Israel began preparing sites for eight new settlements to be built in the occupied northern Sinai yesterday in a move that could touch off serious controversy in the peace negotiations between Israel and Egypt.
The United States asked Israel to clarify the reports that Israel had authorized new settlements in the Sinai and the West Bank.
State Department spokesman Tom Reston said U.S. policy continues to oppose the establisment of Israeli settlements in occupied territory on grounds that they are in conflict with international law and are an impediment to peace. Reston added: "We consider such settlements to be in contravention of our policy."
U.S. Ambassador Samuel Lewis saw Prime Minister Menahem Begin in Israel yesterday but Reston said he could not say whether the subject arose during their meeting.
Earlier this year, the Carter administration sharply criticized the Begin government for expanding settlements on the West Bank of the Jordan River. It said the policy hindered efforts towards peace.
The latest Israel action affects the northern Sinai, where bulldozers were reported leveling sites for eight new outposts between Al Arish and the Yamit settlement where the Gaza Strip meets the Sinai.
It came amid the most serious effort the region has seen to reach peace following Egyptian President Anwar Sadat's history-making trip to Jerusalem in November.
In a related development, Israeli television reported tonight without citing its sources that the Israeli government settlement committee had approved investment of $24.5 million for projects in the Sinai peninsula.
It said one project included establisment of an urban settlement and a new village near Neweiba, an oasis on the coastal road to Sharm el Sheikh.
Four new hotels are to be built near Sharm el Sheikh, the strategic outpost on the southern tip of the Sinai peninsula.
It wa not clear whether serious construction is really intended at the Sinai sites. There is some speculation that Israeli work on the settlements is meant both as a form of pressure on Egypt and as a way to satisfy Israelis suspicious that the Begin government may abandon Israeli settlements in the occupied territories.
The locations of the bulldozing operations seemed to be within the general perimeter of existing Israeli settlements in the region. This is consistent with the Israeli Cabinet's decision not to extend settlements to new areas but to beef up settled areas pending the outcome of negotiations with Egypt.
In another development, one of Begin's oldest and closest associated resigned his government position today in an apparent protest over the government's proffered concessions on the occupied territories.
Shmuel Katz, who was Begin's special adviser on information policy and sat in on Cabinet meetings, had been with Begin since the days of the jewish struggle against Britain for independence in the 1940s. His defection is bound to be see as a major blow in Begin's drive to keep the bulk of his own Likud Party behind him.
Katz touched off a controversy last summer when he issued a directive to Israeli state radio and television that they should stop referring to the West Bank as "administered territory" and use the biblical names of Judea and Samaria. The directive was ignored.