US unit occupying Israeli territory (5)

I believe the answer is:

liter

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'us unit' is the definition.
'liter' can be an answer for 'unit' (liter is a kind of unit). I'm unsure of the 'us' bit.

'occupying israeli territory' is the wordplay.
'occupying israeli' becomes 'li' (I can't justify this - if you can you should give a lot more credence to this answer).
'territory' becomes 'ter' (I've seen this in other clues).
'li'+'ter'='LITER'

Can you help me to learn more?

(Other definitions for liter that I've seen before include "unit across the pond" , "American volume" .)

I've seen this clue in The Guardian.

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