The Oslo II Accord divided the West Bank into three administrative divisions: the Areas A, B and C. The distinct areas were given a different status, according to their governance pending a final status accord: Area A is exclusively administered by the Palestinian Authority, Area B are administered by both the Palestinian Authority and Israel, and Area C, which contains the Israeli settlements is administered by Israel. Areas A and B were chosen in such a way as to just contain Palestinians, by drawing lines around Palestinian population centers at the time the Agreement was signed; all areas surrounding the Areas A and B were defined as Area C.
Area A comprises approximately 18% of the West Bank and Area B about 22%, together home to some 2.8 million Palestinians. As of 2015, Area C is home to 150,000 Palestinians in 532 residential areas. It also is home to 389,250 Israelis, in 135 settlements, as well as 100 outposts unrecognized by the Israeli government. Area C forms a contiguous territory, administered via the Judea and Samaria Area administration. In contrast, under the Oslo Accords the Areas A and B were subdivided into 165 separate units of land that have no territorial contiguity.
The Oslo II Accord stipulated that "during the first phase of redeployment" the jurisdiction over the Areas A and B would be transferred to the Palestinian Council. Article XI.2.a reads:
"Land in populated areas (Areas A and B), including government and Al Waqf land, will come under the jurisdiction of the Council during the first phase of redeployment."
The populated areas were defined by delineations on a map attached to the document. Area C comprised the areas of the West Bank outside Areas A and B.
Area A (full civil and security control by the Palestinian Authority): initially, circa 3% of the West Bank, exclusive East Jerusalem (first phase, 1995). As of 2013, Area A formally comprised about 18% of the West Bank. The Israel Defense Forces, however, abolished the prohibition against entering Area A during Operation Defensive Shield in 2002 and enters the area regularly, mostly at night, to conduct raids to arrest suspected militants. This area includes eight Palestinian cities and their surrounding areas (Nablus, Jenin, Tulkarem, Qalqilya, Ramallah, Bethlehem, Jericho and 80 percent of Hebron), with no Israeli settlements. Entry into this area is forbidden to all Israeli citizens.
Area B (Palestinian civil control and joint Israeli-Palestinian security control): initially, circa 23–25% (first phase, 1995). As of 2013, Area B formally comprised about 22% of the West Bank. This area includes some 440 Palestinian villages and their surrounding lands, and no Israeli settlements.
Area C (full Israeli civil and security control): initially, circa 72–74% (first phase, 1995). Under the 1998 Wye River Memorandum, Israel would further withdraw from some additional 13% from Area C to Area B, which officially reduced Area C to circa 61% of the West Bank. Israel, however, withdrew from only 2%, and during Operation Defensive Shield, it reoccupied all territory. As of 2013, Area C formally comprised about 63% of the West Bank, including settlements, outposts and declared "state land". Including or excluding annexed East Jerusalem, no-man's land and the Palestinian part of the Dead Sea also determines the percentage. John Kerry, U.S. Secretary of State stated that Area C "is effectively restricted for any Palestinian development, and that in 2014, his office had noted only one building permit had been granted to Palestinian residents of the area.
All Israeli settlements, including those in and around East Jerusalem, are located in Area C. Oslo II, Article XII, for example, states: "For the purpose of this Agreement, 'the Settlements' means, in the West Bank the settlements in Area C; and in the Gaza Strip ..."
In 1972, there were 1,000 Israeli settlers living in what is now Area C. By 1993, their population had increased to 110,000. As of 2013, an estimated 350,000 Jewish settlers lived in Area C in Israeli settlements and outposts. In 2013, some 300,000 Palestinians lived in Area C, scattered over 532 residential locations.
Oslo II defines Area C as follows:
″"Area C" means areas of the West Bank outside Areas A and B, which, except for the issues that will be negotiated in the permanent status negotiations, will be gradually transferred to Palestinian jurisdiction in accordance with this Agreement″.
The issues that will be negotiated, according to Article XVII, are ″Jerusalem, settlements, specified military locations, Palestinian refugees, borders, foreign relations and Israelis; and … powers and responsibilities not transferred to the Council″. Parts of Area C are military area closed for Palestinians.
Part of Area C was intended to be handed to Palestinians by the end of 1999. Israel promised to redeploy its troops from Areas A and B before the elections. After the inauguration of an elected Palestinian parliament, the Israeli Civil Administration would be dissolved and the Israeli military government be withdrawn. The Council would get some powers and responsibilities.
Within 18 months from the date of inauguration, Israel would further redeploy military forces from Area C in three phases, however, without transfer of any sovereignty to the Palestinians:
″The Council will assume powers and responsibilities for civil affairs, as well as for public order and internal security, according to this Agreement″.
″1. Israel shall transfer powers and responsibilities as specified in this Agreement from the Israeli military government and its Civil Administration to the Council in accordance with this Agreement. Israel shall continue to exercise powers and responsibilities not so transferred.″
″5. After the inauguration of the Council, the Civil Administration in the West Bank will be dissolved, and the Israeli military government shall be withdrawn. The withdrawal of the military government shall not prevent it from exercising the powers and responsibilities not transferred to the Council.″
The military forces would be redeployed in "specified military locations" in the West Bank, to be negotiated in the permanent status negotiations within 18 months. The Legislative Council was elected in January 1996.
Area C, 99% of which is excluded from Palestinian use, contains most of the West Bank’s natural resources and open spaces, access to which, according to the World Bank, would enable the Palestinians to halve their budget deficit and lead to an expansion of their economy by a third. According to Danny Rubinstein: "Much land in Area C is undeveloped. Israel, however, does not permit Palestinian construction for residential, commercial or industrial purposes."
70 percent of the area is defined as within settler municipal boundaries, where permits for development are denied to Palestinians. The World Bank estimates that the effect has been to cause a potential loss of $14 billion of revenue for the Palestinian economy.
According to a 2013 EU report, Israeli policies have undermined the Palestinian presence in Area C, with a deterioration in basic services such as water supplies, education and shelter. Nearly 70% of the Palestinian villages are not connected to the water network that serves settlers, which accounts for the fact that Palestinians in the zone use only a quarter to a third of the pro capita consumption of settlers.
Palestinians cannot build in Area C without an army permit; however, building applications are expensive and have a 5% approval rate. As a result, most Palestinians who build there do so illegally. Israel demolishes about 200 buildings per year in Area C.
Israel has made over 14,000 demolition orders against Palestinian-owned structures in Area C since 1988. As of January 2015, almost 20% of the demolition orders issued had been executed and more than 11,000 of these still outstanding, affecting an estimated 17,000 structures.
Israeli planning in Area C allocates 13 times more space to Israeli settlers than to Palestinians there, according to the United Nations. Israeli settlers have been allocated about 790 square meters per capita, whereas Palestinians have been allocated about 60 square meters per capita.
During the period 1988–2014, the Israeli Civil Administration issued 6,948 demolition orders against structures in settlements located in Area C. As of January 2015, 12% of these were classified as executed, 2% were cancelled, another 2% "ready for execution" and 2% on hold due to legal proceedings. More than one-third of the orders were classified as "in process", while the current status of about 45% of the demolition orders against settlement structures was unknown.
The relatively new phenomenon of building Palestinian settlements began in 2006, attempting to trace after the Israeli settlement experience beyond the 1967 Green Line, and in a media-driven counter-offensive. The most notable Palestinian settlement in the West Bank, defined by Israel as "illegal", was built in January 2013 on E1 Area East of Jerusalem. The settlement which was named "Bab al-Shams" consisted of about 20 tents, constructed by the Popular Struggle Co-ordination Committee. A few days after the evacuation another "Palestinian settlement" was erected in the village of Beit Iksa near the planned Wall barrier, which they claim would confiscate Palestinian land. It was named "Bab al-Karama".
Area B is defined as land under Palestinian civil control and Israeli military control. According to Dror Etkes, Israeli settlers have violated the accords by spreading into Area B and seizing private Palestinian land for cultivation and settlement. Examples he cites are the Amona settlement, overlooking Ofra, where he argues that land belonging to villagers of Deir Dibwan has been taken for redevelopment; the settlement of Itamar which he says has seized control of land and resources belonging to the Area B villages of Yanun, Awarta and Einabus; he states that settlers have seized Area B land near Esh Kodesh and Mitzpeh Ahiya east of Shilo; and he states that settlers of Ma'ale Rehav'am have built in a nature reserve established under the Wye River Memorandum.
The Palestinian side (later to become the Palestinian Authority) agreed to ensure free access to a specific list of Jewish religious sites located in Areas A and B as specified in the 1995 Interim Agreement on the West Bank and the Gaza Strip, but due to the uncertain security situation, the Israel Defense Forces limits visits by Jews to rare occasions. In Area C, Palestinians were given the right to visit al-Maghtas on the Jordan River and to Nabi Musa.