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EU Envoy Urges Israel to Focus on Peace Gain, Not Boycott

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Feb. 20 (Bloomberg) -- The European Union’s ambassador to Israel has some advice for his hosts: stop hyping the threat of economic sanctions if peace talks with the Palestinians fail and focus instead on the possible benefits if they succeed.

There’s no basis to talk of a major economic rupture with the EU over Israel’s settlement of lands Palestinians seek for a state, Ambassador Lars Faaborg-Anderson said.

Finance Minister Yair Lapid and other Israeli officials have warned that an anti-settlement boycott campaign that has scored some small successes is liable to snowball dangerously if U.S.-sponsored talks with the Palestinians don’t produce a peace deal. Talk of the EU revoking its preferential trade ties with Israel is “on the table” in Brussels, Lapid cautioned.

“There’s absolutely nothing to that, no discussions, plans or anything about abrogating our Association Agreement with Israel,” Faaborg-Anderson, a 57-year-old Danish diplomat, said in an interview this week at his Ramat Gan office near Tel Aviv. “There is a spin in this debate that is getting further and further away from the truth, and we are quite frankly stunned and amazed.”

The EU, he said, is offering both Israel and the Palestinians a “special privileged partnership” that would strengthen their economic ties with the bloc if they reach a final peace deal. It may also help with the “huge bill” that such an agreement would entail, he said.

‘Strong Signal’

That aid offer is “a very, very strong signal of a political commitment to strengthen relations with Israel,” he said. “This is not something we are trying to do to bribe anyone to do something that would not be in their interest.”

The EU is Israel’s biggest trading partner, accounting for a third of its exports and totaling about 30 billion euros ($41 billion) annually in total trade. It is also a major champion of the Palestinian campaign to establish a state incorporating the West Bank and east Jerusalem, territories Israel captured in 1967 where more than half a million Israelis now live.

European countries consider Israeli settlement of those territories to be illegal, and the opposition has spilled over into the economic domain. Banks in Sweden and Denmark, Dutch asset manager PGGM and Norway’s sovereign oil fund recently announced divestment steps against Israeli companies operating in the West Bank.

Israelis are particularly sensitive about European boycotts because of the historical connotation of Nazi economic sanctions against Jews. Some officials draw that link up front.

‘Disgraceful Thing’

“I think the most eerie thing, the most disgraceful thing, is to have people on the soil of Europe talking about the boycott of Jews,” Israeli Prime Minister Benjamin Netanyahu said this week, labeling advocates of economic sanctions against his country “classical anti-Semites in modern garb.”

Faaborg-Anderson says the sanctions campaign is “something that emanates from individuals or groups” in some European states, and “not the EU’s policy, or one we want to further or promote.”

Israeli officials don’t see it that cut-and-dried, arguing that some EU policies have the effect, desired or not, of boosting the boycott movement.

“Of course the EU is officially opposed to the boycott movement, but its actions speak otherwise,” creating “a certain atmosphere that makes people all across Europe believe that the EU is encouraging the boycott of Israel,” Foreign Ministry spokesman Yigal Palmor said by phone.

Grant Restrictions

He cites restrictions added last year to the EU’s Horizon 2020 research funding program, which specifically limits grants and loans to Israeli companies and institutions operating beyond Israel’s 1967 borders.

Another is an EU initiative to label products produced in Israel’s West Bank settlements, which would make it easier for them to be targeted for consumer boycotts. Palmor notes such labeling is not required for imports from other conflict areas around the world.

Faaborg-Anderson says the Horizon 2020 guidelines simply reflect long-standing policy forbidding EU funding for Israeli projects in the West Bank. The same goes for labeling, which reflects EU policy exempting settlement goods from tariff breaks enjoyed by exports produced inside Israel’s internationally recognized boundaries, he said.

The EU envoy declined to discuss why such product labeling is not required from products in other contested areas, such as Chinese goods produced in conquered Tibet, or Turkish exports from occupied northern Cyprus.

Strains Deepened

Israeli-EU strains were exacerbated this month after European Union President Martin Schultz delivered a speech in Israel’s parliament criticizing the Israeli government’s water policies toward the Palestinians. His charges sparked jeers from lawmakers and a walk-out by pro-settlement Economy Minister Naftali Bennett, who met yesterday in Brussels with Schultz in an effort to smooth things over.

Despite such blow-ups, Faaborg-Anderson described EU-Israeli ties as strong, and said prospects for expanding trade look brighter now that Europe is recovering from its economic downturn.

To contact the reporter on this story: Calev Ben-David in Jerusalem at cbendavid@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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