The NY Times has an article on the two Haredi settlements of Beitar Ilit and Modiin Ilit, and the issues that differentiate them from the rest of the settlement enterprise.

But appearances are deceiving. Modiin Illit and its sister community, Beitar Illit, are entirely ultra-Orthodox, a world apart, one of strict religious observance and study. They offer surprising potential for compromise.

Unlike settlers who believe they are continuing the historic Zionist mission of reclaiming the Jewish homeland, most ultra-Orthodox do not consider themselves settlers or Zionists and express no commitment to being in the West Bank, so their growth in these settlement towns, situated just inside the pre-1967 boundary, could be redirected westward to within Israel.

Their location also means it may be possible, in negotiations about a future Palestinian state, to redraw the boundary so the settlements are inside Israel, with little land lost to the Palestinians. And the two towns alone account for half of all settler growth, so if removed from the equation, the larger settler challenge takes on more manageable proportions.

“If I thought this was a settlement, I would never have come here,” said Yaakov Guterman, 40, the mayor of Modiin Illit and a grandfather of three, his Orthodox fringes hanging from his belt, his side locks curled behind his ears. Asked about the prospect of a Palestinian state rising one day on his town line, he said: “We will go along with what the world wants. We have gone through the Holocaust and know what it means to have the world against us. The Torah says a man needs to know his place.”
[...]

Yet they are lumped with everyone else. The settler movement and the Israeli government point to ultra-Orthodox settlements, with their large and ever-increasing families, to argue that there is no way to stop “natural growth” without imposing acute human suffering. Those seeking a freeze use the settlements as evidence that growth is so out of control that drastic action must be taken. More broadly, opponents say the settlements violate international law, legitimize force by armed messianic Jews and ruin the chance of establishing a viable Palestinian state.

But even those who strongly favor a complete freeze acknowledge that the annual settler growth rates of 5 and 6 percent owe a great deal to these two towns that have little to do with the broader settler enterprise.

Dror Etkes of Yesh Din, an antisettlement group in Israel, noted that half of all construction in West Bank settlements was taking place in these two ultra-Orthodox communities, adding that given their location next to the boundary, it was highly likely they would be in Israel in a future deal through a redrawn border. “From a purely geographic point of view, construction there is not as destructive as elsewhere,” he said.

But he does not want building to continue in Modiin Illit or Beitar Illit without a deal for a Palestinian state, nor does he mean to imply that these settlements have been a benign force. “Land has been taken from Palestinians, in some cases from private landowners, for the building in these settlements, and there are many other issues like sewage flow into Palestinian villages that must be addressed,” Mr. Etkes said.

Settler leaders reject any distinction. The fact that the ultra-Orthodox came to the West Bank to solve their housing problems is “completely O.K. with me,” said Dani Dayan, chairman of the Yesha Council, the settlers’ political umbrella group. “They are an integral part of our endeavor and our achievement.”
[...]

Across the West Bank and excluding East Jerusalem, there are nearly 300,000 settlers living on scores of settlements among 2.3 million Palestinians. And while some say they will fight to stay put, a third are the reluctant ultra-Orthodox, known in Israel as Haredim, Hebrew for the fearful ones, or those who tremble in awe of God.

They believe it important to live in the land of Israel, because certain commandments can be performed only here. But some Haredim actively reject the formation of a Jewish state before the arrival of the Messiah, while others are ambivalent. They also say that protecting life trumps holding territory. Very few serve in the military because the ultra-Orthodox say they do more good for the nation by studying the Torah and praying than fighting.

Until his death in 2001, Rabbi Eliezer Schach was the religious authority of the Haredim of European origin. He opposed building Jewish settlements that extended over the 1967 line into territory Israel seized in the war, once calling them “a blatant attempt to provoke the international community” and complaining that they endangered Jewish lives. In fact, when first offered housing for his followers in Beitar Illit, he took it as an insult, according to Yitzchak Pindrus, a former mayor of the settlement.

“Our people live around their families and rabbis, and they were terrified of the idea,” Mr. Pindrus recalled. But with thousands of new couples marrying every year, and the traditional ultra-Orthodox communities expensive and crowded, the Haredim needed homes.
[...]

Avraham and Riva Guttman, who arrived in Beitar Illit 15 years ago from Toronto and have seven children, look out from their street at Palestinian villages. They believe strongly in living in the land of Israel, they say, and they are happy for the parks and space lacking in traditional Haredi areas of Israel. But they do not insist that it is there or nothing. “We are not here for political reasons,” Mr. Guttman said. “Ninety percent of the people are here for the affordability, not for ideology. Haredim don’t fight with Arabs.”

Perhaps not, but his wife, Riva, bristled at the idea of moving. “If you told me to move elsewhere because Arabs needed a place to live, it would not sit quietly on my conscience,” she said. “I am a Jew in the Jewish homeland.”

And increasingly, the Haredim have vested interests over the 1967 line. Yaron and Sara Simchovitch arrived in Beitar Illit from Jerusalem 13 years ago with a group led by their rabbi. The couple now have a thriving butcher shop.

Yoseph Shilhav, an expert on the ultra-Orthodox at Bar-Ilan University, said that almost every Haredi family now had a member beyond the 1967 border, subtly shifting their attitudes about settlement and withdrawal. The Haredim make up 10 percent of Israel’s population and are a fast-growing electoral force. The Chabad movement and Sephardic or Middle Eastern-origin Shas party have increasingly adopted the nationalist agenda.

The rocket fire into Israel that resulted after its withdrawal from Gaza in 2005 has also taken its toll on Haredi views. “In general, Haredim are very practical people,” said Mr. Pindrus, the former Beitar Illit mayor. “We are not right or left. If we get up in the morning and see that leaving Gaza means missiles, then no, we’re not leaving another centimeter.” He added, “We want to live, and our children not to blow up.”

Still, a surprising number do not oppose the establishment of a Palestinian state if safety can be guaranteed. Since housing is the No. 1 Haredi concern and they feel no need for it to be in the West Bank, redirecting the building of their new homes inside Israel could go a long way toward a solution.

“If the Americans can convince us there will really be peace and we won’t be living in fear of rockets, we’ll bring a recommendation to our rabbis,” said Mr. Guterman, the mayor of Modiin Illit. “Our rabbis want peace. We are not against withdrawing from territory. But life is above all.”

There is also a video, (in the left margin of the original article), that is very balanced.

Despite all this, Obama has no reason to differentiate between people who are living there for ideological reasons or for practical reasons. if he insists on no construction, why should he care what the community's reason for being there is...

The problem is more acute in these places, because of the denser populations and higher birthrates. It is more difficult for them because of the fact that they are not interested in the politics of being there, so they see themselves less as being obstacles. they just want to be left alone to live their lives.