A leading Israeli human rights group yesterday released video footage apparently showing Israeli soldiers doing nothing to prevent militant settlers opening fire on Palestinian villagers with live ammunition.

B'Tselem, the Israeli Information Centre for Human Rights in the Occupied Territories, and the Palestinian Authority called for a full investigation into the incident in which a Palestinian was injured in the head after residents of the Jewish settlement of Yitzhar near Nablus – some of them armed and masked – raided the nearby village of Asira al-Qibliya.

At one point, a settler is seen crouching down and adopting a firing position with a pistol towards Palestinian protesters with soldiers in the vicinity. Immediately afterwards, Palestinian villagers are seen carrying the injured man Fathi 'Asira, 24, to safety.

B'Tselem said on Saturday at about 4.30pm, a "large group" of settlers descended on the outskirts of the village and threw stones at Palestinian homes. The group said one of the settlers had a "Tavor" rifle, normally used by only the military, arousing suspicion he may have been an off-duty soldier. Palestinian villagers arrived to confront the settlers and started throwing stones.

When soldiers and Border Police officers arrived, the firing of live ammunition is audible in the video, but it does not show the source.

The video shows three settlers, two apparently armed with assault rifles and one with a pistol, standing with a soldier amid stone throwing from both sides. B'Tselem says the video shows the settlers aiming their weapons at the Palestinians and firing.

B'Tselem added: "The video footage raises grave suspicions that the soldiers did not act to prevent the settlers from throwing stones and firing live ammunition at the Palestinians. The soldiers did not try to remove the settlers and are seen standing by settlers while they are shooting and stone throwing."

Yitzhar has a notably hard-line reputation and Israel's government halted funding for a Yeshiva – a Jewish educational institution – there last November after the Shin Bet intelligence agency reported that its students were carrying out acts of violence against Palestinians and security forces.

The Israeli military said yesterday the settlers and villagers "threw rocks at each other during a violent confrontation." Security forces had moved in to separate the parties "without casualties, using different riot dispersal means." Its statement added: "During the confrontation, live fire was used; the incident is currently being investigated by the division commander. That said, it appears that the video does not reflect the incident in its entirety."

A spokesman for the settlers told Israeli media that their "security squad" had come under a hail of stones while extinguishing fires lit by the Palestinians and that arms had been used in a "life-endangering situation."

Belfast Telegraph