‘Diplomatic earthquake’ || How the EU caught Israel off guard with its new settlement guidelines

New guidelines conditioning future EU agreements with Israel on recognition of the West Bank, East Jerusalem and the Golan as occupied territories reached the Foreign Ministry 10 days ago, but caught most cabinet ministers by surprise.

By Barak Ravid | Jul. 17, 2013 | 9:46 AM |  14

PM Netanyahu and Economy Minister Bennett in the Knesset, July 2, 2013. Photo by Tali Meyer

A senior Israeli official Tuesday described new guidelines conditioning future EU agreements with Israel on the latter’s recognition of the West Bank, East Jerusalem and the Golan Heights as occupied territories as an “earthquake.”

The guidelines, which were drawn up by the European Commission, are expected to be officially released on Friday. Haaretz revealed Tuesday that the document was circulated among all the EU institutions, foundations, investment funds and aid organizations two weeks ago, as well as to all 28 EU member states. They go into effect on January 1.

In a scathing response, Prime Minister Benjamin Netanyahu said, “We will not accept any external edicts on our borders.” Most cabinet ministers were caught by surprise. Economy Minister Naftali Bennett called the decision an “economic terror attack.” Finance Minister Yair Lapid said it was “unfortunate and badly timed,” adding, “every day that Israel is not in talks harms its international status even further.” Meanwhile, opposition chairwoman Shelly Yacimovich called for an immediate resumption of talks.

A senior Foreign Ministry official said that the information on EU plans to issue new guidelines reached the ministry 10 days ago, when the head of the Middle East Branch of the EU External Action Service, Christian Berger, called Israel’s ambassador to the EU David Walzer, informed him of the move and suggested conducting talks on the matter before July 19, this Friday. This is when the guidelines are meant to be officially published.

Walzer reported the news to the Foreign Ministry and diplomatic contacts were launched to try to understand the significance of the move and the specifics of the guidelines.

After the report was published, a high-ranking U.S. administration official involved in attempts to resume peace talks between Israel and the Palestinians warned that if Secretary of State John Kerry’s efforts to restart talks were to fail, the EU countries would take additional measures against the settlements in the West Bank and East Jerusalem.

“The Europeans are giving us time to complete the efforts to resume the talks,” said the official, speaking on condition of anonymity. “But if we don’t succeed, they’ll want to go in other directions and take measures. The Israelis know that very well.”

A Foreign Ministry source said that the initial information from the EU ambassador spoke of guidelines that would insert a “territorial clause” into agreements that would obligate Israel to recognize that it is not sovereign in the territories over the Green Line. “But they’ve said that before, and we didn’t know exactly what was meant,” the official said.

Only a week later did the seriousness of the situation become clear to Israeli diplomats. On Monday morning a preliminary document outlining the ramifications of the new guidelines landed on the desk of Deputy Foreign Minister Zeev Elkin, and it turned out that the guidelines were much more detailed and of practical significance than had been assessed at first.

After reading the document, Elkin immediately sent it to Netanyahu. According to the senior Foreign Ministry official, Netanyahu was shocked.

“Only three weeks before he had met with EU Foreign Minister Catherine Ashton, and she didn’t say a word about the move,” the official said. “In retrospect, it’s not clear to what degree Ashton herself even knew about it.”

The official added that Netanyahu was particularly surprised because Ashton had agreed to Netanyahu’s request to avoid issuing an EU foreign ministers’ declaration at the end of June on the peace process so as not to jeopardize Kerry’s efforts to restart the peace talks.

“We think that this move [the guidelines] is the result of work by the EU bureaucrats that was done under the radar of the diplomatic officials,” the Foreign Ministry official said.

Emergency meeting

Elkin told Netanyahu that he intended to hold a meeting on the subject on Wednesday morning, but after Tuesday’s report appeared in Haaretz, Netanyahu decided to hold an emergency meeting Tuesday night at his office. Experts from the Foreign Ministry, the Economy Ministry and the Justice Ministry attended, together with Ministers Bennett and Livni, and Deputy Minister Elkin.

Two high-ranking officials who were present told Haaretz that during the discussion, the ministries’ representatives said that at this stage there was no way to give a precise estimate of the economic damage that the state and private Israeli companies might suffer. Still, all the professionals who attended the meeting said that if the guidelines go into effect, their ramifications could have extremely severe and damaging ramifications for the economy, academia, culture, sports and many other areas.

The main problem presented in the meeting was the issue of the indirect connections that Israeli companies, such as banks and large companies, have with the settlements. It is feared that the EU, using the new guidelines, will stop cooperating with banks, supermarkets and large companies in Israel that have branches over the Green Line or that engage in projects in the settlements. Israeli construction and infrastructure companies could suffer the most harm.

Bennett and Elkin took an extremely hard line, calling for a sharp response to the European Union. They suggested that Netanyahu present the EU with an ultimatum: if the guidelines were implemented, Israel would stop the EU from operating in the West Bank, freeze its projects in Area C and not include it in the peace process in any way. Livni said during the meeting that Israel should not take extreme measures that might sabotage Kerry’s efforts. “The only way to neutralize these European measures is to resume the peace process.” Netanyahu also opposed escalation, saying that the affair should be contained. “Don’t forget that we need Europe for sensitive security matters and particularly regarding Iran’s nuclear program,” he told Bennett and Elkin.

The meeting ended with an agreement to try to delay the guidelines’ official publication, expected on January 1. It was decided that Netanyahu would call Ashton and ask her to postpone the publication date from this coming Friday to a later date and begin diplomatic talks on the matter. A high-ranking Foreign Ministry official said that Netanyahu planned to explain to Ashton that if the guidelines were published, he would be under political pressure from within not to make any gestures toward the Palestinians, which would harm the efforts to resume the talks.