"We are looking at the settlements issue with grave concern," Merkel said at a news conference with Israeli Prime Minister Benjamin Netanyahu in al-Quds (Jerusalem) on Tuesday, AFP reported.
"We hope it will not stand in the way of a two-state solution and that we can overcome it," she said.
Since Israeli-Palestinian peace talks were launched after intense US efforts last year, Israel has advanced plans for more than 11,700 new settler homes, infuriating the Palestinians and drawing condemnation from the international community.
Settlement building is illegal under international law. The Israeli regime has defied the international demands to stop building new settlements in West Bank and East al-Quds.
Merkel, who did not plan to meet with Palestinian officials on the visit, reiterated that Germany adhered to the EU position on settlements, which under guidelines published in July prohibits financial dealings with settlement-based entities.
European companies have begun to divest from Israeli organizations with ties to West Bank settlements, prompting accusations of hypocrisy from Israeli leaders.
More than half a million Israelis live in over 120 illegal settlements built since Israel’s occupation of the Palestinian territories of the West Bank and East al-Quds in 1967.
NTJ/BA