European diplomats looking at ways to subvert trade agreement and bank cooperation as 'diplomatic war' on Israel ratchets up a level.

Sweden recognized "Palestine" on the Jewish holiday of Yom Kippur, and on Monday the UK followed suit in a non-binding vote - now "frustrated" European officials reveal that they are ready to take their diplomatic war on Israel to the next stage.

According to European diplomats who spoke to Reuters, the European Union (EU) is looking at ways to pressure Israel in an attempt to foist their vision of a Palestinian state in Judea and Samaria on the Jewish state, despite the fact that many expert point out that Israel's presence in the region is legal under international law.

While the diplomats say they are only at an early point in planning their diplomatic "warfare," one move they are threatening to take is imposing a travel ban on Jewish residents of Judea, Samaria and eastern Jerusalem who have any criminal history.

"The paperwork has been done but it is frozen for now," one official said. "It is basically a blacklist of violent settlers who have been accused of or convicted of crimes. It would prevent them from traveling to Europe."

Such a move would likely prevent roughly 100 to 200 people from entering the EU, but may have legal complications given that some of those affected hold European passports.

"We have ways to show our frustration"

EU foreign ministers are set to meet in Luxembourg next Monday, where they possibly will discuss the various moves against Israel - one move that has been raised is subverting the free-trade agreement with Israel.

Such a step would involve strictly applying regulations in the Association Agreement signed between the EU and Israel in 1995.

In Article 83 of the agreement, it is stipulated that the agreement applies to the territory of the state of Israel, which one official said may mean banks operating in Judea and Samaria that the EU does not consider part of Israel could be targeted."

"I'm not saying we should stop dealing with Israeli banks, but it's an issue that has been raised and some would say we need to look at it in more detail," said the unnamed ambassador to Israel.

The ambassador also stated "no one is talking about imposing trade sanctions on Israel. But there is a very high level of frustration and there are many instruments at our disposal to make that frustration clear."

Another senior diplomat threatened that Europe's patience is "wearing thin."

The impatience in Europe is somewhat ironic given that Prime Minister Binyamin Netanyahu's government is currently imposing a covert construction freeze against Jews in Judea, Samaria and eastern Jerusalem. The freeze comes despite a severe housing crisis in Israel, and despite the fact that over 90% of the region is reportedly unpopulated.

"Press the PA, not Israel"

In response to the EU plans of diplomatic warfare, an unnamed Israeli government official told Reuters on Tuesday that Europe would do better to put its pressure on the Palestinian Authority (PA), which torpedoed peace talks in April by signing a unity deal with the Hamas terror organization and refuses to even recognize Israel.

"By focusing only on one issue and only on Israel, they are not doing the Palestinians a favor and they are definitely not playing as productive a role as they could do in peace talks," said the official.

He continued "Europe could be much more productive in its engagement if its messages to the Palestinians were that it's time for them to fundamentally accept the legitimacy of the Jewish state."

The EU has been taking an aggressive stance against Israel for a long time already; back in July it published new guidelines which boycott Israeli entities operating beyond the 1949 Armistice Lines, including Ariel University.

It also threatened Israel with boycotts throughout the peace talks - boycott threats that reports revealed were initiated by US Secretary of State John Kerry who was behind the talks.