Many countries view the settlements as illegal under the 1949 Fourth Geneva Convention, which prohibits an occupying power from transferring parts of its population to territories that it occupies [source: BBC News].
These countries have tried to exert pressure on Israel in various ways. In 2015, for example, the European Union began requiring Israel to label any exported products that were produced in the settlements — which would make it easy for consumers to boycott them [source: Reuters].
Religious leaders also have weighed in against the settlements. A dozen U.S., Canadian and European bishops from the Roman Catholic Church issued a statement in January 2017 denouncing what they called "de facto annexation of land" by Israel, and said Christians had a moral responsibility to oppose further construction.
Even though the U.S. is a longtime ally and provider of aid to Israel, the settlements question has put U.S. presidents from Lyndon Johnson to Barack Obama in a difficult position. For decades, official U.S. policy was to disapprove of Israel's building of more settlements, while opposing any international effort to pressure Israel to stop.
But that holding pattern was shattered in 2016, when the U.N. Security Council voted 14-0 to condemn the Israeli settlements as a violation of international law, and called for Israel to stop building more of them. The U.S., which usually has used its veto power to block any anti-Israel resolutions, abstained and allowed it to pass[source: Williams]..
Israel annexed East Jerusalem after the 1967 war and declared the entire city its capital. While Israelis tend to speak as if East Jerusalem and the West Bank are two different entities, Palestinians consider them as one body (the occupied West Bank) [source: Myre and Kaplow].
This is one reason why the U.S. and other countries are reluctant to establish embassies in Jerusalem — part of the city's ownership is in dispute. East Jerusalem is also home to Judaism's holiest site, the Wailing Wall (or Western Wall), as well as one of Islam's holiest sites, the Dome of the Rock, so both sides of the conflict have a special interest in it.
In 1995, Congress passed a law requiring the U.S. to move its embassy from Tel Aviv to Jerusalem. But every president since then has signed a waiver that postpones the move because of the effect it might have on Middle East peace. President Donald J. Trump promised several times during his election campaign to move the embassy but no one knows yet if he will really do so.