Nine countries, including France, the UK and Australia, have warned that settlement-related violence must end and that businesses should avoid participation in the E1 development, where tenders have been opened for more than 3,000 housing units between Jerusalem and Ma’ale Adumim.

The proposed construction would effectively divide the West Bank into northern and southern sections, making a contiguous Palestinian state geographically difficult, according to critics.

The issue has triggered political pressure in the UK, with 137 Labour MPs urging Foreign Secretary Yvette Cooper to take stronger action against settlement expansion, including ending trade with illegal Israeli settlements.

In a joint letter, MPs argued that continued inaction is “unacceptable” and called for “urgent, concrete action” to counter what they described as escalating violations in the occupied West Bank and East Jerusalem.

Campaigners and MPs supporting the move said restricting trade with settlements would send a clear message that such developments lack international legitimacy.

The proposal aligns with recent international positions, including a joint statement from nine Western countries warning that the E1 project would breach international law and urging companies not to bid for construction tenders.

The UK package is expected to outline sanctions targeting firms involved in E1-linked activity and entities accused of supporting settler violence, though it remains unclear whether it will extend to a full ban on trade with settlements.

The debate follows broader international criticism of Israel’s settlement policy and renewed diplomatic discussions involving Gaza, where mediators continue efforts to revive stalled negotiations between Israel and Hamas.