Settlement construction in the West Bank: A stress test for Israel's relationship with Europe

Settlement Construction in the West Bank: A Stress Test for Israel's Relationship with Europe

Israel is pushing ahead with the construction of new settlements that could make a contiguous Palestinian state impossible. Western nations are condemning the plans, the EU is discussing sanctions — and the relationship with Israel continues to deteriorate.

Israel's settlement policy in the Palestinian territories appears to be driving relations with Europe to a new low. With the E1 settlement project, Israel is currently advancing what is probably its most controversial undertaking in the West Bank.

The plan calls for 3,400 new housing units for Jewish settlers to be built between East Jerusalem and the Israeli settlement of Ma'ale Adumim. Ma'ale Adumim itself, with its 37,000 residents, is a settlement on Palestinian land that is illegal under international law.

Israel's government had already approved the project last year. But since the beginning of this week it has been pushed even further: the construction ministry has publicly tendered the building of the first more than 1,200 housing units for the E1 project.

Condemnation by Western Nations

International outrage was considerable. In Berlin, Chancellor Friedrich Merz had deputy government spokesman Sebastian Hille declare: "The Chancellor is following the Israeli government's latest steps in the West Bank with great concern. His message: there must be no further steps toward annexation in the West Bank."

On Thursday, a joint statement followed from the heads of state and government of seven Western countries, including Germany, France, the United Kingdom and Canada. Additional countries have since joined. They are calling on Israel to halt the project.

"We Do Not Accept Dictates from Foreign States"

Furious reactions from Israel, including from Finance Minister Bezalel Smotrich, were not long in coming. He responded to a similarly worded post on X by British Foreign Secretary Ed Miliband with the words:

"I want to make it unequivocally clear: the British Mandate in the Land of Israel is over. I am neither impressed nor intimidated by threats and sanctions. We do not accept dictates from foreign states."

Is the EU Considering Far-Reaching Sanctions?

According to initial media reports, the EU is now also considering far-reaching sanctions: including the labeling of products from Israel — not just from the settlements — restrictions on academic cooperation, and the freezing of certain security policy and diplomatic cooperation.

It is unlikely that Germany in particular would support such steps at the EU level; the federal government has repeatedly blocked such initiatives in the past. Nevertheless, even the discussion alone shows how serious the situation is this time. To understand that, one must appreciate the significance of E1.

E1 Divides the West Bank

Daniel Seidemann, an Israeli lawyer and expert on East Jerusalem, says E1 is different from all other settlements in the West Bank because it would effectively make the possibility of a future Palestinian state impossible.

"It will fragment the West Bank and split the territory into a northern canton with Ramallah and Nablus and a southern canton with Bethlehem and Hebron. There would be no connection, no direct proximity between these two parts," the lawyer said.

Seidemann himself has twice taken legal action against E1 before Israel's Supreme Court - and lost both times. He therefore has little hope that the project can still be stopped through legal channels in Israel. Especially since the tender already closes on October 19.

"Once the bids are opened and the contracts are signed, no power on earth will be able to stop it. So we have a very short window of time to stop E1," says Seidemann. "If E1 is not stopped, it will be irreversible." Waiting for court rulings is therefore not an option.

"Sanctions against everyone who participates in E1"

Seidemann is therefore now counting on pressure from Europe. The most important European countries should declare "that any natural or legal person - whether a contractor, a lawyer, a planner, a financial institution, simply anyone who actively participates in E1 - loses the right to do business in Europe."

Such a warning is already contained in the existing statement by Western heads of state and government. However, it is directed only at companies considering bidding on the tender.

Israeli Prime Minister Benjamin Netanyahu is no longer receptive to foreign influence, says Seidemann. "His armor is immune to international pressure. I know that significant states around the world have held talks with him and he has not budged from his position."

But the threat of sanctions could be effective precisely with internationally operating banks and financial institutions, the lawyer argues. "Financing is absolutely critical for E1. Some of it comes from banks, another part from other financial institutions. And all of these actors have international interests." A corresponding warning from Europe would have "certainly a very sobering effect" in that regard.