Jewish settlers mourn at the funeral of Dafna Meir in Otniel, in the southern West Bank, on Monday. Meir, a mother of six, was stabbed to death by a Palestinian who broke into her home, the Israeli army said. (Menahem Kahana/AFP/Getty Images)

Israeli leaders on Tuesday sharply criticized U.S. Ambassador Daniel Shapiro’s observation that the law in the occupied West Bank is applied differently to Palestinians and Israelis, calling it “unacceptable” and demanding a retraction.

Shapiro’s comments would strike many as a statement of fact: Palestinians in the West Bank live under military occupation, face Israeli military tribunals and can be held for months, even years, without charges; the Jewish settlers in the territory, however, are subject to Israeli civilian courts.

But the plainly critical remarks by the U.S. diplomat in a speech at a security think tank Monday angered Israel’s top leaders, including Prime Minister Benjamin Netanyahu, who called them “unacceptable and wrong.”

The diplomatic skirmish comes as Israel finds itself facing renewed criticism from the European Union for the continued expansion of Jewish settlements in the West Bank and East Jerusalem, a complaint that Shapiro echoed in his remarks.

It also follows on the heels of another diplomatic dust-up. Swedish Foreign Minister Margot Wallstrom recently called for “thorough, credible investigations” into “extrajudicial killings” of Palestinian attackers or suspects by Israeli forces. Wallstrom’s comments incensed Israeli officials, who said she was no longer welcome in their country.

[Israel steps up home demolitions to punish Palestinian attackers]

In his speech, Shapiro said, “Too many attacks on Palestinians lack a vigorous investigation or response by Israeli authorities, too much vigilantism goes unchecked, and at times there seem to be two standards of adherence to the rule of law: one for Israelis and another for Palestinians.”

The U.S. diplomat was referring to assaults and acts of vandalism by Jewish extremists against Palestinians, including a July arson attack in the West Bank village of Duma that killed a toddler and his parents.

Earlier this month, Israeli prosecutors filed charges against two Jewish Israelis accused of killing the members of the Dawabsha family in Duma and indicted several others who they said were responsible for arson attacks and vandalism against Palestinians. None of the suspects have been convicted.

On Tuesday, Israeli Justice Minister Ayelet Shaked said Shapiro should recant his remarks.

“We are being subjected to a terrorist onslaught that is simply unfamiliar to the United States, and to pass judgment on us in such a one-sided manner is wrong,” Shaked told Army Radio. “It would be appropriate if he corrected himself, and I hope he does that.”

[Israelis are calling attacks a ‘new kind of terror’]

Shapiro’s speech comes in the middle of a surge in violence. In the past four months, 25 Israelis have been killed, as well as an American and three others, by Palestinians wielding knives, guns and even potato peelers in what authorities here have called “a new kind of terror” by leaderless, angry and frustrated youths. About 100 Palestinians have been killed by Israeli forces during the attacks or attempted assaults; 50 others have been fatally shot by soldiers during clashes as Israel has dramatically increased its use of live fire to suppress riots.

Netanyahu traveled to the Jewish settlement of Otniel on Tuesday to offer condolences to the family of Dafna Meir, a 38-year-old nurse and mother of six who was stabbed to death Sunday.

The prime minister said: “Whoever wants to see the truth about the roots of the conflict between us and the Palestinians should come to Otniel and see here a wonderful family who only wants coexistence and peace. They should see the young people, inflamed by incitement, who come to murder women here.”

Netanyahu said that “there is humanity here” in the Jewish settlements “and the desire for peace and coexistence on one side and boundless hatred on the other. This hatred has an address; this is incitement by the Palestinian Authority and other elements such as the Islamic Movement and Hamas, and the time has come for the international community to stop its hypocrisy.”

The Islamic Movement is a Palestinian group in Israel that seeks to promote Islam. Israeli authorities have arrested some of its leaders and banned some of its activities, charging that the organization incites violence. The Islamist militant group Hamas controls the Gaza Strip.

Israeli authorities announced Tuesday the arrest of a suspect in the Meir killing, a 16-year-old boy from the village of Yatta.

Fearing further Palestinian attacks, the Israeli army on Tuesday banned all Palestinians from entering Jewish settlements in the West Bank.

About 25,000 Palestinians hold permits that allow them to work inside the settlements, where they build homes for the settlers or work in Israeli-owned businesses. A military spokesman said the ban was not designed as “collective punishment,” as some Palestinians charge, but is a security precaution that will be reviewed daily.

More than 350,000 Jews live in about 200 settlements in the occupied West Bank. Most of the world considers these communities illegal, although Israel disputes this. The United States views the communities as “illegitimate” and an impediment to a peace deal with the Palestinians, who want the land for a future state.

[Administration concedes that Mideast peace beyond reach on Obama’s watch]

In his speech Monday, Shapiro said: “We are concerned and perplexed by Israel’s strategy on settlements. This government and previous Israeli governments have repeatedly expressed their support for a negotiated two-state solution — a solution that would involve both mutual recognition and separation. Yet separation will become more and more difficult if Israel plans to continue to expand the footprint of settlements.”

The U.S. ambassador complained that new “settler outposts are being legalized despite earlier pledges to the United States not to do so, while routine, administrative demolition of Palestinian structures continues. Again, the question we ask is a simple one: What is Israel’s strategy?”

He said it was becoming increasingly hard for the United States to defend Israel in international forums, especially in the absence of peace negotiations. “What is Israel’s plan for resolving the conflict?” Shapiro asked. “For remaining a Jewish and democratic state? And if it judges a political solution to be out of reach for the time being, then what is its plan for managing and stabilizing the conflict in the short and medium term?”

The diplomatic scuffle came as the nongovernmental group Human Rights Watch charged that international companies that do business in Israeli communities in the West Bank are supporting the settlement enterprise by taking advantage of cheap Palestinian labor and reduced government taxes.

“The conclusion we have drawn from this report is that this is not a situation where companies can eliminate human rights violations if they are carrying out businesses from the settlements or with the settlements,” said Eric Goldstein, a deputy director at Human Rights Watch. He added, “The only way companies can stop being complicit is to remove their business from the settlements.”

Emmanuel Nahshon, a spokesman for Israel’s Foreign Ministry, called the report “one-sided and politicized” and said it “jeopardizes the livelihoods of thousands of Palestinians and discourages rare examples of coexistence between Israelis and Palestinians.”

Ruth Eglash contributed to this report.

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