B’nai B’rith International Advocacy Brief | September 2026

Background

Across Europe, governments are increasingly considering or adopting restrictions on economic activity connected to Israeli settlements in the West Bank. Measures now range from import bans and licensing requirements to proposed restrictions on services, financing, property advertising and companies deemed to facilitate settlement expansion. On  September 8, 2026, twelve European and North American governments, including eight EU member states, announced they would introduce, support or actively consider further national and/or European trade restrictions.

Europe should not respond to policy disagreements with a longstanding partner by progressively building an architecture of economic punishment. Israel is a close political, economic and security partner of Europe, and disagreements over settlements should be pursued through dialogue, diplomacy and targeted measures against specific wrongdoing—not broad restrictions that risk eroding the relationship and pushing Israel further away from European engagement.

A Significant Departure from Existing EU Policy

The European Union already differentiates between Israel and territories under Israeli administration since 1967. Settlement products do not benefit from preferential tariffs under the EU-Israel Association Agreement, and EU rules require settlement provenance to be identified. Moving from this established system of differentiation to outright prohibitions on economic activity is a significant policy shift and deserves greater scrutiny of its effectiveness and consequences.

Six reasons the EU should choose engagement over restrictions

1. Restrictions will clearly lead to unintended consequences

Geography is a blunt proxy for responsibility. West Bank economic activity is interconnected: businesses may employ Palestinian workers, buy from Palestinian suppliers or operate across communities and jurisdictions. Restrictions aimed at settlements can therefore reduce economic opportunities for Palestinians and others they are not intended to target.

Broad measures can also affect consumers, tourists, pilgrims, religious institutions and small businesses that may have little ability to determine the precise origin or legal status of a product.

A pilgrim visiting Jerusalem from Europe could buy a Bible, a kippah or a religious souvenir in a shop, put it in their suitcase and return home without any realistic way of knowing whether that item was produced in East Jerusalem, a settlement or passed through a business covered by the restriction.

2. Selective application of measures by the EU raises serious questions of consistency

The EU applies markedly more accommodating approaches in other disputed or occupied territories, including Tibet, Western Sahara and Northern Cyprus, where it has generally relied on differentiation, origin rules or other tailored arrangements rather than outright prohibitions on private trade.

These situations are not legally identical, but the contrast raises a legitimate question of consistency: if non-recognition is now deemed to require trade bans in the Israeli-Palestinian context, the EU should explain the objective criteria for not applying that principle elsewhere.

Elsewhere, the EU has recognized that maintaining economic links across territorial and political divides can support reconciliation. In Cyprus, it actively funds and facilitates cross-community trade as a means of bringing communities together. It is therefore legitimate to ask why, in the Israeli-Palestinian context, economic separation is increasingly presented as a contribution to peace. In Western Sahara, the EU has sought to preserve trade flows through origin and labeling rules rather than prohibiting private commerce.

3. Preserve a partnership of growing strategic value

At the same time the EU is considering new economic restrictions on Israel, it is actively seeking Israeli expertise in areas of growing strategic importance.

That creates a clear tension: Europe is turning to Israel as a valuable partner where its security and technological capabilities are needed, while pursuing punitive economic measures elsewhere. If strategic cooperation with Israel remains both useful and desirable, marginal civilian trade restrictions risk looking more like political signaling than a coherent strategy for advancing peace.

Just in early September, EU Commissioner for Startups, Research and Innovation Ekaterina Zaharieva met Israel Space Agency Chair Shimrit Maman in Brussels to discuss cooperation in space, AI and robotics, amid European interest in Israeli dual-use and high-tech air-defense capabilities.

4. Mission creep: a narrow restriction is becoming a wider boycott reality

What begins as a restriction on settlement goods can quickly expand into services, finance, real estate and companies with wider links to Israel. Businesses facing legal and reputational uncertainty may simply over-comply and avoid Israel-related activity altogether.

That is the broader risk: measures presented as narrow “differentiation” can create the regulatory infrastructure and political precedent for progressively wider boycott policies against Israel.

5.The measures risk adding to already strained transatlantic relations

At a time when EU-U.S. relations are already under strain, the planned measures risk opening another area of transatlantic disagreement. U.S. federal law explicitly treats foreign barriers affecting companies doing business in Israel or in “Israeli-controlled territories” as a matter of U.S. trade policy and directs the administration to oppose such measures.

European restrictions would not automatically trigger U.S. sanctions, but they would run directly against an established American policy objective. Creating a new point of friction with Washington over measures of questionable practical impact on the ground is difficult to justify—particularly when transatlantic cooperation is needed on far more consequential security and geopolitical challenges.

This is no longer a theoretical concern: on September 9, U.S. Congresswoman Claudia Tenney asked Treasury Secretary Scott Bessent to examine whether the UK and other countries adopting settlement-related restrictions should be added to the U.S. Treasury’s international boycott list under Section 999.

6. Working toward peace cannot mean holding Israel solely responsible

One of the main justifications for settlement-related restrictions is the stated need to work toward a peaceful resolution of the Israeli-Palestinian conflict. But settlement expansion is only one item: Hamas’s October 7 attack and continued rejectionism, refusal to disarm, the continued “pay for slay” practice (despite announced reforms), weak Palestinian governance, incitement and terrorism, and the absence of a credible unified Palestinian leadership able to negotiate and implement an agreement have all eroded the prospects for peace.

The 1967 lines are a reference point for negotiations, not a substitute for negotiated final borders. A policy aimed at resolving the conflict should address obstacles on both sides, not place responsibility overwhelmingly on Israel.

A more constructive approach

Europe already has substantial tools of engagement with Israel that should be harnessed rather than weakened. The EU is Israel’s largest trading partner; Israel participates fully in Horizon Europe and in major Mediterranean research initiatives; and EU-Israel cooperation extends to law enforcement, pharmaceuticals, aviation and advanced technology. These relationships create channels for influence, dialogue and practical cooperation that punitive trade measures risk undermining.

We urge the EU not to turn the current differentiation framework into an import ban and encourage member states to avoid national measures that could create a fragmented, de facto boycott regime within the single market.

Rather than progressively narrowing economic ties, Europe should use these existing partnerships—and expand cooperation in areas such as technology, water, energy, research and security—to build mutual interests.