Following two emergency meetings to discuss the rift with the European Union over the Horizon 2020 scientific cooperation initiative, Prime Minister Benjamin Netanyahu decided overnight Monday to continue seeking a compromise that would enable Israel to sign the pact.
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“In light of the difficulties in the talks with the European Union, Netanyahu ordered us to work to change the agreement so that it can be signed," a high-ranking diplomatic source in Jerusalem said.
Recent negotiations between the sides over the terms for signing the Horizon 2020 initiative all but hit an impasse, after the EU rejected most of Israel's compromise proposals concerning the European ban on funding entities in West Bank settlements.
In July, the European Commission issued new guidelines regarding EU funding of entities in the West Bank settlements. The new guidelines prohibit funds and agencies from giving grants, scholarships, or prizes to Israeli entities in the settlements or to activities in the settlements. In some cases, the guidelines forbid giving loans to Israeli entities that operate directly or indirectly beyond the 1967 lines.
The guidelines also stress that every agreement between Israel and EU has to include a territorial clause that stipulates the agreement does not include the settlements in the West Bank, Jerusalem, and Golan Heights. Due to the new guidelines, the agreement on the scientific cooperation initiative Horizon 2020 has become a point of contention between Israel and the EU.
The Horizon 2020 agreement would provide Israeli research institutes and high-tech companies with hundreds of millions of euros in funding over the next several years. If Israel does not sign, the country’s R&D stands to lose about 500 million euros (roughly NIS 2.5 billion) over the period. The Committee of University Heads and the Council for Higher Education’s Budgeting and Planning Committee have expressed great concern over the damage to Israeli academia if the agreement is not signed.
'Signing would be capitulating'
Netanyahu's decision comes after Foreign Minister Avigdor Lieberman and his deputy, Zeev Elkin, took a hardline on the issue on Monday, saying Israel should not sign the deal under the current conditions, in light of the fact that the EU had rejected all of Israel’s proposed compromises.
“Signing the agreement would be capitulating,” Lieberman said at the meeting.
Justice Minister Tzipi Livni is expected to speak with EU foreign policy chief Catherine Ashton on Tuesday, to ask her to intervene and help resolve the crisis.
Livni and Science and Technology Minister Jacob Perry took the opposing view from Lieberman and Elkin at the meeting, saying that Israel could not afford to give up the European investment.
Netanyahu had held an initial meeting to address the rift with the EU earlier Monday.
During that meeting, the premier was updated about the EU's rejection of most of the compromise proposals Israel submitted regarding the transfer of funding to settlements within the context of signing the Horizon 2020 initiative.
Senior Economy Ministry officials noted that most of the requests for grants that are approved are submitted in the first week after the deal is signed – in other words, in the next 10 days.
EU rejects Israeli demands
On Friday, Pierre Vimont, Ashton's deputy, sent a letter to the Foreign Ministry rejecting most of the proposed Israeli compromise on the language of Horizon 2020 agreement. The Europeans turned down Israel’s demand to remove the new guidelines on the settlements. The EU wants the agreement to include an “attachment” stating that the agreement’s conditions do not prevent the European Commission from implementing the guidelines on the settlements.
The Foreign Ministry officials said this clause breaches oral understandings between the sides and backtracks on positions that the EU stated during the talks.
The EU also rejected Israel’s demand to remove the clause prohibiting the indirect funding of agencies that operate in the settlements. Regarding loans, EU officials said they feared that no way would be found to ensure that EU funds did not eventually reach the settlements. They said the EU was unwilling to back down on the issue.
Foreign Ministry officials, including Elkin, who is responsible for this issue, see this clause as untenable under any circumstances. They say it harms Israeli firms even if they only have branches in the West Bank, such as fuel companies, energy companies and banks.
The EU also demands that Israel’s recognition of its policy on the settlements not just focus on EU funding. The EU now demands Israel’s consent to the following clause:
“In accordance with EU policy this agreement shall not apply to the geographic areas that came under the administration of the state of Israel after 5th of June 1967. This position should not be construed as prejudging Israel’s principled position on this matter. Accordingly the parties agree that the application of this agreement is without prejudice to the status of those areas.”