Israeli settlements in the West Bank are legal. Article 49 of the Fourth Geneva Conventions, which is relied upon by those who claim the settlements are illegal, does not apply in the case of the West Bank. This is because the West Bank was never under self-rule by a nation that was a party to the Convention, and therefore there is no “partial or total occupation of the territory of a High Contracting Party,” as Article 2 of the Convention specifies. Moreover, even if it did apply, by its plain terms, it applies only to forcible transfers, and not to voluntary movement. Therefore, it can’t prohibit Jews from choosing to move to areas of great historical and religious significance to them.
Article 49 of the Geneva Convention, which is relied upon to make the claim that settlements are illegal, was written for the purpose of outlawing the Nazi practice of forcibly transporting people into or out of occupied territories to death and work camps. It was never intended to prevent Jews from free movement into their historic homeland.
Furthermore, the drafters of UN Security Council Resolution 242, passed in the aftermath of the Six-Day War, have made plain that they never intended it to mean that Israel must return to the 1948 ceasefire lines (sometimes mistakenly referred to as “the 1967 borders”), as well as that any Israeli withdrawals must be preceded by resolution of the conflict. Eugene Rostow, US Undersecretary of State for Political Affairs from 1966-1969, who was one of the drafters, explained in 1991, that
Security Council Resolution 242, approved after the 1967 war, stipulates not only that Israel and its neighboring states should make peace with each other but should establish “a just and lasting peace in the Middle East.” Until that condition is met, Israel is entitled to administer the territories it captured – the West Bank, East Jerusalem and Gaza Strip – and then withdraw from some but not necessarily all of the land to “secure and recognized boundaries free of threats or acts of force.” (Emphasis added.)In fact, no new UN resolutions are necessary, since Security Council resolutions 242 (1967) and 338 (1973) establish the guidelines for achieving a general Arab-Israeli peace. The Israeli-Palestinian Interim Accords (1995), moreover, taking 242 and 338 as reference points, apply them as well to a particular Israeli-Palestinian peace.
For more background on this issue, see here, here and here.
I also add Eugene Kontorovich's research into state practice under Art. 49(6) of the Geneva Convention and related IHL rules - the rules regarding settlements in occupied territories. It examines what could be called "settlement activity" in all situations of belligerent occupation since the adoption of the Geneva Conventions.
The paper is now available on SSRN at this link.