Israel Should Thank EU for Setting Guidelines, Avoiding Sanctions

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In the past few days much has been written about new "Eropean Union guidelines" excluding Israeli settlements in the occupied territories from EU cooperation. Notwithstanding the breadth of comments made and conclusions drawn even before the guidelines’ official publication last Friday 19 July in the EU Official Journal, it is appropriate and necessary to analyze the text as it is – what it does, and does not, contain.

First, it must be stressed that the guidelines only concern the future policy of the European Commission; they are not binding for other actors such as EU member states or private individuals. This is clear from the guidelines' publication in the “C” series of the EU’s Official Journal, reserved for texts that do not have binding legal effect. The purpose of such texts is to indicate the manner in which the Commission intends to apply EU law in a given area. The Commission has, in the past, issued numerous such guidelines, or "Notices" as they are officially called (in areas such as competition policy, state aids, free movement of goods, import formalities, etcetera).

Interestingly, the Commission has already stated in several previous Notices that the territory of Israel does not extend beyond the Green Line and that, as a consequence, products made in Israeli settlements are not entitled to benefit from the EU-Israel Association Agreement. The fact that the Commission explains this position further in the current guidelines, therefore, was not unexpected.

Contrary to what has been stated by many critics, the guidelines do not concern the EU’s member states, which remain free to make grants to whomever they wish. However, since the member states were consulted before the guidelines were finalized and a majority presumably approved them, it is likely that they will gradually adopt the same attitude in their dealings with Israel.

In the guidelines the Commission announced that it will not award financial support to Israeli entities that fall into one or both of the following categories:

• Either the entity has its place of establishment outside Israel’s pre-1967 borders or

• Even though the entity is established within Israel’s pre-1967 borders, the support concerns activities taking place outside these borders.

These conditions apply to all kinds of Israeli entities: Regional or local authorities, other public bodies, public or private companies or corporations, NGOs. However, the guidelines expressly make an exception for national level government ministries and other public authorities. The fact that such authorities (e.g. the Israeli Antiquities Department) are located outside the pre-1967 borders does not disqualify them, unless the support relates to specific activities taking place beyond the pre-1967 borders.

The requirements do not apply to natural persons (a human being, rather than a public or private ‘legal person’ that could be e.g. a corporation.) Thus the fact that a firm established in Israel proper employs Israeli workers residing outside the pre-1967 borders does not disqualify it from receiving EU funding. Nor do the requirements apply to activities benefiting the Palestinian population or promoting the Middle East peace process.

The practical impact of the guidelines on the Israeli economy will probably be limited. A firm such as Ahava Dead Sea Laboratories, although having substantial activities outside Israel’s pre-1967 borders, has its place of establishment (legal address) in Holon near Tel Aviv. If it engages in research inside Israel proper it will not be barred from receiving EU funding for that research. The same criteria will apply to all other entities having their legal address in Israel proper while also having activities beyond the pre-1967 borders.

Only institutions which are established inside a settlement, such as Ariel University, will be denied access to EU resources. Other entities will in many instances be able to continue to benefit from EU financial assistance by ensuring that the activities for which they seek such assistance are carried out inside Israel proper.

That the European Commission has come up with guidelines clarifying relations with Israeli entities in the occupied territories should not come as a surprise. Already on December 10, 2012, the EU Foreign Affairs Council stated that "all agreements between the State of Israel and the EU must unequivocally and explicitly indicate their inapplicability to the territories occupied by Israel in 1967." At the time these words hardly raised any interest in Israel, although it was the first time that the EU put in such clear language what it had been saying for the past forty years; namely, that according to international law the Occupied West Bank, Gaza, East Jerusalem and Golan Heights are not part of Israel. The entire international community, including the United States, had been saying the same for years.

What is really surprising is that it took the EU so long to put things down clearly and unambiguously and to draw concrete consequences from the many declarations it had issued during decades. Some commentators allege that the European Commission operated in a Machiavellian way by publishing the guidelines just as U.S. Secretary of State Kerry was in the final stages of securing both sides’ agreement to relaunch peace negotiations. However, the guidelines have consequences for various EU financial programs and therefore had to be adopted well before the EU's next six-year budget cycle starts on January 1, 2014.

Successive Israeli governments, in particular those led by Prime Minister Benjamin Netanyahu, are the only ones to blame for the fact that the European Commission finally felt obliged to take this step. Never did they show any sign of being seriously interested in peace negotiations. Their calls to the EU to withdraw the guidelines on the pretext that they would complicate possible peace discussions were disingenuous. With its heavy settler representation, the current Israeli government has so far presided over a deterioration, in which the Economy Minister Naftali Bennett openly declares that Israel should intensify construction in the settlements: "The most important thing in Land of Israel is to build, build, build," and Deputy Foreign Minister Ze'ev Elkin said that "Regardless of the world’s opposition, it’s time to do in Judea and Samaria what we did in [East] Jerusalem and the Golan," i.e. annexation.

Such statements explain why even traditionally staunch supporters of Israel, such as the Czech Republic and the Netherlands, now feel that they can no longer defend Israeli policies. Hence the unexpected remarks last May from Dutch Prime Minister Mark Rutte that labeling settlement goods "is not a boycott and not sanctions ... one has a right to know what one buys" and from Czech Foreign Minister Karel Schwarzenberg that Israeli plans to build in the controversial E1 corridor are “obnoxious” and an "unnecessary provocation."

The most important aspect of this controversy, and one that is liable to be lost in all the sound and fury, is that in reality the exclusions in the guidelines will help Israel avoid EU sanctions. This is by no means an empty achievement, as there is substantial public support for sanction-like action amongst the European public. Indeed, opinion polls in Europe show a great divide between the pro-sanctions attitudes of the average citizen and the limited ‘guidelines’ positions taken by their governments. Even in a country like the Netherlands there is considerable support for EU and Dutch measures against Israel and the BDS campaign throughout Europe has grown. By focusing on the illegality of the Israeli occupation, the EU guidelines have actually relieved the pressure on EU governments to adopt further-reaching measures against Israel as a whole.

Willem Aldershoff held various positions in the Departments for International Relations and Justice and Home Affairs at the European Commission and is now an independent advisor on EU policy on Israel and Palestine, Brussels.

Michel Waelbroeck, previously a visiting Professor at the Law Schools of New York University and Michigan University, the European University Institute in Florence and Columbia University is Emeritus Professor of European Law at the Université Libre de Bruxelles.  

The West Bank settlement of Ariel.Credit: AP

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