Future EU Sanctions Against Israel? Real, Imagined, and Somewhere in Between

, February 11, 2014

No. 600    March-April 2014

Flags EU Israel

A Jerusalem Center Study*

  • Is the scenario of a full-scale EU boycott of Israel at all realistic? This study is designed to provide policy-makers with a “Brussels insiders” perspective on the prospects for future sanctions by the European Union against the State of Israel.
  • It remains unlikely, and would require extraordinary and unexpected new developments, for the European Union to adopt a formal, new sanctions regime against Israel through its Common Foreign and Security Policy (CFSP), regardless of the precedent set by the EU’s Horizon 2020 research project and the European Commission’s guidelines on it. In this arena, the EU uses a mixture of unanimous voting and “qualified majorities,” which still keep the bar of approval relatively high.
  • At the same time, any NGO – the BDS movement, for example – can approach a member of their country’s parliament or a group of parliamentarians who can then lobby a domestic ministry to raise a matter such as sanctions against Israel in Brussels.
  • If BDS groups are lobbying in countries such as Britain, Germany, and France, pro-Israel groups need to be doing the same but in the opposite direction. If a member state ministry sees no push back against BDS movements, it is that much more likely that a BDS-inspired proposal will work its way through to the policy-makers and institutions in Brussels.

Introduction

According to recent newspaper reports, the movement to wage economic warfare against Israel for its policies regarding the Palestinian issue, known as BDS (Boycott, Divestment, and Sanctions), is gaining steam. Indeed, a recent article by the movement’s founder on the BDS website asks if it is reaching “a turning point.”

There are some senior Israeli officials who join in predicting that the measures taken by the European Union recently against cooperation with any Israeli economic activity over the pre-1967 lines could get worse, predicting that the boycott against settlements might be applied to all of Israel. Even Secretary of State John Kerry has warned that international action might be taken against Israel if progress in the peace process is not achieved.

While Israel has had difficulties making its case in Europe in recent years, especially after military clashes like Operation Cast Lead in Gaza in 2008-9 or its interception of the lead ship in the Gaza Flotilla in 2010, is this scenario of a full-scale EU boycott of Israel at all realistic in the context of a diplomatic scenario? Let’s say Israeli-Palestinian negotiations reach an impasse; might EU economic sanctions be applied? Much of the discourse about this scenario is being conducted with little awareness about how the EU actually makes decisions in foreign policy.

Insiders note that the EU’s use of sanctions has grown in recent years. While 22 such decisions were taken in 2010, some 69 decisions to impose EU sanctions were adopted in 2011.1 Yet a recent study of EU sanctions cases showed that their success rate remained low.2 In late 2013, observers noted that there was “no appetite” for a high-profile decision at the EU level for new sanctions against Ukraine.3

This study is designed to provide policy-makers with a “Brussels insiders’’ perspective on the prospects for future sanctions by the European Union against the State of Israel with this political context in mind. It addresses the key questions of the mechanisms by which sanctions are imposed by the European Union. Though not prepared by lawyers, extensive consultation was undertaken with people of substance who actually work in the EU’s institutions. This study:

  • attempts to simplify accurately the complex issue of the overlapping institutions which come together to make EU foreign policy, in general, and sanctions policies, in particular.
  • addresses the ambiguities of EU foreign policy and how they can be exploited by both friends and enemies of Israel, with particular reference to how sanctions proposals get on the agenda in the first place.

How Is EU Foreign Policy Decided: Unanimity or Majority Voting?

At first sight, this aspect of the question may seem a strange place to start. After all, the Common Foreign and Security Policy (CFSP) is, by EU standards, reasonably clearly defined as the basis for EU general external policy relations with non-EU member states.

Decisions are made on the basis of unanimity in the meetings of the EU Council of Ministers, whereby foreign ministers of the 28 countries forge policy and then hand it over to other EU bodies to implement. Also known as the Council of the European Union, it plays a defining role in the formation of the CFSP along with the European Council, made up of the heads of state or government. For example, the EU decision to impose restrictive measures on Syria, which included export and import restrictions, was taken by the Council of Ministers on May 31, 2013.

Nonetheless, under the terms of the Lisbon Treaty (2009), the legal basis on which the European Union is currently constructed, the CFSP is where the biggest, strategic, broad policy direction decisions about European foreign policy, including sanctions, are made. A clear purpose behind the empowerment of European institutions in the Lisbon Treaty is to strengthen the EU’s role as a global actor.4

In the meantime, it is useful to understand how EU decision-making operates. True, there is an effort underway to streamline the EU’s voting system which is being implemented in some policy areas between 2014 and 2017.5 The EU will introduce “qualified majority voting” based on 55 percent of the members of the European Council that represent 65 percent of the EU population. This new EU voting partly influences foreign and security policy. A report on the Lisbon Treaty prepared by the European Committee of the British House of Lords concluded:

The evidence is that the Lisbon Treaty has preserved the independence of the UK’s foreign and defense policy, subject to the constraints arising when unanimous agreement does not prove possible. The fundamental principles of the CFSP will not change under the new treaties. In particular, the principle of unanimity and the search for consensus in decision-making will continue to apply to the CFSP.6

However, there are important exceptions. An action proposed by the European Commission “to interrupt or to reduce, in part or completely, economic relations with one or more third countries” may be taken by the European Council by a “qualified majority,” according to the language of the Lisbon Treaty (Article 301).7 That may be easier to obtain than a full consensus, but it is still a higher bar than a simple majority.

All member states participate in the Political and Security Committee (PSC). This is the permanent body which provides a place for each member state’s ambassadors to discuss the serious matters of foreign policy among each other as often as they like. It is here that the waters are tested.

One country may want to impose a full trade embargo on Israel proper. Another may want visa restrictions for Israeli officials accused of “war crimes.” Still others may completely oppose such measures. On the contrary, they may wish to enhance relations with Israel.

The PSC is the forum where the member states get an idea as to what is worth proceeding with and what is pointless. They then report back to their respective foreign ministries.

The key, routine, operational decisions are then made by the EU Council of Ministers, whereby foreign ministers gather once a month. Sometimes, very sensitive strategic matters are even taken up at the level of the quarterly European Council summit meetings of heads of state and government (chaired by the President of the EU Council Herman Van Rompuy) which is the EU’s supreme decision-making body and can instruct the EU Commission on policy matters.

Sanctions against Israel would almost undoubtedly be first referred to the European Council for a strategic review before going any further, and here unanimity would be required.

The meetings of the foreign ministers are chaired by the High Representative of the Union for Foreign Affairs and Security Policy, currently Catherine Ashton (who will be replaced later in 2014). The High Representative can initiate an agenda item in her own right, though she does not do this often. She cannot vote; that privilege belongs to the member states alone on a weighted basis according to size, or unanimity depending on the issue at stake.

However, her presence in the meetings and her ability to make proposals should immediately alert one to the overlapping institutions – in her capacity as High Representative she is also a vice president and voting member of the European Commission – involved in all foreign policy and related matters.

But in terms of the CFSP itself, in theory, they can only forge policy on the basis of unanimity, meaning that a single member state can block anything. In practice, if one or two relatively small member states opposed something which was desired by all the rest, it would be leaned on heavily – using a carrot-and-stick approach – so as to get them to back down.

Ultimately, major issues of foreign policy do not go through unless the “Big Three” – Britain, France, and Germany – want them to, or at least have no objections to them.

Should a policy be agreed upon, it is then referred for implementation and (crucially) interpretation to the External Action Service, which does not operate under unanimity, but under Council of Ministers’ qualified majority voting.

In other words, even if a sanctions policy is formally agreed upon, there may be much to-ing and fro-ing about what actually happens in practice unless the Council has been extremely specific, which it often is not.

All sources contacted for this study agree that nothing as substantial as a significant new sanctions regime against Israel could happen at the top level unless Britain, France, and Germany all wanted it to happen and were prepared to devote considerable energy to overcoming the differences they all have on Israel themselves, as well as the multiple objections that would likely be raised by several other medium-sized and smaller member states, such as, for example, the Czech Republic.

They also agree that on such a sensitive matter as Israel, the External Action Service would not in practice be able to manipulate CFSP decisions taken by the Council of Ministers to the significant detriment of Israel.

What Form Can Sanctions Take?

Restrictive measures can take a variety of forms including diplomatic measures – the severing of diplomatic ties; suspension of cooperation; sporting or cultural boycotts; trade sanctions; arms embargoes; financial sanctions such as the freezing of government or targeted individuals’ funds or restrictions on investment or export credits; flight bans; and visa bans for officials regarded as persona non grata.

Sanctions are in place against a whole range of countries from Iran (where they have just been changed in accordance with recent initiatives) to Belarus.

They can also take the form of something being withdrawn, such as was the case with Sri Lanka, which lost its GSP+ status giving it privileged trade access to EU markets.

Sanctions are defined in terms of a specific duration, which is sometimes referred to as a “sunset clause.”

A good recent example of this in action was the case of the ban on arms to Syrian rebels. Once the six-month ban expired, Britain and France ceased to renew their commitment and the arms embargo to Syria thus lapsed, opening the way to arm the rebels if the member states so chose.

It is also important to note that once a common position is adopted, member states are obliged to ensure that their domestic, national policies conform to, and do not contradict, that common position.

Foreign Policy and Sanctions Outside the Framework of the CFSP

The fact that other bodies, like the European Commission, which do not need unanimity to make decisions, are involved in implementing foreign policy is important to bear in mind. CFSP is a high-profile matter and attracts much media attention, especially on highly charged matters such as Israel. But much can be done below the radar, which can yet have a significant effect.

An example is trade policy or the EU’s single market. In these areas, the European Commission is the EU’s executive body which implements policies previously adopted by the European Council of Ministers. If a positive set of actions can be taken in favor of Israel under qualified majority voting outside of the CFSP, a negative one could be taken too. Access to the single market could be rescinded or suspended, for example, though a decision of this magnitude would probably need the assent of the heads of government. Ministries of trade, aid, or the economy would be the relevant bodies in these cases; they operate with qualified majority voting.

Again, it is well worth noting that even under qualified majority voting in these cases, sensitive matters are overwhelmingly dominated by the wishes of the Big Three. Having instituted enhanced trade relations with Israel, it would require the energetic and united efforts of Britain, France, and Germany to curtail them.

Unless there is a dramatic downturn in EU-Israel relations and/or relations between Israel and Britain, France, and Germany, respectively, this is unlikely to happen.

However, and here we come to the real risk factor for Israel, what could happen much more easily is the extension of existing measures against Israel through tighter and tighter interpretations of the guidelines from the Commission on Horizon 2020, as well as its role as a possible precedent. We will come to that matter shortly.

Agenda Setting and Lobbying

Before doing so and in order to give greater substance to what has already been said, as well as to help better understand the real processes at work in the EU, it is useful to recognize how we get to the policy level from below.

Policies do not appear out of a vacuum. First, there is an idea or a proposal, then there is an official who takes it up, and only then do we get to EU policies and practices.

All of our sources have emphasized that lobbying by NGOs is increasingly widespread and takes many different forms. Given the multi-layered and overlapping nature of the EU institutions and everything related to them, this should be obvious, yet it is easy to miss the forest for the trees.

The first point to stress is that no person or institution need set foot in Brussels at all to start a process in motion. Any NGO – the BDS movement, for example – can approach a member of their country’s parliament or a group of parliamentarians who can then lobby a domestic ministry to raise a matter such as sanctions against Israel in Brussels.

This could be the foreign ministry, the trade or aid ministry, or any other ministry that has dealings in Brussels, which to some degree or other is most of them.

As noted above, at Council of Ministers meetings – the monthly meetings of EU ministers looking after many different competencies – a single member state through their member state’s permanent representative (ambassador), and with the support normally of the rotating President in Office, can ask for an item to be put on the agenda.

This is important to recognize since it emphasizes that Israel’s relationship with the EU is intimately bound up with domestic, member state politics, too. If BDS groups are lobbying foreign or aid or trade ministries in countries such as Britain, Germany, and France (as well as elsewhere, of course), pro-Israel groups need to be doing the same but in the opposite direction.

If a member state ministry sees no push back against BDS movements at this stage of the process, it is that much more likely that a BDS-inspired proposal will work its way through to the policy-makers and institutions in Brussels.

There will still be a long way to go from there, of course, but “nothing will come of nothing.” Without someone starting the process in motion, nothing will happen. Nipping it in the bud at the member state level is an essential element of a multi-track policy that Israel must engage in.

Pushing it back even further, domestic policy-making on sensitive issues such as Israel is heavily impacted by the domestic media. Helping get a positive and informed message across about Israel and/or a message questioning Palestinian integrity and credibility is also essential. Nothing can be overlooked.

Returning to Brussels, there are formal and informal ways in which issues such as sanctions can be put on the agenda. We have pointed out that ministers and their delegations from member states can get items on to the agendas of high-level forums.

There is nothing whatsoever to stop BDS groups or other such NGOs from writing letters or petitioning embassies in Brussels. As an MEP told us:

Increasingly, the secretariat is lobbied. For example, ambassadors and envoys can be lobbied to have a quiet word with Catherine Ashton [or anyone else on the Commission] so as to place an issue on the agenda. There are multi-pronged ways of lobbying.

The rotating presidency, for example, which does not have many competencies, but does run the neighborhood policy of which Israel is a part, can be lobbied. It controls a lot of funds.

Also, an MEP can submit a question in the European Parliament to the High Representative, the Council of Ministers, or to anyone on the European Commission. MEPs can directly address the rotating President in Office, or the European Neighbourhood Policy (ENP) Commissioner Stephan Fule or Baroness Ashton herself in their regular appearances before the European parliament. Any of them can start something in motion.

MEPs can, of course, be lobbied by constituents at home, by BDS groups in Brussels, or can act entirely of their own initiative.

Horizon 2020 – The Issue at Hand

Horizon 2020 is a framework within which the EU has a research project for science and technology. The EU wanted Israel to participate because Israel is perceived as a hi-tech country which could add significant value. Horizon’s original purpose was to improve European productivity and competitiveness in the world economy. Israel was the only non-European country invited to participate in the Horizon 2020 program. In this context, European sanctions against Israel could be enormously self-defeating for European industry and labor.

In December 2012, the EU’s foreign ministers, acting in the framework of the Foreign Affairs Council, came together under the CFSP and resolved that all agreements henceforth with Israel must “unequivocally and explicitly indicate their inapplicability” to the “occupied territories“ and that they would not be relevant to the West Bank, Golan, and Gaza.

But the European Commission took this a step further. EU officials and civil servants in Brussels prepared specifics for the European Commission of how the earlier decision of the EU foreign ministers was to be applied. Using the vagueness of the December 2012 decision, it unilaterally issued guidelines in mid-2013 which were much tougher than had hitherto been issued or envisaged.

The Commission published guidelines with respect to Israel that barred institutions based beyond the 1967 lines from receiving grants. It falls within the Commission’s competence to define such guidelines and it was given a mandate from the Council of Ministers to do so.

But such definitions must be based on EU policies (which is the case here – the EU has considered the West Bank and east Jerusalem as occupied territories since 1980 and reiterated it many times. However, in this case, until the guidelines were adopted, this had not had any practical effect.) The guidelines episode demonstrates how EU officials can direct an EU decision away from the European Council to an EU body which has less stringent voting requirements like the EU Commission. This same procedure could be followed with respect to the labeling of West Bank products as well.

But the biggest problem with the Horizon guidelines and the way they are being interpreted by some member states is that, practically speaking, they have broadened the question of settlements and the pre-1967 lines to the whole of Israel.

Any company or institution that has a branch in east Jerusalem, the West Bank, or Gaza is subject to the Horizon proscriptive guidelines. This means that, for example, Israeli banks with branches all over Israel could be subject to sanctions for having a single branch office in the neighborhoods of Gilo or Ramot in southern or northern Jerusalem. The ban would not apply to that branch office alone but to the entire company and all its branch offices all over Israel.

As one Brussels insider put it:

Horizon is actually big because it broadens the settlement issue to Israel proper. And it thus establishes a precedent. The member states must take Horizon into account for Horizon-related issues, but there is already evidence they are using it as a precedent more broadly. The Dutch Foreign Ministry has advised its companies not to have ties with companies in the West Bank.

And this has been broadened already. PGGM, the huge Dutch pension fund, acted on the Horizon precedent and set a new precedent itself by divesting from five Israeli banks operating in the whole of Israel. It is already a proven point that the sanctions issue is moving to Israel proper.

Similarly, at the behest of the senior Palestinian Authority leadership, the Dutch government recently instructed the Dutch water management and project planning company Royal HaskoningDHV to revoke a project planning contract with Jerusalem Wastewater and Purification Enterprises Ltd. for a wastewater project along the Kidron Valley in the area of Jerusalem.

It is this question of precedent that Israel must now guard against. The danger from Horizon is there and it gains momentum as BDS groups lobby member states to adopt an ever harsher interpretation of what are still only guidelines.

Yet another layer to this is that BDS groups are lobbying companies directly, using Horizon as the precedent, for the companies to have nothing to do with any Israeli company that has branch offices in what they term “occupied territories.“

Horizon provides companies an “excuse,” as one source put it, to give in to BDS on the grounds that they are only acting in line with the European Union as any respectable company should. However lame an excuse this may be, it should not be underestimated as the above-mentioned momentum gathers pace.

However, should Israel get the full blame for a breakdown in peace talks, the ultimate risk is that Horizon is used as a precedent within the framework of the CFSP to up the ante against Israeli “occupation“ by adopting measures which punish any Israeli company, university, or institution of any kind that has branches in the disputed territories.

Since Israeli law obliges Israeli companies not to discriminate against Israelis living in the territories, this would provoke a full-blown crisis in relations between the EU and Israel.

Conclusion and Recommendations

  • It remains unlikely, and would require extraordinary and unexpected new developments, for the European Union to adopt a formal, new sanctions regime against Israel through its Common Foreign and Security Policy (CFSP), regardless of the precedent set by Horizon and the Commission’s guidelines on it. In this arena, the EU uses a mixture of unanimous voting and “qualified majorities,” which still keep the bar of approval relatively high.
  • It should not be forgotten that the relationship is a two-way process. Clearly, the EU is by far the larger partner in economic terms, but, for example, Israeli technology and products are highly valued in Europe and sanctions would hurt Europe too if it really came to it.
      • Attempts in 2010 to prevent Israel from receiving the right to certify pharmaceutical products exported to the EU which required a co-decision by the European Parliament failed after much heated parliamentary debate about the theoretical provenance of possibly including the settlements, although there were actually no such manufacturing capabilities located there.
  • Economically, sanctions already called for by European institutions and taken up by European governments vis-à-vis their private sector companies and banks which have commercial relations in Israel inevitably affect the private sector. This resultant effect on private sector companies could potentially become a serious factor to be considered by each individual state.
  • Diplomatically, the EU would risk writing itself out of the Middle East peace process for good, reducing its influence in the world at a time when it is nervous about its international credibility, and for no obvious result since, as Brussels well knows, Israel will never bend to an agenda that it believes has been defined with Palestinian interests at heart.
  • One cannot rule out an international backlash to a European decision to initiate sanctions. For example, at the height of the Arab boycott against Israel, the U.S. adopted laws to counteract it that primarily influenced U.S. companies. U.S. sanctions on Iran, years later, affected non-American companies as well.
  • It should not be beyond the capability of the State of Israel to mount a multi-tiered counter-offensive. In practice, this will not happen unless someone is assigned responsibility for coordinating it in the form of an all-European organization with the requisite resources and committed manpower that would devote itself to a pro-active countering of Palestinian, BDS, and other European anti-Israel propaganda and lobbying events. With elections for the European Parliament to be held in late May 2014, Israel must be prepared for many new parliamentarians coming to Brussels.
  • As part of this effort, BDS needs to be unmasked. It is not about Palestinian rights or statehood, but rather the elimination of Israel as the historic homeland of the Jewish people.8 Greater attention needs to be given to focusing advocacy efforts on Brussels in light of the strengthening of certain EU institutions in the aftermath of the Lisbon Treaty.

The expectations regarding the present peace negotiations are very low in any case. A breakdown of the talks, therefore, need not provoke a serious problem at the level of CFSP unless Israel allowed itself to be cast as the party solely responsible for their failure.

If Secretary of State Kerry’s initiative does break down, it is at the lower levels of the EU decision-making process on sanctions that Israel is most likely to encounter problems.

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* The Jerusalem Center would like to express appreciation to Alan Baker, Robin Shepherd, Fiamma Nirenstein, and Henk Lok for their contributions in the preparation of this study.

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Notes

1. Konstanty Gebert, “Shooting in the Dark? EU Sanctions Policies,” European Council on Foreign Relations Policy Brief, www.efcr.eu, January 2013, ECFR/71.

2. Clara Portela, European Union Sanctions and Foreign Policy: When and Why Do They Work? (New York: Routledge, 2010), p. 27.

3. Andrew Rettman, “EU Unlikely to Impose Ukraine Sanctions,” EU Observer, December 1, 2013, http://euobserver.com/foreign/122301.

4. “Common Foreign and Security Policy Structures and Instruments after the Entry into Force of the Lisbon Treaty,” EPLO Briefing Paper 1/2012, April 2012.

5. “What Lisbon Contains: The Small Print of A Notably Complicated Document,” The Economist, October 27, 2007, http://www.economist.com/node/10024471.

6. “The Treaty of Lisbon: An Impact Assessment,” House of Lords European Union Committee, 10th Report of Session 2007-08, Vol. I, March 13, 2008, http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf.

7. Portela, p. 27.

8. NGO Monitor, “Boycotts, Divestment and Sanctions (BDS) Resource Page,” January 6, 2014.