Common Grounds

Occupation and Sovereignty: Renewing EU Policy in Israel- Palestine

Occupation and Sovereignty: Renewing EU Policy in Israel- Palestine

Policy Brief

Hugh Lovatt

21st December, 2017



Developments in 2017 have brought into focus the one-state reality taking hold in Israel-Palestine. This will have unavoidable repercussions for the EU and its member states, underlining the urgent need for bolder and more decisive EU action.


The EU must take seriously the implications of an emerging one-state reality for EU-Israel relations and EU policy more generally. This should not be about discarding the two-state solution but rather acknowledging that an immediate course correction is required to avoid a fully-fledged one-state reality of perpetual occupation and unequal rights.


Despite the absence of credible US leadership, the EU and its members have the power to save the two-state solution. If they are serious about this, they must act now – and with determination. This includes supporting on-the-ground Palestinian sovereignty-building strategies, cementing the contours of a final status agreement, and leveraging Israel’s growing relations with Gulf Arab states to make meaningful Israeli steps towards de-occupation.



Developments in 2017 have brought into focus the one-state reality taking hold on the ground in Israel-Palestine, and the consequences this will have for all concerned. Israeli actions have steadily eroded the territorial basis for a two-state solution and undermined attempts to reach a peace agreement with the Palestinians. Meanwhile, Donald Trump’s recognition of Jerusalem as Israel’s capital and efforts to distance himself from the two-state solution have only accelerated this shift towards a one-state reality.


The cementing of “a one-state reality of unequal rights, perpetual occupation and conflict” – in the words of Federica Mogherini, the European Union’s high representative for foreign affairs and vice-president of the European Commission – require Israel to choose between maintaining either its democracy or its Jewish political majority, in the extent to which it grants rights to the almost five million Palestinians under its military control.[1] For Palestinians, a one-state reality may eventually lead to political empowerment. But, until Israel ends its unlawfully prolonged occupation, Palestinians will continue to experience discrimination, territorial dispossession, and open-ended military subjugation in the occupied Palestinian territory (OPT).


All of this has repercussions for the EU and its member states, underlining the extent to which EU policy has fallen out of sync with trends on the ground and in the negotiating arena. Worse still, intra-European divisions and the EU’s relationship with Israeli settlements is further weakening the two-state solution the EU has long strived to achieve. During the last 25 years of its engagement with the Israel-Palestine conflict, the EU has (despite its many efforts and best intentions) increasingly contributed to a reality that is at odds with Israelis’ and Palestinians’ desire for self-determination.


This is not to say the EU has not had successes or policy achievements. In fact, it can learn from, and take pride in, several of its most effective policies. The EU has played a key part in promoting and sustaining international support for a two-state solution predicated on Palestinian statehood in the West Bank, East Jerusalem, and Gaza. EU measures designed to differentiate between Israel and Israeli settlements in the OPT have helped remind the international community of the pre-June 1967 Green Line as the basis for a Palestinian state and, at times, have forced the Israeli authorities to adapt their practices accordingly. The EU has also reinforced international adherence to non-recognition of Israel’s sovereignty in the OPT, and international reaffirmation of the illegality of Israeli settlements there.


The EU can also claim credit for keeping the international spotlight focused on Israeli violations of international law, and for inspiring the United Nations to enshrine EU policy language on the conflict in a December 2016 UN Security Council resolution.[2]Finally, EU financial support has helped make Palestine ready for statehood and gone some way towards protecting vulnerable Palestinian communities in Area C of the West Bank from coercive actions by Israel.


Yet, the EU should also learn from – and seek to address – its failures and inadequacies. It has often failed to translate its rhetorical and financial support for Palestinian sovereignty into concrete political action that can fulfil its vision of a two-state solution. For all its political goodwill and financial investment, the EU has in practice incentivised Israel’s continued commitment to prolonged occupation of the OPT and obstructed steps towards Palestinian sovereignty.


Regardless of the EU’s foreign policy scorecard, only Palestinians and Israelis can make decisive progress towards peace. However, Israel’s government and public opinion show no immediate indication of ending the occupation or allowing for the creation of a fully sovereign and contiguous Palestinian state based on the Green Line. For its part, the Palestinian liberation movement has become atrophied and fragmented, lacking the ability to galvanise popular support for a new set of strategies to challenge the occupation. If anything, these two trends lead away from a two-state solution.


The saviour of the two-state solution will not come from Washington. The EU has stepped back and given the new US administration room to relaunch the Middle East Peace Process (MEPP), reasoning that even a process that goes nowhere is better than nothing. By now, though, it is likely clear to the EU that the Trump administration is leading both sides over the edge of a cliff.


Despite the absence of credible US leadership, an effective Palestinian liberation strategy, and Israeli moves to end the occupation, the EU and its members have some power to save the two-state solution. If they are serious about doing so, they must act now – and with determination.


Mogherini has spoken of the need for greater EU engagement to solve the conflict. But this cannot equate to doubling down on the current failed approach. Instead, the EU should chart a new policy course that helps preserve the normative and physical space needed for a two-state solution, leverage Israel’s growing relations with Gulf Arab countries, and build the conditions necessary for a meaningful resumption of Israeli-Palestinian peace negotiations. At the same time, the EU should give serious thought to how its engagement with Palestinians can develop from state-building to on-the-ground sovereignty-building, and how it can cement the contours of a final status agreement.


The EU’s policy review


During an informal meeting of EU foreign ministers in Tallinn in September 2017, Mogherini announced a review of the EU’s modes of engagement with the Israel-Palestine conflict, aiming to better align the EU’s activities and instruments with the goal of achieving a two-state solution.[3]


The initiative is a welcome, and badly needed, step towards the implementation of a stronger and more effective EU policy on the conflict. But for it to be meaningful, the review must extend beyond a narrow technical evaluation of the modalities of financial assistance for the Palestinian Authority (PA) – as seems to be currently envisaged – by also conducting a technical review of the EU’s relations with Israel to ensure they fully and effectively exclude Israeli settlement entities and activities.


In addition, the EU would do well to undertake a broader policy review that tackles the political and regional context of international peacemaking efforts. It should also assess how the entrenchment of a one-state reality will affect its engagement with the sides.



At the core of current diplomatic regression is the failure of the US-led version of the MEPP stemming from the Oslo Accords, which has trapped the EU in a peacemaking model that is unable to deliver a final peace agreement and that entrenches Israel’s prolonged occupation.[4] But a continued desire to give the Oslo-format MEPP a chance to succeed – without tackling the reasons for its continued failure over 25 years – has dissuaded the EU from taking any serious measures to challenge Israel’s prolonged occupation. As such, the EU has become an enforcer of the status quo established by the Oslo Accords rather than an actor that could effectively support strategies to end the occupation and back Palestinian self-determination.


Israel’s shift away from the two-state solution


Behind the long-standing structural failings of the MEPP has been a steady turn to the right in Israeli politics and society, in favour of policies and actions that normalise Israel’s occupation and settlement project. Due to this dramatic shift, pro-settlement positions and efforts to discredit a two-state solution in line with internationally accepted parameters have become mainstream. With the exception of the left-wing Meretz and the Arab-dominated Joint List, Israeli parties – including the centre-left Labor Party – have moved away from the traditional two-state paradigm in favour of a placeholder arrangement that would effectively allow for the consolidation of the settlement enterprise and formalise the one-state reality (or a “Palestinian state minus”), in which Palestinians are granted continued self-rule under Israeli military oversight. And while Labor’s newly elected chair, Avi Gabbay, has indicated that he favours “two states for two peoples”, he opposes attempts to uproot Israeli settlements and holds that Israeli sovereignty over a united Jerusalem is more important than a peace deal.[5]


Meanwhile, a mixture of government illiberalism and right-wing activism has shrunk the political space for Israeli voices critical of the occupation. The Israeli government and the pro-settlement movement have seized upon the rise of illiberalism, anti-Islamism, and far-right politics in Europe and the United States to forge a new set of alliances in their efforts to normalise the occupation, roll back international law, and discredit the liberal order.


US policy regression


Trump has acknowledged that, on the Israel-Palestine conflict, “we cannot solve our problems by making the same failed assumptions and repeating the same failed strategies of the past”. Yet his administration has rolled back positions the US has held for more than a decade and, in doing so, eroded the key tenets of the international community’s approach to the conflict.


In the administration’s first year, the US has reneged on its long-standing commitment to a two-state solution as the goal of Israeli-Palestinian negotiations, cast doubt on the legal status of the OPT, and come close to legitimising Israel’s settlements. This was capped off by Trump’s recognition of Jerusalem as Israel’s capital in December 2017, reversing more than 70 years of US policy. All of these moves run contrary to long-standing EU positions, and in effect “double down on an unmistakable message to [prime minister Binyamin] Netanyahu and settlers that the United States is fully on board with policies that foreclose the two-state solution, including in Jerusalem”, as analyst Lara Friedman put it.[6]


Alongside this, the US Congress and state legislatures have passed legislation that conflates Israel and Israeli settlements, while blacklisting EU companies that deliberately exclude Israeli settlements from their business dealings.[7]


Intra-European divisions


The EU’s capacity to act effectively in support of Israeli-Palestinian peace has been limited by deep divisions between member states and several internal crises, from the United Kingdom’s pending departure from the EU to large-scale migration; from eurozone reform to the rise of illiberal governments in Poland and Hungary.[8]Additionally, European decision-makers confront several external crises that are seemingly more pressing, not least those in its southern neighbourhood. Issues relating to civil wars in Libya and Syria, destabilising migration flows from north Africa, and the fight against the Islamic State group dominate many Europeans’ foreign-policy agenda, pushing the Israel-Palestine conflict further down their list of priorities.


Attempts to advance EU decisions on the MEPP have also been frustrated by internal divisions between states that are relatively sensitive to positions and obligations based on international law (predominantly, those in western Europe) and others that, out of ideology or geopolitics, have effectively defended Israeli actions that violate such law (primarily, those in the east). The UK’s June 2016 decision to leave the EU widened this split, as the country pulled back from EU initiatives and consensus making on the issue, aligning itself with US policy under Trump on several occasions. These divisions played out over – for instance – the March 2017 UN Human Rights Council vote on Israeli settlements.


Israel has exploited these divisions in its efforts to divide the EU, block the Union’s future decisions, and alter its consensus positions. This was on full display during a meeting in July 2017, when Netanyahu joined the leaders of Hungary, Slovakia, Poland, and the Czech Republic (known as the Visegrád Four) in berating EU policy on Israel, before urging them to help move forward the next meeting of the EU-Israel Association Council (which has been delayed due to a lack of consensus among member states).


The net result has been inaction in the EU’s main foreign-policy body – the European Foreign Affairs Council (FAC), which brings together EU foreign ministers. Despite the unprecedented threat to the two-state solution from the US and Israeli governments, and the deterioration of conditions on the ground in the OPT (particularly the humanitarian crisis in Gaza), there have been no FAC conclusions relating to the MEPP since June 2016. Even a high-profile French peace initiative in begun in early 2016 and the adoption in December that year of UN Security Council Resolution 2334 – which endorsed EU positions such as its differentiation requirement – failed to inspire European action or unity.


Facing new problems


Beyond the long-standing political impediments highlighted above, the EU will have to address a new set of challenges created by shifting politics at the regional and local levels in the Arab world. But, unlike the entrenched issues above, these emerging challenges can be mitigated through effective policy planning.


Fragmenting politics in Palestine and the coming post-Abbas era


Palestinian infighting has laid bare the deep fractures and growing tensions within, and among, Palestinian political factions. Added to this has been the split between the West Bank and Gaza resulting from Hamas’ victory over Fatah in contested legislative elections in 2006. The pursuit of sanctions and no-contact policies targeting Hamas by the international Quartet (comprising the EU, Russia, the US and the UN) exacerbated Palestinian political and geographical divisions. Despite acknowledging the shortcomings of such policies, the EU and its member states have yet to formally alter their position or actively support the stalled, Egyptian-sponsored Hamas-Fatah reconciliation process.


Palestinian leaders and regional actors are steadily positioning themselves for the anticipated appointment of a successor to Palestinian President Mahmoud Abbas. In practice, there are no agreed institutional mechanisms for managing the leadership transition. Abbas’s marginalisation of the Palestine Liberation Organization (PLO) Executive Committee and Fatah’s Central Committee, along with the broader concentration of power within his person, reduces the ability of the PLO and Fatah to implement a smooth leadership transition. These factors have led to the democratic atrophy of the nascent Palestinian state.


Until now, a narrow focus on technocratic governance and security, combined with a large amount of donor aid, has kept the Palestinian state-building project afloat and the PA stable. But the slow-motion implosion of traditional Palestinian leadership structures could converge with growing popular frustration, the disappearance of diplomatic routes to ending Israel’s occupation, and humanitarian challenges in Gaza to increase Palestinian instability and fragmentation.


A growing belief that the strategy pursued by the Palestinian liberation movement for 25 years has failed will present significant dilemmas for the EU given its deep ties with the PA, particularly once a new generation of Palestinian leaders less wedded to the Oslo-format MEPP and two-state solution emerges.


A shifting regional landscape and the erosion of the Arab Peace Initiative


Regional dynamics have put Gulf Arab states such as Saudi Arabia, the United Arab Emirates, and Bahrain on the path to normalising their ties with Israel. In partnership with Saudi Crown Prince Mohammed bin Salman, the Trump administration has repeatedly spoken of its desire to reach the “deal of the century” on regional peace. Given real Palestinian anger at the administration’s change of position on Jerusalem, it is unclear whether a Trump peace initiative will ever materialise – but, if it does, it will most likely include a regional peace track predicated on speeding up the normalisation of Israeli-Gulf Arab relations.


To be sure, this process is hardly new. It has been discreetly gathering speed since the Arab Spring upheaval in the region and the alignment of Israeli and Gulf Arab interests over their shared antipathy towards Iran and political Islam. Although it remains unclear how far this process can ultimately go without grassroots support in Gulf Arab countries, Israeli-Gulf Arab bilateral relations are expected to continue growing – despite the current fallout over Jerusalem. Indeed, promoting greater economic and political cooperation between Israel and Arab states appears to have supplanted Israeli-Palestinian negotiations as a priority for the Trump administration, according to its new National Security Strategy.[9]


While regional peace is a worthy foreign policy objective, any process of normalisation that comes at the expense of the Palestinian issue – or uses the issue as merely a fig leaf – will bring with it real complications in potential domestic blowback among Arab populations and the erosion of the 2002 Arab Peace Initiative (API), which conditions any normalisation of ties between Israel and the Arab world on an Israeli-Palestinian peace agreement. Although the API’s offer has gone unanswered by successive Israeli governments, its conditionality and normative elements are important in pushing Israel towards a lasting peace deal with the Palestinians. The reversal of the API (known as an “outside-in” approach) would convince Israeli politicians and the Israeli public that the country’s foreign relations can be advanced without taking any real steps towards ending the occupation.



Time to rethink the EU’s approach to Israel?


There remains a clear gap between European discourse and practice in promoting a two-state solution. The EU has been firm in its belief that “the only way to resolve the conflict is through an agreement that ends the occupation which began in 1967, that ends all claims and that fulfils the aspirations of both parties [and that] a one state reality would not be compatible with these aspirations.”[10] Statements by several EU and member state officials have sought to drive home the point that, despite the sides’ strong ties, the relationship between the EU and Israel cannot be fully separated from the spillover caused by the latter’s conflict with the Palestinians.


As Nicholas Westcott, then managing director for the Middle East and North Africa at the European External Action Service (EEAS), pointed out, “there is unfortunately a fly in this ointment [of EU-Israel relations], an elephant in this room: the Occupation.”[11] One could add to this Israel’s settlement project, which will continue to impede bilateral relations, because it is not recognised by the outside world yet is integrated into the country’s socio-economic and political fabric.


Despite such warnings, the EU has proven reluctant to impose significant costs on Israel for its actions that undermine the prospects for a two-state solution, or to spell out the implications of perpetual occupation and unequal Palestinian rights for Israel’s relations with European countries. If anything, EU actions seem to point Israel towards sustaining its practices in the OPT. Furthermore, some officials from the EU and its member states have attempted to delay the implementation of legally necessary differentiation measures, in case this upsets relations with Israel or makes the task of relaunching the MEPP more difficult – even at the risk of sacrificing the EU’s internal legal integrity.


Tough love for Israel

By refusing to acknowledge that the true intent and consequences of Israeli actions is the unlawful acquisition of Palestinian territory, the EU is misdiagnosing and mistreating the roots of the diplomatic impasse. It also risks sending the wrong message to Israeli policymakers – namely, that killing off the prospects for Palestinian statehood and a two-state solution will have few, if any, repercussions in Israel’s relations with the EU.


Without an end to the occupation, the EU should look for ways to make Israel face the costs and consequences of its drift towards a one-state reality and its violations of international law. The EU should begin to state the legal and political effects of the unlawfully prolonged occupation for Israel, along with the implications of an emerging one-state reality for EU-Israel relations. This should not be about discarding the two-state solution, but rather about acknowledging that an immediate course correction is required to avoid cementing a one-state reality.


A starting point could be to reflect on the comments of former US ambassador to Israel Daniel Shapiro, who admitted: “if Israel moves toward one of the scenarios in which Palestinians continue to lack the self-determination they legitimately seek […] it will affect our relationship at the level of what we call our common values”.[12] The EU should be equally clear that the entrenchment of a one-state reality with unequal rights in the interim will necessitate changes to the EU’s relations with Israel, including in its 1995 Association Agreement.


More fundamentally, the EU should acknowledge that Israel’s illegal use of force to prolong its occupation and acquire Palestinian territory creates a legal obligation for third parties to intervene under international law on state responsibility. Recent work by ECFR, as well as UN special rapporteur Michael Lynk and eminent scholars of international law such as Marco Sassòli, can provide some initial policy guidance focusing on third-party responses to Israeli violations of jus ad bellum (the rules on inter-state use of force) – including the consequences of its de jure and de facto annexation of Palestinian territory and entrenchment of discriminatory practices against Palestinians in favour of its settler population.[13]


However, the EU should also explore the possibility of commissioning its own study on the legality of Israel’s continued presence in the OPT and its consequences for the EU’s third-party responsibilities.


Auditing the full spectrum of EU-Israel relations


The answer to Israeli efforts to erase the territorial basis for a two-state solution and entrench its settlement project can be found, at least in part, in the furtherance of a foreign policy based on international law and predicated on support for differentiation measures, international accountability mechanisms, and international norms. Through these differentiation measures, the EU has at times successfully pushed back on Israeli efforts to erase the 1967 Green Line, and has compelled the Israeli authorities to alter their behaviour by repeatedly excluding the settlements from their bilateral agreements.


Previous ECFR reports have gone into considerable detail on how this process can be expanded and deepened. Mogherini can play an important part in supporting a comprehensive technical review by the EEAS and the European Commission of EU-Israel dealings to identify and rectify remaining deficiencies and loopholes that give effect to Israel’s unlawful exercise of sovereign authority in the OPT.


It is legally necessary for the EU to proceed with such corrections. Indeed, many such deficiencies have already been identified and are in the process of being corrected, such as those in areas relating to EU cooperation programmes involving Israel, or imports of animal-based and other organic products. This not only ensures that the EU’s relations with Israel do not undermine its objective of a two-state solution, but also aids the full and effective implementation of EU law, in accordance with EU positions and commitments.


A change to the Israeli postcode system has allowed exports from the settlements to once again benefit from preferential tariffs under the EU-Israel Free Trade Agreement, in a worrying sign of the inadequacy of the 2005 arrangement on this issue.[14] If Israel is unwilling to assist EU customs authorities in correctly enforcing the agreement, the EU should shift this burden onto Israeli exporters.


It is also worth bearing in mind that EU institutional relations with Israel are replicated to a large extent at the level of EU member states. A cursory search through the UN’s Treaties Database (which provides only a partial snapshot) shows that there are at least 350 bilateral agreements between Israel and member states. These deals, 31 of which were concluded in the last ten years, relate to bilateral cooperation on social security, labour, tourism, investment, and research and development.[15]


Despite considerable progress in ensuring that settlement entities and activities are effectively excluded from the EU’s relations with Israel, member states remain behind the curve in their bilateral relationships with Israel. This holds true even for states that are relatively supportive of EU differentiation measures. For instance, two years after the European Commission published guidelines on the correct labelling of settlement exports, many member states – including those who called for such guidance – remain unable or unwilling to implement the guidelines at the national level.


On top of this, a large number of European businesses and investors continue to maintain financial relations with entities linked to Israeli settlements. Importantly, 18 EU member states have published business advisories warning of the legal, reputational, and financial risk of such activities; and previous French and Dutch governments have actively discouraged companies from engaging in business dealings with Israeli settlement-related projects in the OPT. But to implement these advisories, states need to provide their regulatory agencies with implementation rules for specific areas of domestic legislation, and to inform businesses of the consequences of operations related to the settlements under domestic law.


In this context, EU member states should support the upcoming UN Human Rights Council database of unlawful business activity related to settlements as a mechanism for alerting “such businesses to the consequences of activities in such a business environment, and [for providing] guidance on the measures they must adopt to comply with their responsibility to respect human rights”. The database would also “fortify the role of home-states in regulating the transnational activities of their corporate nationals through concrete domestic regulatory measures.”[16]


Supporting Palestinian reunification and re-democratisation






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