JERUSALEM — The Palestinians hope to regain the diplomatic high ground following Israel's announcement it will build another 700 housing units in two West Bank settlements.

That hope exists despite this week's escalation of violence.

Housing Minister Natan Sharansky's insistence that the construction was approved under former Prime Minister Ehud Barak did little to mute the international condemnation, including the U.S. State Department's characterization of the move as provocative.

Foreign Minister Shimon Peres has his work cut out to justify the decision to build in Alfei Menashe and Ma'aleh Adumim.

On a midweek visit to Turkey, Peres insisted the new construction falls within government policy guidelines, which rule out building new settlements but hold out the prospect of expanding existing settlements to account for communities' "natural growth."

Israeli Prime Minister Ariel Sharon reportedly took much the same line in a telephone conversation with Secretary of State Colin Powell over the weekend. Sharon advised Washington to discount rhetoric from right-wing junior Cabinet ministers that may seem to contradict what he calls a policy of "relative restraint" in settlement building.

Sharon was at pains to stress that he, not anyone else, sets policy — and that Peres is privy to it.

Sharansky emphasized Tuesday that the building was planned for settlements "in the heart of the consensus" — in other words, within the settlement blocs to be annexed by Israel under proposals discussed at last summer's Camp David summit.

The Palestinians eventually rejected those proposals, although the land issue appeared to be less of an obstacle than other issues.

As time passes without a final Israeli-Palestinian peace agreement, more requests come in for building licenses. Ha'aretz reported Tuesday that the Housing Ministry plans to put land on the market before year's end for another 5,000 homes in West Bank settlements.

Critics often claim Barak built much more in the West Bank than prior administrations but faced little backlash because his Labor-led coalition was perceived internationally as "pro-peace."

The issue is complicated by the fact that the approval process for construction can drag on for years, meaning that units built by one government may have been planned and approved by former administrations now insulated from criticism.

Sharansky noted that 3,500 new homes had been built in settlements over the past five years, 1,000 of them during Barak's tenure.

"When there are negotiations, the opponents say, 'Don't build during negotiations,'" Sharansky said. "Now there are no negotiations, the opponents say, 'Don't build because that will deter a resumption of negotiations.' That way, nothing would ever get built."

The settlement issue stirs up instant, almost instinctive condemnations throughout the international community — and those have been quick to pour in this time, too. Sharon will have to tread carefully between his cardinal desire to maintain warm relations with the Bush administration and his wish to keep Likud hardliners and right-wing coalition partners loyal.

Inside Israel, too, settlement building always generates controversy. Some observers claim to see the first signs of strain within the unity government as Labor's Cabinet ministers shuffle uneasily with the collective responsibility for the decision.

Significantly, though, such creaking on the coalition benches has been muffled and low key.

France was quick to claim this week that settlement building, and not Palestinian rejectionism, is the principal obstacle to peace in the region. That claim must have gratified Palestinian leaders, who have seized on the construction announcement to put the settlement issue back on the international agenda, taking the focus off Palestinian-initiated vi