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EU Moves to Cut Funds to Israeli Settler Entities
Laurence Norman and Joshua Mitnick
The Wall Street Journal

BRUSSELS--A fresh dispute broke out Tuesday between Israel and the European Union as Brussels prepares to issue guidelines that aim to prevent EU funds flowing to Israeli settler organizations in the occupied territories.

The row comes at a key moment in often rocky ties between Israel and the EU. Next week, EU member states could fulfill a longstanding Israeli request to add the military wing of Lebanese Shi`ite group Hezbollah to its terror list. However, there are also calls within the EU for a tougher stance on Israeli settlement activities and stricter application of rules on labeling exports to the EU from the West Bank, East Jerusalem, and the Golan Heights.

Under the guidelines, entities based in the occupied territories would be banned from receiving grants, prizes and financial instruments funded by the common EU budget from January 2014. Individuals wouldn`t be affected and taxpayer money from the EU`s 28 member states will also not be subject to the rules. The guidelines are set to be published Friday, officials said.

The EU is negotiating agreements with Israel on research and innovation funding that could benefit Israeli universities and on greater cooperation between EU police unit Europol and Israeli authorities. The guidelines would require these kind of accords to include a clause specifying that EU resources couldn`t be used in the occupied territories, officials said. However, since they are guidelines, there would be some flexibility in how they are applied.

A spokeswoman for EU foreign policy chief Catherine Ashton said the bloc wants Israel to `make use of all possibilities offered` in its budget. She said there have only been a limited number of cases of EU funding reaching organizations based in the occupied territories since some previous agreements between Israel and the EU carried similar limits on use of funds.

But she said the decision was in line with the EU`s `longstanding position` that Israeli settlements are illegal and that the EU doesn`t recognize Israeli sovereignty over the occupied territories.

`These guidelines were prepared in order to implement the Commission`s commitment to make a distinction...between the state of Israel and the occupied territories,` said the spokeswoman, Maja Kocijancic.

Even as European officials and diplomats emphasized the incremental nature of the decision, many Israeli and Palestinian politicians portrayed it as a big policy shift against Israel in the Palestinians favor.

Israeli Deputy Foreign Minister Zeev Elkin said it is a negative decision that tightens existing limitations on EU activities with Israeli settlements. He told Israel Army Radio that while Israel has encountered such EU limitations before, the decision could prompt EU member states to demand similar limitations in bilateral agreements.

The EU move comes on the eve of a visit to the region this week by U.S. Secretary of State John Kerry, who has held several inconclusive rounds of shuttle diplomacy in recent months to persuade Israel and the Palestinians to restart peace talks. Many Israelis fear that if peace negotiations remain in a stalemate, the Jewish state will eventually face an economic boycott on all its products.

The EU has long sought to play a role in Middle East peace talks and has recently been urging direct talks between the two sides. However, Brussels has come under fire from Israeli politicians, who accuse the EU of siding with the Palestinians on key issues. At the same time, Palestinians have urged the EU to go further in criticizing Israeli policy.

With Israeli-Palestinian negotiations deadlocked for years, Israel has been facing increasing international isolation and criticism over its policy of expanding settlement construction, activity criticized by the international community as jeopardizing the creation of a Palestinian state.

Israeli Energy Minister Silvan Shalom, a former foreign minister, said in an interview with Army Radio that the new policy `proves, again, regretfully, how detached Europe is and how it cannot be a genuine and balanced partner in negotiations with the Palestinians.`

The Palestinian Liberation Organization welcomed the EU decision with Palestinian official Hanan Ashrawi describing the decision as a significant evolution of European policy toward the peace process.

`The EU has moved from the level of statements, declarations and denunciations to effective policy decisions and concrete steps,` she said in a statement. This will `have a positive impact on the peace process.`

Write to Laurence Norman at and Joshua Mitnick at

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