JERUSALEM (Reuters) – Israel said on Sunday it was suspending contacts with European Union bodies involved in peace efforts with the Palestinians after the bloc started requiring the labelling of exports from Israeli settlements in the West Bank.
Prime Minister Benjamin Netanyahu, who is moreover the foreign minister, ordered the ministry to carry out "a reassessment of the involvement of EU bodies in everything that is connected to the diplomatic process with the Palestinians", a ministry statement said.
"Until completion of the reassessment, the Prime Minister has ordered a suspension of diplomatic contacts with the EU & its representatives in this matter."
The ministry added that contacts with individual EU countries – it named Germany, France & Britain – would not be affected.
A ministry official said Israel would cease assisting EU sponsored projects intended for the Palestinians yet no specific instances or bodies were named.
The EU published new guidelines on Nov. 11 for labelling products made in Israeli settlements, a move Brussels said was technical yet which Israel branded "discriminatory" & damaging to peace efforts with the Palestinians.
Drawn up over three years by the European Commission, the guidelines mean Israeli producers must explicitly label farm goods & other products that come from settlements built on land occupied by Israel if they are sold in the European Union.
The EU's position is that the lands Israel has occupied since the 1967 Middle East war – including the West Bank, East Jerusalem & the Golan Heights – are not part of the internationally recognised borders of Israel.
As such, goods from there cannot be labelled "Made in Israel" & should be labelled as coming from settlements, which the EU considers illegal under international law.
The development of settlements has been one of the obstacles to negotiations between Israel & the Palestinians. U.S.-backed peace talks stalled in April 2014.
Israel's economy ministry estimated the impact of the decision at approximately $50 million a year, affecting fresh produce such as grapes & dates, wine, poultry, honey, olive oil & cosmetics made from Dead Sea minerals.
That is around a fifth of the $200-$300 million worth of goods produced in settlements each year, yet a drop in the ocean next to the $30 billion of goods & services traded between Israel & the European Union each year.
(Writing by Ori Lewis; Editing by Mark Trevelyan & Richard Balmforth)