The Palestinians have threatened that indirect, U.S.-mediated peace talks with Israel may be thwarted unless Israel cancels a plan announced this week to build 1,600 new homes in a settlement near Jerusalem.

U.S. Middle East Envoy George Mitchell returns to the region next week to try to salvage the process. Israel announced in November a limited, 10-month freeze on settlement construction in an attempt to persuade Palestinians to return to talks.

Here are some facts about the settlements:

* Israel dismisses international findings that the communities it has been building since the 1980s in the West Bank, on land occupied by the Israeli military since 1967, constitute a violation of international law.

* It has built more than 100 which are home to 500,000 Jews or nine percent of Israel's Jewish population. Some are big, established towns close to Israel, others are red-roofed villages on remote West Bank hilltops fenced off and protected by the army. Some 200,000 of the half million settlers live in East Jerusalem and adjoining areas of the West Bank that Israel annexed to its Jerusalem municipality in a move not recognized by world powers.

* Settlement building has been a contentious issue for years. The on-again, off-again peace process assumes that if there ever is a treaty between Israel and the Palestinians, smaller, more remote settlements will be abandoned but major towns officially will become part of Israel in a land swap deal.

* Many settlers living in enclaves nearest to the cities of Tel Aviv and Jerusalem cite cheaper housing costs as a motive. Others see themselves as pioneers exercising a biblical right of Jews to lands they call Judea and Samaria.

* But last year settlement expansion became a major obstacle to reviving peace negotiations that were suspended in December 2008. The Palestinians, who number some 3 million in the West Bank and East Jerusalem, said all building must stop before they would resume talks with the Israeli government that took office in March. At first Washington echoed this call for a freeze.

* In June, President Obama said: The United States does not accept the legitimacy of continued Israeli settlements. This construction violates previous agreements and undermines efforts to achieve peace. It is time for these settlements to stop.

* Prime Minister Benjamin Netanyahu's coalition is backed by pro-settler parties who want to keep much of the West Bank under any peace deal. He told Obama he won't start new settlements but wants to expand some existing enclaves to accommodate what he calls the natural growth of these communities. And the partial moratorium does not include areas annexed to Jerusalem.

* Palestinian President Mahmoud Abbas this month dropped his demand for a full settlement freeze as a precondition to resuming peace negotiations and agreed to indirect, U.S.-mediated talks with Israel. The Palestinians now say those talks may be thwarted unless Israel cancels its decision to expand a settlement near Jerusalem.

(Jerusalem newsroom, editing by Michael Roddy)

Israel