It’s a “big mistake,” Israel’s deputy foreign minister told Army Radio.
It’s “an economic terror attack against peace,” the economy minister said.
Prime Minister Binyamin Netanyahu vowed: “I will not allow anyone to harm the hundreds of thousands of Israelis living in [the West Bank] the Golan Heights, or in Jerusalem.”
It also “sabotages” US efforts to renew Israeli-Palestinian peace negotiations, the finance minister said, days before the US secretary of state announced the parties had tentatively agreed to talk.
So, what’s the big deal?
A few years ago the European Union woke up to the fact that permitting its funding to go to Israeli settlements violates not only international law, but also EU law.
On 16 July, the European Commission announced new “guidelines” intended to prevent this from happening. It is a bit of EU housekeeping that is so obvious, it is hard to see why it was not done long ago.
Legally speaking, the guidelines are not sanctions on Israel, or even on the settlements. They are a belated and necessary effort to correctly implement the EU’s own law and to keep its hands clean.
The settlements are illegal under international law. The EU has long recognised this and called on Israel to remove them.
The EU also funds activities in Israel, which insists the settlements are legal.
Under the guidelines, starting in 2014, the EU will only give “grants, prizes and other financial instruments [loans]” to Israeli entities that do not operate in the occupied Palestinian territories and promise not to spend the money there.
The grants tend go to a wide range of activities, including research and development projects, cultural projects and youth sports programs.
But Israeli officials view the guidelines as political arm-twisting over the settlements.
One official told The Guardian: "We don't believe the EU's position should be forced down our throats like geese.”
But as the guidelines note, the EU is obliged to uphold international law, and not to support or “recognise” breaches by third parties. For the EU to give money to Israeli entities that operate in settlements could amount to the EU treating Israel’s settlement policies as if they are lawful.
Yet, those policies breach the international law prohibitions on transferring a civilian population into occupied territory and otherwise treating that territory as if Israel had sovereignty over it.
The EU cannot very well claim to respect such international law - as set out for instance, in the Geneva Conventions and the Rome Statute of the International Criminal Court - while giving money to Israeli entities that aid and abet illegal settlement activities.
Yet this is precisely what the EU has done in the past.
Europe gave €1.12 million in research grants to Ahava, a company that produces cosmetics at a factory located in a settlement. When a European parliamentarian called out the commission for the blunder, it lamely explained that Ahava’s corporate headquarters are “formally established” inside Israel.
European taxpayers gave €114,400, under a cultural programme, to the Israeli Antiquities Authority, which is headquartered in East Jerusalem, part of the West Bank that Israel unilaterally annexed in violation of international law.
The authority has carried out excavations in the occupied territory without Palestinian participation, and subcontracted a settler organization, Elad, to run the “City of David” archaeological tourist site in the middle of a Palestinian neighbourhood in East Jerusalem.
The excavations damaged Palestinian homes.
The commission said the authority applied for the money using a P.O. box in West Jerusalem.
To avoid repeats of these errors, the guidelines impose a three-part test for Israeli entities - including governmental bodies, businesses, and not-for-profit organisations - seeking EU money during the next financial cycle, from 2014 to 2020.
First, they must be established inside Israel proper.
Second, grants and prizes will be available only for activities inside Israel, and loans only to entities that don’t operate in the occupied territories at all.
Finally, Israeli applicants seeking European money must “submit a declaration on honour” that they meet and will comply with the criteria.
Israeli groups that are established inside Israel can receive European assistance for activities they carry out in the occupied territories for the benefit of the Palestinian population.
The EU and member states’ leaders should keep Europe’s legal obligations firmly in mind when faced with the inevitable counter-pressure.
Prime Minister Netanyahu reportedly urged European Commission president Jose Manuel Barroso to postpone publication of the guidelines, while Dani Dayan, a settler representative, bizarrely invoked the Holocaust when tweeting against them: “How will be selection done [sic] on [Israeli] youth delegations? A German will say: Tel Aviv to the right, East Jlem to the left? Or will it be a Polish job?”
Brussels is slowly realising that commission actions should be carefully scrutinised to avoid betraying the EU’s laws that incorporate its obligations under international law.
There is much more work to be done.
But the EU’s law-driven attempt to do no evil is a salutary surprise. Will Washington finally show some principled backbone and do the same?
The writer is a senior researcher in the Middle East division at Human Rights Watch