tuesday, Secretary of State Clinton was even more blunt, declaring, "We want to see a stop to settlement construction, additions, natural growth -- any kind of settlement activity," adding, "That is what the president has called for."
But on Sunday, Israel's new prime minister made clear he would defy the pressure applied by both President Obama and the Bush administration before him:

"We will not build new settlements," he said, according to remarks released by his office. "But it is not fair not to provide a solution to natural growth."
An official who attended the meeting quoted Netanyahu as saying, "There is no way that we are going to tell people not to have children or to force young people to move away from their families." The official spoke on condition of anonymity because the meeting was closed.

To bolster its case, the Netanyahu government insisted President Bush gave his private blessing to what claimed to oppose in public. As the Washington Post reported Sunday:

[Netanyahu spokesman Mark] Regev said the Israeli government is relying on "understandings" between former president George W. Bush and former prime minister Ariel Sharon that some of the larger settlements in the occupied West Bank would ultimately become part of Israel, codified in a letter that Bush gave to Sharon in 2004. In an interview with The Washington Post last year, Sharon aide Dov Weissglas said that in 2005, when Sharon was poised to remove settlers from Gaza, the Bush administration arrived at a secret agreement -- not disclosed to the Palestinians -- that Israel could add homes in settlements it expected to keep, as long as the construction was dictated by market demand, not subsidies.

But while the Bush administration in April 2008 claimed "no such agreement exists," former deputy national security adviser Elliot Abrams this week admitted otherwise. Abrams, who negotiated the arrangement with Weissglas, acknowledged, "There was something of an understanding realized on these questions, but it was never a written agreement."
It wasn't a written agreement, it turns out, but a clandestine exchange of personal letters in 2004 between President Bush and Prime Minister Ariel Sharon which secretly gave Israel Washington's blessing to expand existing settlements contrary to the proposed Middle East Road Map.
As the Washington Post detailed on April 23, 2008, the letter George W. Bush personally delivered to then Israeli Prime Minister Ariel Sharon not only contradicted the administration's public position on settlements. It gave Sharon's successor Ehud Olmert ammunition to claim Bush stood behind him:

Ehud Olmert, the current Israeli prime minister, said this week that Bush's letter gave the Jewish state permission to expand the West Bank settlements that it hopes to retain in a final peace deal, even though Bush's peace plan officially calls for a freeze of Israeli settlements across Palestinian territories on the West Bank...
...Israeli officials say they have clear guidance from Bush administration officials to continue building settlements, as long as it meets carefully negotiated criteria, even though those understandings appear to contradict U.S. policy...
..."It was clear from day one to Abbas, Rice and Bush that construction would continue in population concentrations -- the areas mentioned in Bush's 2004 letter," Olmert declared in an interview with the Israeli newspaper Yedioth Ahronoth, published Sunday. "I say this again today: Beitar Illit will be built, Gush Etzion will be built; there will be construction in Pisgat Ze'ev and in the Jewish neighborhoods in Jerusalem," referring to new settlement expansion plans. "It's clear that these areas will remain under Israeli control in any future settlement."

Of course, that presupposes the outcome of a peace process which is far from concluded.
And such an agreement would also fly in the face of repeated public statements by President Bush and his top officials. As far back as 2002, President Bush insisted "Israeli settlement activity in the occupied territories must stop." Speaking in Jordan on March 31, 2008 during a swing through the region, Secretary of State Condoleezza Rice reiterated Bush's firm opposition to new settlement activity in the West Bank, even as the Israeli government announced plans to build hundreds of new homes in the occupied West Bank:

Asked, however, about Israel continuing to approve construction of new housing in contested territory, Rice criticized the close U.S. ally.
"Settlement activity should stop - expansion should stop," Rice said.

That hard line, as it turned out, was a façade.
For its part, the Obama administration apparently plans to reopen the issue. As the Post concluded today:

Regev said Israeli and U.S. negotiators are discussing the degree to which the terms of the 2004 letter will apply under the new administration, but U.S. officials indicated that Obama wants to move beyond the 2004 letter and hold Israel to its commitments under the road map. "The bottom line is we expect all the parties in the region to honor their commitments, and for the Israelis, that means a stop to settlements, as the president said," a senior administration official said.