The Dutch government has asked the country’s largest engineering company to rethink its participation in a project with the Jerusalem municipality because the project is based on the Palestinian side of the 1967 border. Foreign Ministry officials fear that this will be a trend in Europe, not an isolated incident.

The project by Royal HaskoningDHV involves Israeli company Mati, a subsidiary of Hagihon, the municipality’s water and sewage company.

In the project, a sewage treatment plant would be built to battle the pollution in the Kidron stream, which runs from the Mount of Olives and the village of Silwan in East Jerusalem toward the settlement of Ma’aleh Adumim and the Dead Sea. The plant is to be built in Area C, under full Israeli military and civilian control.

According to a senior official in the Foreign Ministry, the municipality told the ministry two weeks ago about problems linked to the project. Royal HaskoningDHV officials told the municipality that the Dutch Foreign Ministry had warned about the possible consequences of carrying out projects for Israeli companies in East Jerusalem or the West Bank.

Dutch Foreign Ministry officials told Royal HaskoningDHV that such a project would violate international law, leading the company to consider pulling out of the project to avoid financial, legal and image problems.

The Dutch government isn’t the first in Europe to warn companies about possible consequences concerning projects over the Green Line. Britain and Sweden have been implementing such polices for several years.

Nevertheless, most EU governments are passive when it comes to private-sector companies. In the past two years, the Dutch government has increased its activity against the settlements; it is among countries leading the demand to label settlement products imported to EU countries.

The Israeli official told Haaretz that in the past two weeks there have been discussions with the Dutch government in an effort to solve the crisis, including talks with the Netherlands’ ambassador in Tel Aviv, Caspar Veldkamp. The Israeli ambassador to the Netherlands, Haim Divon, has also held talks with senior officials at the Dutch Foreign Ministry. At this stage it’s still unclear if the efforts by Israeli diplomats will lead to the resumption of the project.

As part of its lessons from the surprise publication of the European Union’s guidelines concerning settlements, the Foreign Ministry sent out cables to all 28 Israeli representatives in the EU member states. The ministry requested ambassadors to urgently inquire if the Dutch move was an isolated case or part of an EU decision that hadn’t been made known to Israel.

While many ambassadors have said in recent days that there is no new directive in their countries about warning companies, the Israeli ambassador to the European Union in Brussels, David Walzer, sent a cable with worrying information.

According to Walzer, a source told him that EU officials are considering warning businessmen and companies about contacts with the settlements. Walzer added that an EU committee on the Middle East is due to discuss the matter with all 28 member states as early as September. Walzer was already under fire due to his conceived failure to warn about the publication of the guidelines.

A senior official at the Israeli Foreign Ministry said that if the European Union passes a resolution requiring all member states to warn businesses about projects over the Green Line, this would be a serious escalation in EU measures against the settlements.