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As the Israeli government steps up efforts to limit foreign funding for human rights group, an Israeli peace organization sent a letter to European diplomatic missions in Israel this week urging them to tell Israel that legislative action against NGOs may threaten the budget of universities, hospitals and other non-profit organizations.

The government has sought to limit the activity of Breaking the Silence, an organization that has published a damning report of the IDF's conduct during last winter's Operation Cast Lead in Gaza.

In the letter, Gush Shalom told the diplomats that "the discriminatory blocking of European government funding to a specific group of legal and legitimate NGOs may well result in a public backlash in the EU, which would force your government to cut all funding to Israeli NGOs, including to universities and hospitals."

The group added that it had been opposed to campaigns which sought to withhold funding to Israeli non-profits in the hope that the Israeli government would also reconsider.

Gush Shalom also noted that the tax exemptions for non-profit organizations constitute indirect funding for organizations, and asked that the EU Commission warn the Israeli government that these benefits "could be withdrawn for the large number of Christian Zionist organizations in the EU financially supporting West Bank settlement activities."

Human rights groups in the European Union are reportedly preparing to launch a public campaign lobbying EU governments as well as the European Commission to stop funding Israeli non-governmental organizations.