Scoop: U.S. weighs further steps against Israel's settlement expansion

• The decision came despite objections by the Biden administration, which has said it opposes any unilateral moves by Israel, including settlement expansion, that would hurt efforts to negotiate a two-state solution to the Israeli-Palestinian conflict.
• Much of the international community considers Israeli settlements in the West Bank illegal under international law.
• The single biggest settlement announcement during the Trump administration was of 6,000 new housing units.

Behind the scenes: In the days leading to the announcement, Israeli Minister for Strategic Affairs Ron Dermer had numerous conversations with White House Middle East coordinator Brett McGurk and U.S. Ambassador to Israel Tom Nides, U.S. and Israeli officials say.

• Three U.S. officials told Axios some of these conversations were very difficult and turned into tough, and at times heated, arguments over the policy. Israel's Prime Minister’s Office didn’t dispute this description. The White House declined to comment, but other U.S. officials claimed the discussions were civil.
• U.S. officials said McGurk and Nides pushed very hard in private against the planned settlements decision and made clear the Biden administration opposes any legalization of outposts and the approval of any number of new housing units.

A senior Israeli official said Dermer told his U.S. counterparts that the legalization of outposts was part of the coalition agreement.

• A U.S. official said the Biden administration made it clear that Netanyahu’s coalition agreements were not its problem.
• The senior Israeli official also said that Netanyahu's far-right coalition partners had pushed for a much bigger announcement.
• Israeli Finance Minister Bezalel Smotrich and National Security Minister Itamar Ben-Gvir wanted 14,000 housing units to be approved and more than 20 outposts legalized, but Netanyahu toned it down. “Netanyahu promised that the number of outposts legalized will be in single digits," the official said.
• Israeli officials also told the U.S. that only around 2,500 housing units will start to be built immediately while another 7,000 are just moving up the planning process with some of them to be actually built in eight years’ time, according to the official.

U.S. officials said they told the Israelis there will be a strong response to the upcoming decision.

• According to U.S. officials, the Israeli officials said there was not going to be another settlement announcement for a while.
• One U.S. official said the Israelis said at the beginning this will be the only settlement announcement for a year, but then changed it to six months. A Prime Minister’s Office official disputed this account. While the official didn't dispute that Israeli officials told the U.S. any additional announcements wouldn't happen for months, the official did say that no specific time frame was given.
• An official in Smotrich's office said the next settlement announcement is likely to take place in three months when the planning committee is set to convene in May.
• Two U.S. officials who described the conversations conceded that it's impossible to know whether the Israelis will wait on any new settlement announcements as they had indicated.

The big picture: The messages the Biden administration gave the Israeli government in private ahead of the settlement announcement were very tough, but the public response was mild, former U.S. officials say.

• Secretary of State Blinken, other State Department officials and the White House didn’t use the term “condemnation,” but stressed they are “deeply troubled” and “concerned” about the Israeli decision.

What they're saying: "The tone of Secretary Blinken’s statement is measured. But I would not underestimate the concern it represents," former U.S. Ambassador to Israel Dan Shapiro, who's now working at the Atlantic Council, told Axios.

• Former U.S. envoy to the Middle East Martin Indyk told Axios that if Blinken is serious about preserving the hope of a two-state solution, expressing deep concern about the biggest settlement announcement ever is not going to do it with the Israeli government.
• A senior Israeli official told reporters that Israel was not surprised by the statements. "We have disagreed on this for decades," the official said.
• Smotrich held a press conference on Tuesday in one of the outposts that were legalized and said the Biden administration knows the Israeli government is committed to the settlements.
• "We made our position clear to the U.S. and we are committed to lifting all limitations on building in the settlements. We want the settlements to be a normal place like anywhere else in Israel," he said.

What to watch: A senior U.S. official said the Biden administration’s public statements were just the first phase of its response.

• The official stressed that there are discussions on further steps the administration could take to make its position against the settlements clear.
• Shapiro said the Israeli government's settlements decision could harm the Biden administration’s ability to work with Israel on big issues like expanding normalization with Arab states and addressing the Iranian threat.
• The UN Security Council is expected to vote within days on a Palestinian-led resolution against the Israeli policy in the West Bank. "The only thing that will give them [the Israelis] pause is what the U.S. does — or doesn't do — in the UN Security Council," Indyk said, referring to whether the U.S. uses its veto to block the resolution if it passes.