On a hilltop far enough from the existing Israeli settlement of Givat Zeev that one needs directions to get here stands the framework of a settlement meant to house up to 750 families.

Eli Yishai stood on an unfinished balcony of one of the new development's shell homes. He's a key coalition partner of Prime Minister Ehud Olmert and the leader of the religious party Shas, which is feted by some and decried by others for having broken Israel's "settlement freeze."

"The world might want us to freeze, but there's no doubt that we look at it a bit differently," says Mr. Yishai. "We will make this into a continuous, meaningful block connecting this whole corridor to Jerusalem. I see many possibilities to start building again, according to the demands of natural growth."

A new spate of West Bank settlement construction not only complicates efforts to resume Israeli-Palestinian peacemaking, but points to a palpable rightward shift in Shas, a party that used to be considered moderate and amenable to the land-for-peace formula on which any solution to the conflict is based.

Israel's announcement last week that it was going to permit the construction of 750 homes here generated criticism from Palestinians and from around the world. The Bush administration reacted by reminding Mr. Olmert that limiting settlement activity is "a road-map obligation" Israel committed itself to as part of the Annapolis Process, referring to last fall's peace talks in Annapolis, Md.

But in what many here say is a move to lure Shas to stay in the governing coalition, which Shas has been threatening on a regular basis to bolt, Olmert decided to remove the barriers to several already-in-the-works settlement projects and to allow Shas to take the credit. If Shas did leave the coalition, the government would lose its majority and fall apart.

The evolution of Shas

Shas's aging spiritual leader, Rabbi Ovadia Yosef, once made a ruling that territorial concessions, were they to save lives and lead to true peace between Arabs and Jews, were acceptable under religious law.

Today, however, the young generation of Shas seems to be less concerned with the ideal backdrop for peacemaking and more driven by coalition politics and the demands of their constituents, who will benefit from new homes at relatively inexpensive prices. The neighborhood to be constructed here will be designated for the ultra-Orthodox, who constitute the fastest-growing portion of the West Bank settler population, according to figures from Peace Now and Israel's Central Bureau of Statistics.

"There has been a shift, but I think that the main reason is more on the coalition tactical level than the ideological one," says Itzhak Galnoor, a professor of Israeli politics at the Hebrew University of Jerusalem. "Now Shas is the most right-wing member of the coalition, since Avigdor Lieberman [of Israel Beitainu] left, and it has to justify to its constituency that it stays in the government."

When the first Israeli-Palestinian peace accord was reached nearly 15 years ago, Shas was a coalition partner of the left-leaning Labor Party. They've been a key piece of the multiparty puzzle in every government since, in large part because their flexible outlook on peacemaking made them an attractive partner. The party's main concern was to win support for towns and schools heavily populated by their supporters, Jews of Middle Eastern origin, or Sephardim, who were long neglected and discriminated against by the Ashkenazi (European) establishment.

But over the past decade, following the Al Aqsa intifada and the breakdown in Israeli-Palestinian negotiations, Shas has swung right. This may be in part an effort by Shas to boost its standing among more nationalist Israeli voters, regardless of ethnic origin. This trend suggests that Shas is working to attract supporters away from the right-wing Likud as well as the National Religious Party, both of which have been socked in recent years with a significant loss of Knesset, or parliament, seats and political prestige.

"Shas was centrist and very mild on settlements, and it has moved because of the people who vote for it," Dr. Galnoor notes. "The leadership has always been more dovish. But in the last 10 years, it has moved to the right." Galnoor says that this may be a kind of positioning ahead of the elections, which are scheduled for 2009 but are likely to be called for next year instead. Shas won 10 seats in the last Knesset elections, down from 14.

"They made a decision that this is where the votes could come from ... and that being a little more right wing couldn't hurt them," Galnoor adds. "It's a gamble in a way, to try and get some of the votes that may otherwise go to the Likud," or other religious parties.

Shlomo Ben-Izri, a Knesset member from Shas and former cabinet minister, says that Shas's ideology has not changed, but that times have. "We're not in a great situation anyway. You can't say that these settlements will be a reason for a renewal of terrorism, because there is terrorism anyway," he says, referring to the recent shooting at a Jerusalem seminary by a Palestinian gunman.

"We go by halacha [religious law] and our spiritual leader, Rabbi Yosef. He supported the Oslo Accords, but only if it will bring real peace," says Mr. Ben-Izri. "But today, after what's happening in and around Gaza, and what's happening on the Palestinian side, we don't see any partner. So it's the peace process we must freeze."

The settlement conundrum

It is hard to know to what extent Shas's settlement drive reflects that of the entire Israeli government, which has been sending mixed signals. Olmert said Monday that Israel would not stop building over the Green Line – Israel's pre-1967 boundaries – in and around Jerusalem. "There will be places where there will be construction, or additions to construction, because these places will remain in Israel's hands."

Palestinians are deeply dismayed by the moves. The Jerusalem-based Al Quds newspaper said in an editorial Tuesday that Olmert's statements are "a challenge to the American criticism, and will lead to more complications in the inactive peace process."

Nabil Abu Rudenieh, a spokesman for the Palestinian president, said Israel was undermining US efforts. "The situation needs a frank and clear US position against the settlements policy."

In the cluster of new apartments that have just been finished in the past six months, halfway between the existing Givat Zeev settlement and the new 750-unit neighborhood, a few young couples with children have already moved in. Arielle Peretz, who moved here with her husband two months ago, views infrequent bus service as the only drawback.

"I wouldn't have chosen to move here because it's far from the city," she explains, glancing over her new living room, which looks out to the pretty, terraced hillsides tended by Palestinian neighbors across the valley. "We came because it's so much more expensive to buy in Jerusalem. There will never be peace anyway. How many years have we been fighting?"