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    Middle East
     Nov 10, 2012

Trade tilts balance in EU-Israeli ties
By Emanuele Scimia

Caught in a spiral of actions and counteractions, the course of relations between the European Union (EU) and Israel keeps going up and down, while on the one hand Brussels scolds Israeli Prime Minister Benjamin Netanyahu for not halting the expansion of Jewish settlements in the occupied Palestinian territories and, on the other, the Israeli government speeds up its integration into the EU single market.

The European Parliament ratified on October 23 the EU-Israel Agreement on Conformity Assessment and Acceptance (ACAA). Being part of the Association Agreement that the European Union and the Israeli government stroke in 1995, the new framework deal matches Europe's and Israel's industrial standards, most notably with regard to pharmaceutical products - it is worth remembering that on July 24 the European Council, the EU's decision-making


body, already agreed to upgrade trade and diplomatic relations with Israel in more than 60 sectors.

Opponents of the ACAA within the EU's legislative branch - who have been fighting against its ratification since 2009 - contend that it does not clarify if it comprises products coming from Israeli settlements. According to many EU legislators, then, Brussels cannot accept that the Israeli state regulator charged with implementing the agreement has jurisdiction over the West Bank and East Jerusalem.

What's more, there are fears that the ACAA's provisions collide with the European effort to draw up a voluntary code of conduct for labels on goods being exported by Jewish settlers. The rationale behind this code is to empower the Old Continent's consumers, who could choose whether buying "Made in Israeli settlements" products or not. Currently, imports from settlements cannot benefit from EU tax breaks.

But there is something else. A group of 22 European NGOs released on October 30 a report shedding light on the size of EU trade with illegal Jewish settlements. Based on official figures from the Israeli Ministry of Foreign Affairs, the report reveals that EU imports from Israeli settlers are worth US$300 million per year, while those from Palestinians in the occupied territories touch scarcely US$19 million.

The value of EU imports from 500,000 Jewish settlers is roughly 15 times that of imports from four million Palestinians in the West Bank and East Jerusalem. Such an imbalance would prove the incoherence of Europe when it comes to the Israeli-Palestinian conflict, the authors of the study remarked.

They also suggested that the EU should impose a ban on imports from settlers, much as on financial transactions with them. European diplomats in the region have long since put forward similar proposals, but their words have largely gone unheeded before the barrage of Israel's friends within the EU - Italy, Netherlands, Czech Republic, Bulgaria and Romania.

For the European Union, Israeli settlements in the territories that are destined to form the long-awaited Palestinian state are illegal under the international law. EU institutions, Britain and France have officially condemned Israeli government's recent green light to 797 new housing units in the Jewish settlement of Gilo, in East Jerusalem. In the view of the EU high representative for foreign affairs, Catherine Ashton, Gilo's expansion would concur to cut East Jerusalem off from the rest of the West Bank and, in turn, further undermine the two-state way forward.

Yet another topic that is marring the current state of the Euro-Israeli relationship is the demolition by Israeli authorities of Palestinian-built structures in Area C of the West Bank. The new Action Plan that sets out the targets of bilateral relations between the European Union and the Palestinian Authority (PA) over the next five years, that Palestinian Prime Minister Salam Fayyad and Baroness Ashton signed on October 24, provides for a priority: promoting the inclusive development in Area C.

According to the 1993 Oslo Agreement, which set the stage for the two-state solution of the Israeli-Palestinian crisis along the lines fixed after the 1967 Six-Day War, Area C (that is, more than 60% of the Palestinian territories) should have ended up under the PA administration by 1999. To date the civilian and security control of these lands is still in the hands of the Israeli government.

The European Commission and the United Nations highlighted in May that Israeli authorities in 2011 had demolished 622 Palestinian structures in East Jerusalem and the West Bank. As many as 62 of them had been funded by EU member states, not least water cisterns and residential and agricultural constructions within the Area C. From 2001 to 2011, Israel wiped out EU projects in Palestine worth US$64 million, something that European taxpayers cannot take light-heartedly in the midst of a deep economic crisis at home.

The Old Continent is Israel's main trading partner with a total trade of about US$39 billion in 2011, and for many EU officials it should assert its commercial heft in forcing the Israeli leaders to comply with the rules of international law and the Oslo Accords.

However, the strategy of using trade diplomacy as a bargaining chip with Israel fails to take heed of the United States' role in the process. No doubt that Washington, Israel's second-largest commercial partner, would fill the void created by a potential EU ban on Israeli exports, no matter who is in the Oval Office, Democrat or Republican. And China and India would follow suit immediately afterwards.

Then, the European Union is being torn apart at all levels by internal divisions over the official position that the block should adopt to deal with Israel. EU diplomats on the ground, along with numerous NGOs, urge the European institutions to take a harder stance against the Israeli leadership, but in vain. European countries fight on one another over whether or not the EU should blacklist Hezbollah as a terrorist outfit - at this time, Brussels ranks the Lebanese organization as a socio-political movement.

Even peripheral administrations of single EU countries have their own say on the Israeli-Palestinian conflict. For instance, France's most populous administrative zone, Ile-de-France, encompassing the capital Paris, has recently promoted a cooperation agreement with the Palestinian district of Jerusalem. All in the name of the feudal-style entropy characterizing today's European Union.

Emanuele Scimia is a journalist and geopolitical analyst based in Rome.

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