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The Egyptian government and rights groups have lambasted Israel for its decision to expropriate 400 hectares of Palestinian land near Bethlehem in the occupied West Bank.
The announcement was made on Sunday by the Israeli military-run Civil Administration, which declared: "On the instructions of the political echelon... 4,000 dunams [hectares] at Gevaot [settlement] is declared as state land."
Following the statement, the foreign ministry in Cairo said: "This is not a positive step - it contradicts international law and will have negative consequences on the peace process."
Rights watchdog Amnesty International urged Israel to reconsider the expropriation as "it is leading to a wide range of violations of Palestinians' human rights on a mass scale."
Philip Luther, Amnesty International's director for the Middle East and North Africa, said: "Reports that that the Israeli cabinet justified this land grab as a reaction to the deplorable murder in June of three Israeli teenagers suggests this is an act of collective punishment and that Israel is moving further and further away from its obligations under international law."
Israeli advocacy group Peace Now - which promotes a peaceful approach to end the conflict between Israelis and Palestinians - said the seizure announced by Israel was the biggest in three decades and will threaten a two-state solution to the conflict.
"Prime Minister Netanyahu does not aspire for a new 'Diplomatic Horizon' but rather, he continues to put obstacles to the two state vision and promote a one state solution," it said in a statement.
"Netanyahu and Defence Minister Ya'alon are directly responsible to the declaration, which cannot pass without their approval. By declaring another 4,000 dunams as state land, the Israeli government stabs President Abbas and the moderate Palestinian forces in the back, proving again that violence delivers Israeli concessions while nonviolence results in settlement expansion".
Israel's decision to resize Palestinian territories came only a few days after Palestinian Islamist group Hamas and Israel reached a ceasefire, brokered by Egypt, after 51 days of fighting.
The conflict resulted in the death of 2,138 Palestinians, mainly civilians, and 68 Israelis, mainly soldiers.