The Joe Biden administration is deeply frustrated that the Israeli government has pursued a policy of expanding settlements and weakening the Palestinian Authority, and that more extreme members of the government are openly allied with extremist settler groups.
The White House meeting was convened after another surge in violence by extremist settlers against Palestinians, and an Israeli government decision to plan and build another 5,000 housing units in the settlements and legalize five outposts.
The International Court of Justice (ICJ) stated in a non-binding opinion published on Friday that, through the settlements, Israel had illegally annexed large parts of the Palestinian territories.
The Biden administration also considers the settlements inconsistent with international law.
Earlier this year, President Biden signed an unprecedented executive order allowing sanctions on Israeli settlers. Two rounds of sanctions have been issued thus far.
When Biden signed that order, senior White House officials recommended the president sanction Betzalel Smotrich and Itamar Ben Gvir — the ultranationalist ministers of finance and national security respectively.
Biden rejected that proposal on the basis that the US should not sanction elected officials in democratic countries, according to a senior US official.
Several of their supporters and confidants have been sanctioned since, but not Smotrich or Ben Gvir. The idea was discussed again this week in the NSC meeting but no decision was made.
US Ambassador to Israel Jack Lew proposed engaging with Smotrich in hopes of changing his behavior, rather than boycotting him, the officials added.
Israeli Prime Minister Benjamin Netanyahu has delegated most authority over the West Bank to Smotrich, whose broad portfolio gives him wide-ranging authority over building in the settlements.
Himself a settler, Smotrich has publicly vowed to make the two-state solution impossible. He has taken numerous actions to expand the settlements, legalize outposts, weaken the Palestinian Authority economically and support settlers who attack Palestinians.
Meanwhile, Ben Gvir has ordered the Israeli police not to take action against settlers who attack Palestinians and not to protect aid convoys en route to Gaza from being looted by Israeli extremists.