Because the Bible so instructs them.
On the sabbath this week, Jews read in synagogue the following:
Widen the place of your tent, and let them stretch forth the curtains of your habitations, do not spare; lengthen your cords and strengthen your stakes.
For right and left shall you prevail, and your seed shall inherit nations and repeople desolate cities. (Isaiah 54:2-3)
Yet, Israel last November announced a complete freeze on building in Jewish communities in the West Bank and Jerusalem. Not even construction to accommodate natural growth is allowed. And who says Israel refuses to make painful concessions to its enemies?
It is also remarkable that the current Israeli government, to its credit, is turning scripture into policy by announcing a new initiative, described recently in the Jerusalem Post, to offer incentives to Israeli "yordim" who've left the country to live elsewhere to get them to return home.
They say Jewish settlements are an impediment to peace. Actually, active settlement expansion can help achieve peace sooner by showing Israel's enemies that time is not on their side -- that their only hope of halting Jewish expansion is to return to peace talks sincerely ready to compromise.

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