REPORTER: Matthew Carney

On this windy hilltop named Tel Haim, a ragtag bunch of Israeli youth believe they are taking part in a miracle. They think settling in the biblical lands of Judea and Samaria will speed the return of the Messiah.

HEBREW GIRL, (Translation):It's a matter of absolutely knowing, not of believing. This land belongs to us. Full stop.

In the last two years, the hilltop youth, as they're known, have been busy with God's work - 100 sites like this have been established.

The problem is that Judea and Samaria is now the West Bank, where a Palestinian state is to be created.

Under the terms of the US-backed peace plan - the road map - Israel must demolish 60 of these small outposts.

Tel Haim is scheduled for removal, but the young settlers won't go.

HEBREW BOY, (Translation): God promised us this place at the time of Abraham our forefather. It's nobody's decision. It's a divine decision which can't be changed.

Mickey Vastrille is leading the mission here. He comes from the nearby Israeli settlement of Bet El.

For Mickey, this outpost is a protest against the road map. Since the peace plan was endorsed two months ago, he's made sure youth from his settlement are constantly here.

He's also put a thousand young people on alert to resist if the Israeli army is sent to remove the outpost.

MICKEY VASTRILLE: Maybe we move to somewhere else but the next day you will see here a new Jewish life coming back to the place, the next day. We will not wait even a day.

This is part of us, if we give in here, what right do we have to stay in Tel Aviv, in the Galilee, in the Negev, in Eliat? If this place, where Abraham was promised the land and to have his people after him, this is where he was promised the land of Israel. So if you give in on this place, what right do you have for staying in Tel Aviv?

Mickey's dream is to establish a Jewish city here and he's already brought the first families who plan to live here permanently.

HEBREW MOTHER, (Translation): People will come here, a lot of people, and it will make the eviction very difficult. And then we'll rebuild it all.

Like many Israeli settlers in the West Bank, Mickey Vastrille believes the solution to the Israeli-Palestinian conflict is to expel the Palestinians to Arab countries. It's an easy solution, when you've already dehumanised your enemy.

MICKEY VASTRILLE: Which language do you speak to those people? Can you look into their eyes and speak the same language you speak to me?

I mean, it's hurting me to think that we are both… all of us were named human beings. These are not even animals. Animals are killing for eating. Those are killing for the sake of killing. Nothing is... they're getting nothing.

And they're stupid enough to know... not to know even, not to admit that they're losing.

On the ridge across the valley from the outpost is the Palestinian village of Beit In.

85-year-old Abdul Farras is one of the traditional landowners of the area. He says he owns the land Tel Haim outpost sits on. Abdul's family's land was also confiscated in the early '70s so the nearby Israeli settlement of Bet El and an Israeli army base could be built.

ABDUL FARRAS, (Translation): That mountain with the tall tower and houses on it. And this section, all this area from the spring to the houses, we grazed our animals there. We used to move freely in all this area.

Abdul Farras and the village mayor, Diab Yassin, are walking on the last bits of land remaining to Abdul's clan. Even this is effectively off limits for them.

DIAB YASSIN, VILLAGE MAYOR: There's a guard down there, he's looking at us. The owners of this land, they're not able to come around here no more, even to see their trees, because when they see them from the settlement, they start shooting at them.

Since the Israelis seized the West Bank in the Six-Day War of 1967, more than 40% of the land has been taken for the use of settlers.

But if the road map is to succeed, the 2 million stateless Palestinians living in the West Bank have to be given a homeland.

REPORTER: Over there, they say things like, "This is our land. "It's God's land. "God gave it to us." What do you think of this?

DIAB YASSIN: Well, really they can say whatever they want to say but we know this is our land. We know our fathers and grandfathers, our ancestors used to be here even before history.

Abdul confronted the settlers once, but to no avail. His title deeds from the time when Jordan controlled the West Bank mean nothing to them.

ABDUL FARRAS, (Translation): They asked why I was there, I told them it was my land. One of them fell to the ground and started kissing it saying it was his land. I told him "You're crazy. This is not your land, it's not for the Jews. This is Arab land and always will be."

Back on the other side of the valley, at the Tel Haim outpost, the settlers are having a big event.

The evening starts with prayer. Families from the nearby settlement of Bet El have gathered to hear a special guest - Youssef Mendelevitz. Mendelevitz hijacked a plane in the Soviet Union in the 1970s and tried to fly to Israel. He was caught and spent a decade in a Soviet gulag.

In most people's terminology, he's a terrorist, but here he's a hero for highlighting the suffering of the Soviet Jews. He's come to offer support in the fight for Tel Haim.

YOUSSEF MENDELEVITZ, (Translation): The gentiles want us to forget we are Jews. The gentiles want us to forget we have our own state and our own country and we'll fight against it. We'll teach and educate and spread. And we'll remind the young people they are Jews.

But it's not the tiny outpost camps that are the biggest obstacle to peace. It's established settlements like Ariel, in the northern West Bank, with its tidy streets and comfortable homes.

230,000 settlers live in towns like this, and these settlements, connected by a network of highways, have sliced up the West Bank, leaving Palestinians enclosed in areas which are cut off from one another.

If there is ever to be a viable Palestinian state, many of these settlements will have to go.

Ron Nachman is the Mayor of Ariel and today he's taking a group of British MPs on a tour. The MPs are on a fact-finding mission to see if Israel will carry out its obligations under the road map to peace, and that means stopping growth of settlements like this one.

RON NACHMAN, MAYOR OF ARIEL: We don't touch any private property, we don't touch, we don't expropriate any land. We say...

BRITISH MP: You are the only people in the world that say this. You do know that? The rest of the international community says this land has been appropriated. What do you say to that?

RON NACHMAN: Because we need to educate the world... We're here to find out. Because the world is making a mistake.

BRITISH MP: Thank you very much indeed for your hospitality.

But a bunch of British MPs is not going to stop Ron. The Oslo peace accords didn't and the road map's not going to either.

RON NACHMAN: What makes me very angry is the equation in the road map where they say stop the settlements or freeze the settlements and stop the terrorism.

So this equation, if you pull down, stop and stop, you find settlements equal to terror.

You understand? Stop settlement, stop terrorism, stop, stop, you cut off. So what remains, like in mathematics, settlements are terrorism. Am I a terrorist?

Under the road map, there's suppose to be a freeze on the growth of settlements but here, Ron Nachman's ambition is to increase the size of Ariel five times.

RON NACHMAN: We have 18,000 people and our master plan talks about 80,000 or 100,000 people.

So if there will be not 18,000, and there will be 25,000, what will it do to the peace process? Nothing. It has no importance.

To expand as fast as possible, Russian immigrants are being brought in.

Irena Gurskay, with her daughter, and brother, Pavel Baraz, came to Ariel about a month ago. They came not for religious reasons but for the economic opportunities.

IRENA GURSKAY, (Translation): Here we have more choice because Russia, Russia now actually, it has been going on for quite a long time, is going through hard times. It's very hard to achieve anything even if you really want to. Here, if you want to, you can be successful.

The Israeli Government and its Ministry of Absorption offers immigrants to the West Bank extra economic benefits.

IRENA GURSKAY, (Translation): At the airport they gave us the first half of our settlement package. They gave it to us right there, together with our papers.

When we arrived we opened a bank account and the Ministry of Absorption immediately began paying us through it. Also for the first year we receive a discount on our land tax. Our television is subsidised as well.

Irena and Pavel don't really care about the political situation. In Russia, they were told about Ariel's 26 schools, the university and first-class medical care, but not the fact that it sits in the occupied territories.

PAVEL BARAZ, (Translation): I never went into details. I'm not interested in politics. If people live here, that means they can.

Ron Nachman arrived at the site of Ariel 25 years ago with just 10 soldiers and a couple of caravans. It was Ron's dream to build a city, but it was his close friend Ariel Sharon who made it happen.

RON NACHMAN: Ariel Sharon is the father of all the settlement process in Judea and Samaria. Without Ariel Sharon, there was not one Jewish settlement in Judea and Samaria.

He was the visioner, he was the father, he was the one who supported us, asked us to come. We brought the manpower, but he brought the government, and he is the father of all the settlements in Judea and Samaria.

It was Ariel Sharon, always a towering figure in Israel, and now Prime Minister, who colonised the West Bank with settlements in the 1970s. During the 1990s, he succeeded in doubling the number of settlers in the West Bank.

RON NACHMAN: When he planned his strategic plan about settling the territories, and that was the corridor from Tel Aviv to the Jordan valley, Ariel was in the centre like a key and he planned all the settlements spreading around, to spread around the region in order to prevent a Palestinian state.

Two months ago US President George Bush flew to Aqaba, in Jordan, to bring together the Israeli and Palestinian prime ministers to launch the road map plan with its aim to set up a Palestinian state by 2005.

While the Palestinians had to pledge an end to terror, Ariel Sharon had to agree to pull down outposts and freeze settlements. The Israeli Government is required to remove 62 outposts. And, on this promise, there has been a bit of action.

In June, amid much publicity, Prime Minister Sharon ordered the army to dismantle eight outposts.

They did, but since then settlers have established 10 more. The reality is that since the signing of the road map, outpost numbers have increased by two.

Within Israel, there is a movement to get the government to adhere to the road map. Yariv Oppenheimer, from the Peace Now group, monitors outpost activity. Yariv says the outpost removals have all been for show.

YARIV OPPENHEIMER, PEACE NOW GROUP: If we are looking about the Israel action, it's almost nothing, and not only the Israeli Government is not dismantling outposts, it's also giving the settlers the freedom to do almost whatever they like in the territories and to keep building new ones.

Yariv Oppenheimer and other Peace Now members go into the West Bank weekly to expose settler activity.

This is Givat Basafh, an outpost that should have been removed. Yariv finds it deserted. He says there are many like this. It's a way for settlers to stake a claim.

YARIV OPPENHEIMER: They don't have to live here all the time in order to have this possibility, and in the moment of truth they will come to live here and to have more and more people and to establish here a new settlement. This is the final status that they are looking for, to have a big settlement, to destroy the chance of splitting the country into two states.

Since Ariel Sharon's re-election in late January, his government has moved further to the right. Labour, the previous coalition partner, has been replaced with far-right settler and religious factions.

Their leaders, like Minister for Tourism Benny Elon, have key Cabinet positions. They're one more reason why the Prime Minister is not moving on settlements.

Benny Elon has no time for the road map. His ambition is to settle all of the West Bank and remove the Palestinians who live there.

BENNY ELON, MINISTER OF TOURISM: They can be citizens of Jordan, that's all. They can vote to the Palestinian parliament in Amman. They will enjoy all of the human rights and all of the civilian rights, civilian rights as members in the Palestinian state, citizens of the Jordan Hashemite Kingdom of Palestinian state.

Elon is putting his plan into action here, in Sheik Jarrah, in the Arab part of Jerusalem. Arab families had to be evicted so Israelis could move in.

Elon has organised 17 other settlements like this. The Minister's strategy is to stop Palestinian claims over the Arab Quarter, so Jerusalem will become the undisputed capital of Israel.

BENNY ELON: I have my political power in Israel. I hope to grow and I hope to convince many, including politicians in America.

In the USA, I met many congressmen, many senators. We have millions, millions of evangelical Christians that understand this is the biblical heartland and we are not foreigners and, according to the faith that they have and they share with us, we are the children of Israel coming back to the land of Israel and it is a question of patience, education, and I believe that I will succeed.

But in Israeli politics, there are those who see settlements and outposts as a major obstacle to the road map peace plan.

YULI TAMIR, LABOUR PARTY: I don't think that anyone believes that there could be a peace agreement without a massive withdrawal of Israel from the occupied territories. A massive withdrawal means evacuating settlements.

Today, Yuli Tamir and her Labour Party colleagues have brought a motion in the Israeli Parliament, demanding some answers from Prime Minister Sharon.

Labour's Haim Ramon wants to know why the Prime Minister is not adhering to the US-backed peace plan.

HAIM RAMOB, LABOUR, (Translation): Do you know the Americans? They are really nice as long as they're treated well. As long as they are not lied to, as long as they are not misled.

Ramon says the settlers are being allowed to stifle the peace process.

HAIM RAMOB, (Translation): They are a marginal minority in the nation and they want to dictate, to all of us, to this entire house, even to those who stupidly defend them.

They want to dictate, contrary to all rules of democracy, the future map of Israel.

The Prime Minister's response is firmly behind the settlers. Ariel Sharon says it's the Palestinians who are failing the road map by not dismantling their terrorist infrastructure and stopping attacks on Israelis.

But on Israel's obligations, the Prime Minister remains defiant. After the Aqaba summit, he told a cabinet meeting he won't stop growth in settlements.

And he says he won't consider evacuating any established settlements until final negotiations, several years from now.

ARIEL SHARON, ISRAELI PRIME MINISTER, (Translation): I'll remind you that the future of the Jewish settlements in Judea, Samaria, and the Gaza Strip will only be determined when we negotiate the permanent agreements that will hopefully lead to peace between Israel and the Palestinians.

But the opposition believes the man who made the settlements now has no choice but to curb them if there's ever going to be a Palestinian state.

YULI TAMIR: Palestinians. There's no territory for a Palestinian state within the framework of the present sort of map of settlements.

If you look at the map, you know - in my first speech in the Parliament I walked up on the podium and I opened the settlements map and I said to Sharon, I said, "Assuming I believe that's what you want to do, just point at the place where the Palestinian state will be."

And he had no answer, because there is no place.

Back in Tel Haim, no action has been taken to dismantle the outpost. The hilltop youth have been building a more permanent residence - another dent in the fragile road map to peace.

In their struggle to take more of the West Bank, the settlers are winning, but the peace process is losing. Plans are under way here to take another hilltop next month.