Israel gave final approval Wednesday for a controversial settlement project in the occupied West Bank that would effectively cut the territory in two, and that Palestinians and rights groups say could destroy hopes for a future Palestinian state.

Location of E1 is significant because it is one of the last geographical links between Bethlehem and Ramallah.

Israeli approval of the E1 settlement project in the West Bank has sparked controversy, with critics saying it threatens Palestinian statehood hopes. Despite international condemnation and previous U.