Legal house-keeping in the EU

The recently issued EU guidelines banning funding to projects in settlements in the occupied Palestinian territory is not a new proactive political strategy; it is simply a matter of legal necessity.

Valentina Azarov
31 July 2013

To some, the publication of the European Union’s (EU) new guidelines, on 19 July 2013, clarifying the “eligibility of Israeli entities and their activities in the territories occupied by Israel since June 1967 for grants, prizes and financial instruments funded by the EU” was a great surprise. Israeli government officials and media have been up in arms, claiming that the EU’s intentions were hostile and demanding the guidelines be suspended. However, Israel’s “nightmare scenario” is in fact a “moment of truth” for the EU.

EU law requires that it respect international law in the exercise of its powers, as codified in the ECJ’s case law and with regards to the EU’s Common Foreign and Security Policy in the Treaty of Lisbon. This obligation includes the duty not to recognize, aid, or assist illegal acts under international law. It must therefore prevent itself from giving legal effect to acts of Israel - or any other state - considered internationally unlawful, which extends to Israel’s settlement policy and effective annexation of Palestinian territory it has occupied since 1967. Under international law, Israeli settlements are unequivocally unlawful – a position maintained by the international community at large and affirmed by the International Court of Justice, despite Israel’s political protest and claims that the settlements are located in ‘disputed’ territory.

The EU’s “long-held position” is that “bilateral agreements with Israel do not cover the territory that came under Israel’s control in June 1967”, as EU High Representative Catherine Ashton recently re-asserted. Over the past several years however, the EU has discovered that its institutions inappropriately relied on Israeli authorities by presuming their good faith observance of international law, e.g. not to treat the Occupied Territories as part of its own through application of Israeli domestic law, thereby ​providing an internationally illegal basis for EU-supported Israeli entities in settlements. The EU discovered that ​its reliance on Israel allowed internationally unlawful institutional practice to determine how the EU’s own legislation is implemented. This resulted, repeatedly, in the deficient implementation of EU law.

Corrective measures

The underlying premise behind the guidelines is the EU’s “commitment to fully and effectively implement existing EU legislation”, as reaffirmed in the EU Council conclusions in May 2012. The 2012 conclusions came after a long process of rising institutional awareness in Brussels and Member State capitals regarding the overlooked reality of deficient implementation of EU law resulting from carelessly constructed instruments underlying EU-Israel relations. These legal lacunae resulted in the failure to respect the EU’s own basic legal obligation to exercise its powers in accordance with international law.

The EU and Israel are involved in over sixty areas of economic, social, financial, civil scientific, technological and cultural cooperation, as well as having close trade and investment relations.  As the intensity and scope of EU-Israeli relations has grown and expanded, the EU realised that it had no choice but to make necessary corrections to its legislation. The recent guidelines ensure the proper implementation of EU law by henceforth excluding entities and activities located or operating in a settlement in occupied territory from receiving EU grants. It is the first in a series of required corrective measures ensuring that the EU does not provide support to any acts considered illegal under international law.

For example, under the EU’s Seventh Framework Program (FP7), the EU’s main research funding instrument, the EU awarded more than one million Euros to Ahava, a cosmetics company, for research and operations carried out in an illegal settlement in the Occupied Territories, and accepted the participation of the Israeli Antiquities Authority despite the fact that it is unlawfully headquartered in occupied East Jerusalem.

The guidelines clarify that the EU should take account of an entity’s place of operations or, more specifically, the EU’s ability to recognise the legislative and administrative acts that form the basis for an entity’s operations, to determine its eligibility for financial support – and only fund entities based in Israel’s internationally-recognised territory. The only exception is those activities carried out by entities established in Israel exclusively for the ‘benefit’ of the Palestinian population in the occupied Palestinian territories, as defined by the EU in accordance with international law. An example would be the provision of services or development of infrastructure for the Palestinian population.

To adhere to these guidelines, the EU must prevent itself from funding illegally based entities and activities, and require Israeli entities to guarantee through a “declaration of honour” that they are not established in occupied territory. In response, some Israeli settlers and political officials have called on entities to refuse to deliver the pledges required of them, and have ordered a freeze on EU projects in the West Bank and entry permits to Gaza.

What’s in it for Israel?

Why should Israeli entities and their government agree to apply the territorial limitation required by the EU, when every Israeli government since 1967 has treated the settlements as part of the territory of the state of Israel, including in their dealings with the EU?

EU diplomats have suggested that Israel’s acceptance and implementation of these guidelines can prevent the need for further measures akin to a boycott. As the EU delegation in Israel noted, the guidelines simply enable the EU to ensure that those entities whose funding would contravene EU law and policy are excluded. Regarding Israel’s compliance with international law, the guidelines will require Israeli public and private bodies to make the territorial distinction in accordance with international law between Israel and the Occupied Territories, possibly providing a disincentive to their involvement in the settlement process.

While the practical implications of these requirements would initially only pertain to Israeli institutional engagement with the EU, similar demands could be mandated by the national law of other states, including individual EU Member States. As the Israeli government continues its settlement policy, the guidelines’ effect on Israeli businesses could trigger backlash within the Israeli public.  

The EU will continue to make the corrections to its legislation and practice to ensure that it conducts its relations with Israel in accordance with the requirements of EU law, in particular the general principle of EU law not to give legal effect to internationally unlawful acts of third countries. The next round, as EU High Representative Ashton’s 8 July 2013 letter to the European Commission mentions, is the drafting of comprehensive guidelines on the labelling of settlement products. It will no longer be possible to label agricultural produce, cosmetics and wines from settlements as originating in Israel. Israeli entities will be required to cooperate in applying this distinction correctly, which, considering the particular intensity and regularity of EU-Israel relations, is expected to gradually alter Israeli institutional practice beyond its engagements with the EU.

A legal challenge to stalled politics?

The EU’s record condemning settlements and other international law violations – as frequently reiterated, for instance, in the Council’s conclusions on the Middle East Peace Process – is far longer than its list of actions to counter them. The guidelines are indeed a new paradigm for the EU: the EU’s need to implement its own law trumps political considerations. But as much as one might like to say that the guidelines are sanctions on illegal Israeli actions or a token to appease the Palestinians, the fact is this concrete measure does nothing more than spell out a measure of internal EU legal necessity, rather than a proactive political strategy.

Following their release, Ashton reiterated in a statement that the guidelines simply adhere to the EU’s long-held position regarding territory under Israel’s belligerent occupation since 1967 and will in fact contribute to “an atmosphere conducive to a meaningful and sustainable negotiation leading to a peace agreement between the parties”. Of course, though the EU’s recent and forthcoming legal house-keeping measures cannot avoid political implications for the so-called “peace process”, they hardly stem from an activist impulse – whether scepticism towards the Kerry initiative to restart negotiations or some unprecedented EU assertion against Israel's violations, as has been noted by other commentators.

Regardless, such measures should set a positive example for other stakeholders, including the United States. Human rights groups that have long called on the EU to take a more activist role should be encouraged to seize the possibilities for the enforcement of international law by moving a state’s decision to do so out of the realm of political discretion and into that of legal necessity.


The work discussed in the piece is that of Mattin Group, based between Ramallah and Brussels; many thanks to Charles Shamas, its co-founder and senior partner. All errors are the author’s.


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