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What the EU settlement 'compromise' will mean on the ground

An analysis of how the EU’s settlement guidelines will affect Israel and the settlements after the two sides reached an agreement on their disputed terms, as they have been reported thus far.

EU foreign policy chief Catherine Ashton with PM Benjamin Netanyahu (Photo: GPO/Avi Ohayon)

The European Union will not impose a blanket ban on loans to Israeli entities that operate on both sides of the Green Line. That was the most important concession the EU made in watering down its settlement guidelines in the face of Israeli pressure, preliminary reports of a compromise detailed Tuesday evening.

Instead of banning financial instruments to any company that operates on both sides of the Green Line, as the original wording would have done, the new reported compromise will put the burden of proof on an applicant or recipient to show how they will ensure EU funds do not inadvertently finance settlement activity, Haaretz and other Israeli media reported.

Opposing views: Why the guidelines won’t have any effect

The importance of that concession for Israel is massive. In the domestic Israeli market, there is no Green Line as far as commerce and trade are concerned. Barring financial instruments, i.e. loans, to any company or institution that operates on both sides of the Green Line would have effectively made most Israeli companies and institutions ineligible.

For example, an Israeli petrol company might have been ineligible for EU loans because it operates petrol stations in the West Bank. Now, it must only show how it will prevent EU funds from reaching those gas stations.

On the European side, there is actually little change in the practical applications of the new wording. The point of the blanket ban on granting financial instruments to bodies that operate on both sides of the Green Line was to prevent inadvertent EU funding of settlement activity. With a requirement to make sure that EU money doesn’t make its way to settlements, however, the original goal is fulfilled.

The second change, as reported by the Israeli media, appears to be a semantic change designed to assuage Israeli fears that tacitly accepting the EU guidelines would somehow open it up to international legal action over the illegality of the settlements under international law. While the Horizon 2020 agreement will in the end include a clause saying it must adhere to the EU settlement guidelines, Israel will be allowed to attach an objection to that clause.

The objection is similar in nature to American presidential signing statements, made famous by George W. Bush, who would attach a statement to many laws he signed explaining which parts he did not accept and would therefore not enforce.

As explained in the Haaretz article, the details and wording of the compromise agreement have yet to be signed by the political echelon, so all of this could still change in the coming hours and days.

One thing, however, is for sure: the game changed. While Israel was not excluded from a very important agreement, thereby bringing about tangible consequences for the settlements and ultimately for the occupation, the Netanyahu government was forced onto the defensive.

As Noam Sheizaf wrote earlier today before news of the compromise was announced:

For the first time in decades, a serious debate has started among local elites about what isolation the occupation could cause Israel.

This national conversation – long overdue – is more important than anything in the guidelines themselves.

Could UNHRC’s settlement report put the ‘S’ back in BDS?
European MPs to Ashton: Make Israel pay for settlements
Why the EU shouldn’t amend its new settlement guidelines 

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    1. I am way less optimistic. While I think that the debate on the guidelines was good (hence my earlier comments), I think that now that the EU handed Bibi a political victory, they might have the opposite effect – the impression that the settlements/occupation has no price, from an israeli perspective.

      Reply to Comment
      • Kolumn9

        I don’t see this as a political victory for Bibi or the right. That the issue came up at all would suggest that the Bennett-style approach that there are no consequences from settlement construction is incorrect. However it certainly supports the theory that given a firm Israeli position on the matter this is not an issue that will prevent cooperation with important states and that the negative impact of the settlements on Israeli international relations can be relatively inexpensively mitigated. Meaning, that it suggests that the actual price for the status quo is relatively minimal and certainly insufficient to warrant the risks involved in changing it.

        I am not convinced that this assessment would really change even had this agreement not been reached. The unwillingness of Europe to sign an agreement would have just been explained to the populace as the usual European anti-Israeli policy and Bibi would go out front waving the flag and rejecting foreign diktats. That would fall on fertile fields in the center and right. The missing $60m/year over the next 7 years would have barely been noticeable. I doubt Bibi or the right would suffer, if at all, in the fallout.

        Two cheers for Tzipi Livni on this matter. Too bad she isn’t the Foreign Minister.

        Reply to Comment
        • I think Kolumn correct. If Israel was excluded from participating it would cause consternation among some elites, but at least the academic elite is already marginalized. An impacted business elite could make the argument that unconditional settlement love is hurting job creation in such a case, but to say so forcefully would be a breach of national solidarity. More likely, business would try to work around the bar by partnering with international businesses, indeed thereby failing some job creation in Israel.

          But Bibi does get a win. He can again say that Western critics are paper tigers. Since Bennett is opposed to a Palestinian accord as such (whatever it is), he can say the same: when they raised their fits, they soon backed off. If there is to be resistance to settlement, it seems more likely to come internally from a middle class unable to progress, with curtailed settlements at least a symbolic budget act.

          The one thing which might change this is a control mistake in the occupation leading to many deaths or wounds. Sporadic individual harm to the occupied is always offset by security logic and Palestinian violence to Jews, even if settlers; but correlated harm to Palestinians under occupation in a single event, or few days, might have an impact domestically and even more internationally. A controlling impact, I doubt much.

          Reply to Comment
        • Richard Lightbown

          I think it was potentially very damaging for Israel. Sure they have blustered their way out of it and the EU has wimpishly backed down again. But the threat of some very real damage was acknowledged in Israel.

          “Manuel Trajtenberg, the chairman of the parliamentary higher education planning and budgetary committee, said the question was whether signing or not signing was the lesser evil.

          “Taking part in the programme means access, a doorway to co-operation with the greatest researchers in Europe, and access to expensive research infrastructure that the state of Israel cannot afford. There is no alternative in the world to co-operation of this extent,” he told Israel radio.

          Israel should make a final attempt to amend the wording, he said. “And it has to make every effort to sign it. If it doesn’t, this will not only hurt the state of Israel’s basic interests. If we don’t sign, we will be removing ourselves from Europe.”


          Reply to Comment
          • Kolumn9

            The people that wanted the accord will exaggerate its value to make the case…

            From a budgetary point of view (which Trajtenberg represents) it would certainly be a net negative, but he is not someone whose job it is to be concerned with the diplomatic consequences.

            In any case, it would appear that if negotiations blew up yesterday no one would have noticed given the events of the day.

            Reply to Comment
      • Michael Omer-Man

        If the deal did hand Bibi a victory, it’s not that significant.

        The little political capital he can gain by maintaining the status quo for another day is not lasting. He’ll continue to be slammed from both the left and the right.

        If anything, it raised awareness among more moderate voices in the government, including Bibi, that the day when there might be tangible consequences isn’t as far away as they thought.

        Furthermore, the fact that they were able to fend off the consequential part of the guidelines will only embolden the more belligerent and unapologetic elements in the government (Liberman & Bennett). If they can convert that overconfident scorecard into actual political capital, eventually wresting control of the government from Bibi and pals, then that runs the risk of laying the groundwork for real international isolation in the long run.

        Or not.

        Reply to Comment
        • Kolumn9

          Bennett was with Livni on this one according to Haaretz. I don’t think he is who you think he is. He is just Bibi with a kippah.

          Reply to Comment
          • Michael Omer-Man

            Bennett was with Livni on this because of the economic and scientific value Horizon 2020 offered Israel. Maybe one day we’ll see how he reacts when the price is something as important to the country but less dear to him.

            At a certain point, no cost benefit analysis can explain away a betrayal of the ideological foundation on which you were elected. Unless you’re Sharon, of course.

            Reply to Comment
          • Kolumn9

            The capacity for cost/benefit analysis, even where his supposed ideological beliefs are compromised, would suggest a very rational, flexible and pragmatic approach. Uri Ariel or Avigdor Liberman are not be capable of acting like this.

            He is a new Bibi trying to replace the old Bibi from the right which requires him to adopt right-wing positions. In practice he has taken pragmatic positions on pretty much all issues – negotiations, prisoner releases, settlement construction, etc.

            Reply to Comment
      • Maybe the Iran agreement led the Europeans to soften up, feeling that they’d already freaked the Israeli govt out once, and they’re asking Israel not to try to undermine the deal via AIPAC, so maybe they figured they don’t want to freak Israel out again so soon after Geneva, and get Bibi screaming about Munich, so they decided to go easy on the EU deal. Maybe.

        Reply to Comment
    2. “the new reported compromise will put the burden of proof on an applicant or recipient to show how they will ensure EU funds do not inadvertently finance settlement activity”

      This is the “funds are rfungible” argument in reverse. The USA imprisoned people who gave money to hospitals to which Hamas had also given money — arguing that their gifts freed Hamas to use its money for other things (terrorism).

      Here it is the opposite: even though, clearly, giving money to an enterprise which operates on both sides of the line effectively provides moeny to both sides, the fiction will be that the money goes only to one side.

      This change to the guidelines *IS* a victory for N’yahu and a defeat for EU, decency, and apple pie (as Americans might say).

      Reply to Comment
      • Kolumn9

        Even if the Europeans insisted and the Israelis accepted terms according to which only organizations operating entirely within the green line would receive funding you would still argue that the Israelis will take money saved from operations within the green line and will use it to fund the settlements. In other words, no agreement would actually satisfy you, or rather, every agreement would upset you because in reality you wish to see no money flowing into Israel at all rather than caring where it goes.

        Reply to Comment
        • Kolumn9: You are correct about my feelings. I advocate a total boycott of trade with Israel until the settlers, settlements, wall, and siege of Gaza are gone/ended.

          But the topic was the EU guidelines.

          And the toughness is gone. As practiced, we will have to wait and see. Perhaps the “burden of proof” will recognisze that all money to OPT-linked organizations can go to Israel-in-OPTs and this would mean that no “proof” of the contrary would suffice. But it doesn’t look good. This was a “cave-in” to Israel’s (illegal) settlement project. Pure and simple. There was no need whatever to make this change other than to cave-in, or to appear to do so.

          “Follow the money” has many meanings. These guidelines probably will not do so. the change to the guidelines presumably arose from the appllication of money by what in the USa is by some called the Israel Lobby.

          Reply to Comment
          • Kolumn9

            Indeed, I doubt you would be happy until ceases to exist. Then trade with ‘Israel’ would be ok with you.

            The underlying idea of the guidelines was that Eutopean money would not be used in the settlements. This agreement achieves that and will probably force Israeli institutions to structure themselves accordingly. There was no cave-in. At best there was minor superficial compromise on the part of the Europeans. Had they not done so there would be no agreement to the benefit of no one. Your gripes about the details of the agreement are silly since you admit that you would only be happy with no agreement whatsoever.

            Reply to Comment
    3. Paul Usiskin

      So if the public discourse on this is essential, who apart from 972 will lead it?

      Reply to Comment
      • Kolumn9

        The public discourse on the matter is just fine and takes place in Israeli media on a daily basis in Hebrew. There are plenty 972mag fellow travelers there.

        Reply to Comment