Updates

Update from AIJAC

August 19, 2011
Number 08/11 #05

As readers are probably aware, there was a major terror attack in southern Israel yesterday, the most serious in a number of years, in which 8 Israelis were killed by a group of terrorists who apparently crossed from Gaza into Sinai, and then into Israel (a useful timeline on the attack is here). Israel responded with airstrikes in Gaza that reportedly killed the leader of the group believed responsible, together with five other terrorists.

The attack raises questions about diminished Egyptian control of Sinai, as well as the growth of extreme Salafist Islamist groups in both the Sinai and Gaza. As Israeli Defence Minister Ehud Barak stated: ” The incident reflects the weakness of Egypt’s hold over Sinai and the spread of terrorist elements.”

We lead with a look at these implications of the attack from Dr. Boaz Ganor, the head of Israel’s Institute for Counter-Terrorism in Herzliya. Quoted in the Israeli business daily Globes, Ganor explores both Cairo’s loss of the control over Sinai and the spread of Salafism. He recommends that Israel complete the construction of a fence along the Sinai border as the only solution to the terrorist threat from there. For Ganor’s full analysis, CLICK HERE. More on the Sinai context of the attack comes from security correspondent Roee Nahmias of Ynet, while the Jerusalem Post seconds Ganor’s call to “finish the fence” along the Sinai border.

Next up, looking at the Sinai situation in considerably more detail is Andrew McGregor, an analyst with the Jamestown Foundation, a Washington-based counter-terrorism think tank. McGregor notes that “The near collapse of Egypt’s internal security forces has opened Egypt to a resurgence of Islamist violence that would have been inconceivable a year ago” and details the growth of Salafist groups in Sinai, as well as the increasing independence of the Bedouins in the area, leading to an attack on a police station in el-Arish and repeated attacks on the Gaza gas pipeline from Egypt to Israel, Jordan and Syria. He also discusses, very informatively, efforts this week by Egyptian Government forces to re-assert a measure of control. For everything that everyone should understand about the Sinai situation, CLICK HERE. A useful AIJAC blog post from last week summarising various reports of Sinai chaos and anarchy is here, while the always insightful Barry Rubin had some comments on why the attack amounts to a major escalation in the terror war against Israel.

Finally, there has been controversy over the past week over Israeli building announcements in both east Jerusalem and the West Bank settlement of Ariel. Former senior American official turned analyst Elliot Abrams looks at the reality of the the Ariel announcement in terms of overall Israeli settlement policy – noting that, as per agreements made in 2003, “Ariel will expand in population but not in land area.  It is not, in the usual Palestinian Authority parlance, ‘taking more Palestinian land.'” He goes on to make it clear that despite the US Administration’s focus on this issue, “It is not reasonable to view it as a violation of international law and a threat to a peace agreement every time bricks and studs and drywall show up at the center of an Israeli settlement in the West Bank.  In the real world those new units in Ariel do not make a final peace agreement harder.” For this important piece explaining some little understood realities concerning the settlement controversy, CLICK HERE. Some important comment on the Jerusalem building also announced to some controversy comes from American columnist Jonathan Tobin.

Readers may also be interested in:

• More and more articles are appearing calling attention to Palestinian financial woes, and how plans to seek UN state recognition may exacerbate the situation – read these stories from the Los Angeles Times and Businessweek, plus a Jerusalem Post editorial.
• Noted Israeli Arab journalist Khaled Abu Toameh – who is currently visiting Australia – on how both the PA and Hamas have so far successfully closed down any Palestinian equivalent of the Arab spring.
  
• On the Syrian front, the US Administration finally took the step of urging Bashar al-Assad to step down. Some knowledgeable preliminary reaction is here, here and here.
• In other news yesterday, Israel reportedly told the US it would not issue an apology to Turkey over the Mavi Marmara incident last year. American analyst and recent visitor to Australia Michael Rubin explains why he believes this was the right decision. He also had an interesting post on Turkish hypocrisy over Kurdish versus Palestinian terrorism.
• Meanwhile, US foreign policy pundit Walter Russell Mead has an excellent survey of Turkey’s changing foreign policy and its implications.
• Another bizarre anti-Israel conspiracy theory from Egypt – Israel’s Mossad was supposedly plotting to sell Egyptians hair products which would cause infertility.
• Some examples from the many stories and comments now appearing at AIJAC’s new daily “Fresh AIR” blog:
  • A post noting the lack of world reaction when it is Syrian forces which send Palestinian refugees fleeing from their homes.
  • A post on why Palestinians are not heeding PA calls for mass protests.
  • Egyptian TV using children and puppets to broadcast the message that all Egypt’s problems, including the tyranny of the Mubarak regime, are Israel’s fault. Plus, some potential improvements with respect to the disarray of  liberal opposition groups in Egypt.
  • A post detailing the apparent survival plans of Syrian dictator Bashar al-Assad.
  • One of their own exposes the reality behind claims about “non-violent” BDS protests outside Max Brenner chocolate shops in Australia.
  • Our latest “Media Week” analysing the best and worst of the Australian media.

“Where a Sudanese refugee can enter, so can a terrorist”

Terrorism expert Dr. Boaz Ganor sees jihadists, not Hamas, behind today’s attacks.

Chen Ma’anit
Globes, 18 August 11 20:13,

Today’s combined terrorist attacks that originated from Sinai took most of the Israeli public by surprise, as it has been busy with the tent protest and the Margalit Tzanani affair, but Dr. Boaz Ganor, director of the Institute for Counter-Terrorism at the Interdisciplinary Center Herzliya was not surprised. He says that such an attack was predictable ever since the fall of President Hosni Mubarak in Egypt, the fall in status of Hamas in Gaza, and the fact that the border is wide open.

“In the past few months, we have seen a substantial rise in terrorist activity in Sinai, expressed in the statement by jihadists affiliated with al-Qaeda on the establishment of a Caliphate in Sinai. They even call themselves ‘Sinai al-Qaeda’,” says Ganor.

He says that, since the terrorist attack at Taba in 2004, Egypt has had no effective control over Sinai, which has made it easy for terrorist organizations to operate there.

“Even during the Mubarak government, control of Sinai was shaky. Now that the Egyptian regime is busy with political survival and all its actions are perceived as helping or collaborating with Israel and examined under a microscope by the Egyptian people, the regime is even more hesitant than before in frustrating terrorist activity,” says Ganor.

“According to one estimate, there are tens of thousands of jihadists operating in the area today. They belong to various organizations, which have grown stronger since the fall of Mubarak. The threat from the south has increased and border is open. We also see many jihadists escaping from Egyptian jails, and they are joining the terrorist forces in Sinai. Besides them, there has been a steady increase in the number of Palestinians joining organizations affiliated with al-Qaeda. These Palestinians are fed up with Hamas, which they perceive as too pragmatic vis-à-vis Israel.”

Who do you think is responsible for today’s terror operation?

“We still don’t know for sure who is responsible for the incident, but in my view there are two main possibilities. One, the less probable of the two, is that it was perpetrated by Palestinians who crossed from Gaza into Sinai, and from there back into Israel. We have seen attacks on this format in the past. The likelihood that this is the case this time is low, because Hamas has no interest in escalating the situation with Israel at present.

“The other, more likely, possibility is that the attacks were carried out by cells belonging to world jihad and al-Qaeda. These cells have also hit the gas pipeline from Egypt to Israel time after time, and they will continue trying to carry out terrorist actions, with greater intensity, against Israel.”

How can a deterioration on the southern border be prevented?

“The State of Israel needs an obstacle on the ground in the South. It could be in the form of a fence, a trench, a minefield, technological means, or, preferably, a combination of all of these. At the moment, the border is porous, and for much of its length ‘there’s air and no obstacle.’ Where a Sudanese refugee can get through, a terrorist can certainly get through too. You also have to remember that the jihadist element represents a worldwide threat, among other things to the Egyptians, whose sovereignty has been dented. The battle against terror must continue to be a regional and international battle.”

Published by Globes [online], Israel business news – www.globes-online.com – on August 18, 2011

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Hot Issue– Has Al-Qaeda Opened A New Chapter In The Sinai Peninsula?

By: Andrew McGregor

Jamestown Foundation, August 17, 2011

Executive Summary:

In the absence of police and government security forces, al-Qaeda-sympathetic movements, including al-Shabaab al-Islam (The Youth of Islam), have formed in the Sinai Peninsula. The demands of these Salafi-Jihadist groups reflect both local and regional concerns. Among their demands are calls for a full implementation of Shari’a, the revocation of Egypt’s treaties with Israel, the establishment of an Islamic Emirate in the Sinai and Egyptian military intervention against Israel on behalf of the Palestinians in Gaza. Despite a statement proclaiming the establishment of al-Qaeda in the Sinai Peninsula, core al-Qaeda has not yet acknowledged this new chapter of the movement. Sinai-based militants have repeatedly targeted a natural gas pipeline to Israel in a show of distaste for Arab-Israeli relations and to strike a symbol of the corruption of Mubarak’s regime. These attacks and the recent storming of a police station by armed militants in the regional capital of al-Arish have alarmed Cairo, which has lost control of the region since security forces fled Bedouin attacks in the January revolution. In response to these developments, Egyptian security forces have returned to the Sinai, though there are conflicting accounts of whether their mission will be solely defensive or directed at eliminating the militant threat. The size and armament of the deployment is limited by restrictions imposed by the Camp David Accords signed with Israel. The long standing alienation of the Sinai Bedouin from the rest of Egypt and the growth of a radical Salafist movement influenced by like-minded groups in Gaza have combined to pose a serious challenge to a regime that is handcuffed in its response.

Introduction

The one area of Egypt that appeared ready to explode into violence during last January’s revolution was the Sinai. Unlike the unarmed, peaceful demonstrators that filled the streets of Cairo and Alexandria, the Bedouin tribesmen of the Sinai were well armed and already engaged in a low-level conflict with Egyptian authorities over a number of issues, including Bedouin smuggling activities, a traditional occupation that has lately become politicized through Bedouin interaction with radical Islamists in Gaza, the end-user of the weapons the desert dwellers are shipping to Sinai’s eastern border. Possibly the only reason a large-scale conflict did not break out in Sinai at the time was the flight or desertion of nearly all the police and security forces based in Sinai after a number of attacks on police stations. Now, however, after a growing number of acts of militancy and the release of an alarming video allegedly depicting the formation of an al-Qaeda-sympathetic movement in Sinai known as al-Shabaab al-Islam (The Youth of Islam), Egypt’s security forces are back, this time accompanied by a significant military presence. [1] The release of the video and a subsequent statement followed an attack on an al-Arish police station in northeast Sinai and the fifth attack this year on a pipeline supplying natural gas to Israel

Al-Qaeda in the Sinai Peninsula

An August 2 pamphlet distributed in al-Arish entitled “A Statement from al-Qaeda in the Sinai Peninsula” displayed a mix of local and regional concerns, demanding an Islamic Emirate in the Sinai, an end to the exploitation of Sinai’s wealth by non-residents, the full implementation of Shari’a, an end to discrimination against the Bedouin, the revocation of Egypt’s treaties with Israel and Egyptian military intervention on behalf of the Palestinians in Gaza. It also questioned the military government’s efforts to halt drug-smuggling in the region (Youm7.com [Cairo], August 2; Bikya Masr [Cairo], August 2). Though the video was carried on jihadi websites before being taken down by its host, the declaration of a new branch of al-Qaeda in this highly sensitive and strategic region has yet to be supported by a statement from any of al-Qaeda’s known media outlets.

Despite the influx of Egyptian security forces into the Sinai, the military-run interim government is reluctant to acknowledge the emergence of an al-Qaeda chapter in the Sinai. One state-controlled Egyptian daily described the group’s declaration as “a fabrication” (al-Jumhuriyah [Cairo], August 4).

The latest disturbances began on July 29 when tribesmen in Land Cruisers or on motorcycles attacked a police station in al-Arish, killing three civilians and two security officers as well as wounding 19 others (MENA Online, July 30). The attack occurred the same day as an estimated one million Islamists gathered in Cairo’s Tahrir Square to demand an Islamic state in Egypt. Tribal sources indicated that most of the attackers came from a single village that had become a stronghold of Salafi-Jihadis who “raise the black flags of al-Qaeda” (al-Ahram [Cairo], August 1). A later statement by police said that 15 suspects had been arrested in connection with the attack, ten of them Palestinians (al-Ahram, July 31).

On July 30, an Egyptian National Gas Company (Gasco) pipeline carrying natural gas to Israel was attacked for the third time in a month, and the fifth time this year. The attackers punched a hole through the pipeline with rocket-propelled grenades. The pipeline was still out of operation following an earlier attack on July 12 (Jerusalem Post, July 31). Israeli sources indicate that a second attack on the pipeline in the early hours of July 30 was beaten off by private security forces working for Israel’s East Mediterranean Gas Company (Globes Online [Rishon LeZion], July 31).

Beside the militants’ distaste for Israel, the pipeline also symbolizes the corruption of the Hosni Mubarak regime, which is believed to have offered a contract at below-market prices to Israel in return for kickbacks. The loss in revenue to the Egyptian state is estimated at roughly $700 million. One tribal leader insisted that locals viewed such attacks by militants as little more than a nuisance: “The most they do is torch the pipeline that transfers gas to Israel and we couldn’t care less about whether Israel has gas or not” (Daily News Egypt, August 12). The steady series of attacks on the $500 million al-Arish to Ashkelon pipeline have placed the future of the project in jeopardy and Israel is already looking for alternative supplies.

Further unrest spread to the main border crossing with Gaza at Rafah, a key smuggling site, where Egyptian police turned back hundreds of people (Ma’an News Agency [Bethlehem], July 31).

The Bedouin Struggle with the State

As the meeting point of Asia and Africa, the Sinai has always been important to Egypt’s security. Though the Sinai has been, with brief interruptions, a part of Egypt in one form or another since the time of the First Egyptian Dynasty (c. 3100 – 2890 B.C.E.), it has also been regarded as something apart from the Egypt of the Nile and Delta, a remote wasteland useful for mineral exploitation and strategic reasons but otherwise best left (outside of Egyptian security outposts) to the unruly Semitic and Bedouin tribes that have called the Sinai home since ancient times. The effect of these policies is that the Sinai Bedouin form only a tiny minority of Egypt’s total population, but retain an absolute majority in the Sinai.

In recent decades, however, Cairo has attempted to impose the deeply infiltrated security regime that existed in the rest of the country up until last January’s revolution. Many Bedouin involved in traditional smuggling activities found themselves in Egyptian prisons serving long sentences in often brutal conditions. The attempt to impose a security regime on the freedom-minded Bedouin led to a greater alienation of the tribesmen from the state, and the Egyptian uprising presented an opportunity to quickly roll back decades of attempts to impose state control on life in the Sinai. Most importantly, it opened the door for those influenced by the Salafist movements of neighboring Gaza to begin operations.

There are roughly 15 Bedouin tribes in the Sinai. In the politically sensitive northeast region (including al-Arish and the border area) the most important are the Sawarka and Rumaylat. There are also significant Palestinian populations in al-Arish and the border towns of Rafah and Zuwaid.

Local Bedouin took the opportunity of storming the Sinai’s prisons, freeing an unknown number of Bedouin smugglers and Palestinian militants. In nearly all cases they were unopposed by prison staff. One of the escapees was Ali Abu Faris, who was convicted for involvement in the Sharm al-Shaykh bombings that killed 88 people in 2005. Others freed included Lebanese and Palestinian prisoners convicted more recently of planning terrorist operations in Egypt (see Terrorism Monitor, June 12, 2009). Since emptying the prisons the tribesmen have warned the police to stay out of the main smuggling centers on penalty of death and the region has been effectively operating without any type of government. Police stationed in the north Sinai have tended to be drawn from Egypt’s Nile and Delta population rather than local sources, giving the impression of an occupation force to some of the Sinai’s more-independent minded Bedouin.

One unintended consequence of sealing the border between Gaza and Egypt has been growing cooperation between Bedouin and Gazan smugglers. While goods and arms have passed into Gaza, Salafi-Jihadi ideology has crossed into Sinai in return. A new and volatile combination of Bedouin dissatisfaction, Palestinian radicalism and Salafist-Jihadi ideology erupted in 2004 with the emergence of the Tawhid wa’l-Jihad (Monotheism and Struggle) – a mixed Bedouin-Palestinian group that opposed the presence of Egyptian security forces and sought to end tourism in the region, especially visits to historical or archaeological sites, which the group regarded as idolatry. The new group carried out a series of bombings in 2004-2005 that targeted tourist resorts in Sinai (well used by Israelis) and international peacekeepers belonging to the Multinational Force and Observers (MFO) (see Terrorism Monitor, May 2, 2006). The government security operations that followed cast a very wide net, killing dozens of suspects and sweeping thousands of Bedouin into detention, creating an ever more hostile relationship between the Bedouin and Egyptian administrators and security forces.

Cairo’s Military Response

Cairo addressed the emerging threat on August 12 by sending over 2000 troops from the Egyptian Second Division backed by police and border guards to al-Arish, along with a number of armored vehicles stripped of their main armaments to meet security obligations under Egypt’s treaty with Israel. Authorities were emphatic that the deployment was for defensive purposes only and that none of the troops would be “chasing anyone in Sinai’s mountains” (al-Masry al-Youm, August 12). The deployment marks the largest Egyptian military presence in the Sinai since the signing of the 1979 Camp David Accords.

The military response is hampered by Camp David Accord restrictions on the deployment of Egyptian military forces in parts of the Sinai, especially in the sensitive “Zone C” near the Israeli border, where only international peacekeepers and Egyptian civilian police were allowed to carry arms before a 2005 agreement with Israel permitted the deployment of 750 soldiers to secure the border. Al-Arish is located in Zone B, where Egypt is permitted to maintain four border security battalions, but Rafah and Zuwaid are within Zone C.

Despite attempts to downplay the extent of the deployment in Sinai, the inclusion of two brigades of Special Forces (1,000 men) would indicate significant operations are planned. Security sources claim the deployment is called “Operation Eagle” and is designed to restore security in the Sinai in three phases:

• Supported by armored vehicles and warplanes, the troops will restore security in northern Sinai and crack down on organized crime and smuggling rings in al-Arish.
• Security forces will then deploy in the border towns of Rafah and Zuwaid, where they anticipate strong resistance. Salafists have already destroyed the shrine of Shaykh Zuwaid in the town that bears his name, an action typical of Salafist ideology.
• The last phase of the operation will be a coordinated ground-air offensive in the mountains of central Sinai, particularly the Mount Halal area, which is believed to be a haven for militants (al-Masry al-Youm [Cairo], August 13; Egyptian Gazette, August 13).

So far, the deployment has not impressed many tribesmen. Of the disarmed armored vehicles, tribal leader Shaykh Hassan Khalaf remarked: “They look stupid and are completely useless in facing Islamist groups who carry machine guns and heavy artillery. Israel has tied the army’s hands.” North Sinai governor al-Sa’id Abd al-Wahab Mabruk has denied the existence of “Operation Eagle,” insisting that the newly arrived security forces will be limited to protecting individuals and buildings (Daily News Egypt, August 12).

The return of the Egyptian military to sensitive areas of the Sinai has been encouraged in some quarters of Egypt as a necessary step to allay fears of Israeli military action designed to protect Israel’s security in the border region (al-Ahram [Cairo], August 12). Typical of the suspicion regarding Israeli intentions is a report in a Saudi-owned pan-Arab daily that said Egyptian security sources claimed to have intelligence regarding contacts between the militants and Israel’s Mossad in relation to obtaining material support for further terrorist operations that would give Israel an excuse to stop the opening of the Rafah border crossing with Gaza (al-Sharq al-Awsat, August 12).

The Salafist Denial

Reports are circulating that claim Sinai’s Salafist community intends to replace traditional Bedouin councils with courts run by Salafist shaykhs, their writ enforced by 6,000 armed men. According to a leading local Salafist, Shaykh Sulayman Abu Ayyub, the Salafists “will work to serve justice between people, even if we have to use force through youth members” (al-Misri al-Youm [Cairo], August 10). Local Salafist leader Shaykh As’ad al-Beek has denied the reports, however, maintaining that the Salafists do not conduct any armed activities (Daily News Egypt, August 12).

The leader of the Salafist movement in al-Arish, As’as Bey al-Arish, denied that the Salafis had entered into any confrontations with police in Sinai, claiming that such rumors originate with Israel’s Mossad, which “propagates such rumors to foster instability in Sinai” (Youm7.com [Cairo], August 12; Bikya Masr [Cairo], August 12). Other Salafist leaders have denied that the movement had any part in the attack on the al-Arish police station (MENA Online, August 2).

Conclusion

The near collapse of Egypt’s internal security forces has opened Egypt to a resurgence of Islamist violence that would have been inconceivable a year ago. There are now concerns within Egypt that the nation’s sizeable but divided Islamist community intends to usurp the secular revolution to impose an Islamic state in Egypt.

Aside from suspicions of Israeli involvement in instigating the unrest, some Egyptian commentators see the hand of HAMAS behind the disturbances in the Sinai (al-Akhbar [Cairo], August 10). However, there seems to be a general reluctance to discuss the specific grievances of the Sinai Bedouin or their place in Egyptian society. Thousands of years of Egyptian occupation have failed to integrate the native peoples of the Sinai Peninsula into Egypt, whether socially, politically or even economically. The persisting sense of alienation provides fertile ground for the growth of militancy, conditions easily exploited by Salafist-Jihadi groups that see themselves as fighting two enemies in the region – the apostate regime in Cairo and the Zionist regime in Israel. While the enhanced security force now in the Sinai may be able to restore some semblance of security in the urban areas of the northeast, it will almost certainly be insufficient to tackle the militants should they decamp to the wild, cave-ridden mountain region of central Sinai.

Note:

1. The video was posted to YouTube (www.youtube.com/watch?v=OYuKeeIVFzM ) on July 27, but has since been removed “as a violation of YouTube’s policy on depiction of harmful activities.”

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Will Ariel Block Peace?

by Elliott Abrams

Council on Foreign Relations, Posted on Tuesday, August 16, 2011

If there is a single issue that explains the failure of Obama policy toward Israel, it is settlements. And this week the Administration once again indulged itself in a knee-jerk reaction that displayed incomprehension in a way that harms U.S.-Israeli relations without doing the slightest bit of good for the Palestinians.

This week Israel announced a plan to construct 277 more housing units in Ariel, a settlement that is a town of 18,000.  The new units are to be constructed in the center of  the town, it was also announced. This is a significant fact, for construction of new units at the edges of the town would mean that the security perimeter would need to be extended to protect the new housing and the people in it. But this will not happen, and Ariel will expand in population but not in land area.  It is not, in the usual Palestinian Authority parlance, “taking more Palestinian land.”

When I worked on these issues in the Bush Administration, we discussed settlement expansion thoroughly with the government of Israel and (as I have explained elsewhere) reached agreement on some principles.  These were that Israel would create no new settlements and that existing settlements would expand in population but not in land area.  New construction, that is, would be in already-built-up areas, and the phrase we used was “build up and in, not out.” The usual complaints about new construction in the settlements were that “it is making a final peace agreement impossible” or at least more and more difficult by “taking more Palestinian land” that would have to be bargained over in the end and whose taking would right now interfere with Palestinian life and livelihoods. We understood that there would never be a long construction freeze even if there might be some brief ones, for the settlements– especially the “major blocks” that Israel will keep–are living communities with growing families.  So we reached that understanding with the Israelis: build up and in, not out.  That way whatever the chances of a peace deal were, construction in the settlements would not reduce them.

This agreement the Obama Administration ignored or denounced, suggesting at various times that it never existed or that, anyway, it had been a bad idea and all construction must be frozen– even in Israel’s capital, Jerusalem.  (To be more accurate, construction by Israeli Jews was to be frozen; construction by Palestinians could continue).  No Israeli government could long accept such terms and though the Netanyahu government did agree to a short and partial freeze, when that failed to bring the PLO back to the negotiating table the freeze was ended.  This Obama fixation with a construction freeze proved disastrous because the President and his Secretary of State took the view that it was a precondition for negotiations without which the Palestinians could not be expected to come to the table.  Of course once that American position was announced the Palestinian leadership had to adopt it, lest they appear weaker in asserting Palestinian “rights” than Washington.

The argument over the construction freeze embittered U.S.-Israel relations and killed any chance of negotiations in 2009 and 2010.  Late in 2010 the policy was finally abandoned.  Nothing has replaced it, and no one really knows what Administration policy is these days beyond getting past September’s expected UN General Assembly vote on Palestinian statehood.

But if the fixation on freezing construction in settlements is no longer the main pillar of Obama policy, those old sentiments and statements linger on.  Thus did the announcement that new units were to be built in Ariel evoke a new denunciation from Washington.  To be sure, it did not come from the President himself and was a pretty low-key affair; it did not suggest that new a crisis in bilateral relations loomed.  But this was a reminder that the Administration appears to have learned nothing, and still does not understand the difference between expanding a settlement physically and expanding the population of a settlement by building in already-built-up areas.

Why not?  Without dealing with the question of which individual policymakers are responsible for this foolish policy, it does seem that the policy is based on the view that every square foot of land controlled by Jordan before the 1967 war is rightly part of “Palestine,” so that every Israeli action on that land is wrong.  This view also explains why the President believes peace negotiations should start from the “1967 borders.” But there are no “1967 borders,” just the 1949 Armistice lines that all sides agreed in 1949 were not to be regarded as permanent.  It is reasonable to have the 1949 map on the table when negotiations begin, and to have next to it the 2011 map, and to seek a compromise. It is not reasonable to view it as a violation of international law and a threat to a peace agreement every time bricks and studs and drywall show up at the center of an Israeli settlement in the West Bank.  In the real world those new units in Ariel do not make a final peace agreement harder.