JERUSALEM // The EU agreed this week to push ahead with introduction of labels that specifically identify Israeli goods made in settlements in the occupied West Bank, a policy that has angered Israel.
Now, an influential European think-tank is proposing that Israeli banks should also be targeted.
The European Council on Foreign Relations (ECFR), which frequently informs EU policy, argued in a paper on Wednesday that the EU is in breach of its own laws.
“Under its own regulations and principles, Europe cannot legally escape from its duty to differentiate between Israel and its activities in the occupied Palestinian territories,” said the report entitled “EU Differentiation and Israeli Settlements”.
The EU must go further to distinguish its dealings with Israel from Israel’s activities in the West Bank and East Jerusalem, which it has occupied since 1967, it said.
European diplomats have long said that making clear that goods originate in settlements is only the first in a series of steps the EU could take against Israel over its settlements policy, one that in financial terms is expected to have a relatively minor impact on the Israeli economy.
But the new proposals would go much further, reaching into banking, loans and mortgages, qualifications earned in settlement institutions and the tax-exempt status of European charities that deal with Israeli settlements.
European Union officials have talked about the steps that might follow labelling, but there are no formal European Commission proposals at this stage.
Authors of the report say that pushing further to separate the EU’s dealings with Israel from the settlements will force Israel to consider the sort of relationship it wants with Europe, and in turn encourage the Jewish state to return to talks with the Palestinians on a two-state solution to the conflict.
The most significant proposal is on banking, where large Israeli institutions have daily dealings with major European banks, while also providing loans and financing to Israeli businesses and individuals based in the settlements.
Under European Commission guidelines from 2013, EU loans and member-state-funded lending cannot be provided to Israeli entities operating in the occupied territories. While not legally binding on EU states, the guidelines have an influence.
“Do day-to-day dealings between European and Israeli banks comply with the EU requirement not to provide material support to the occupation?” the report asks, saying it is an issue that EU member states have yet to resolve.
The Israeli government has described Europe’s steps on labelling as discriminatory and wrong-headed, suggesting they are akin to the Boycott, Divestment and Sanctions (BDS) movement, which Israel regards as anti-Semitic.
One of the authors of the ECFR paper, attia Toaldo, said the EU needed to explain more clearly its legal obligation when it comes to differentiation, making a sharp distinction with the BDS campaign. The ultimate aim, he said, should be to urge Israel towards a two-state solution.
* Reuters
