(JTA) — Australia’s main pro-Israel lobbying group criticized a controversial new Israeli law that retroactively legalizes settler homes built on private Palestinian land.

In a statement released Wednesday, the  Australia/Israel & Jewish Affairs Council (AIJAC) called the law a “counter-productive and unwise piece of legislation aimed at pandering to fringe constituencies at the expense of Israel’s integrity and image abroad.”

“The biggest barrier to peace at the moment is the Palestinian refusal to negotiate, not settlements – which comprise just one of the contentious final status issues that must be negotiated directly between Israel and the Palestinians, and one whose importance has often been exaggerated and distorted. However, this unhelpful law seems likely to make resolving that issue more difficult when and if the Palestinians end their self-destructive boycott of the negotiating table,” the statement continued.

AIJAC seldom criticizes Israeli actions.

The law, which the Knesset passed in a raucous late-night session Monday, allows the state to seize private Palestinian land on which settlements or outposts were built, as long as the settlers were not aware of the status of the land. In cases where the landowners are known, they are entitled to compensation.

Most of Israel’s political opposition and even members of the governing coalition oppose the legislation. Israeli Attorney General Avichai Mandelblit has said he would not defend it before the Supreme Court.

“[While] the negative effects of this new law should not be exaggerated or distorted, AIJAC nonetheless remains concerned that it does not serve the long term interests of Israel, including the nurturing of circumstances conducive to an eventual negotiated two-state resolution,” the statement, signed by the group’s national chairman, Mark Leibler, and its executive director, Colin Rubenstein, continued.