The introduction of a labeling regime for settlement products is a “red line” for Israel, the country’s top diplomat said this week, threatening to downgrade economic ties with states that implement such labels.

In an extensive interview, Deputy Foreign Minister Tzipi Hotovely said the European Union’s intention to publish guidelines for the labeling of Israeli goods produced beyond the pre-1967 lines is “the epitome of boycotts,” vowing to launch a campaign to persuade the Continent’s most important countries not to implement these guidelines. Countries that do decide to label settlement products will no longer be considered by Jerusalem to be significant players in the Middle East conflict, she warned.

“It is possible to work with all the European countries and give a very sharp Israeli response, saying: This is a red line. Israeli diplomacy won’t tolerate this,” she said.

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Sometime next month, the European Commission is expected to publish guidelines meant to facilitate the implementation of EU legislation that calls for a distinction between products from Israel proper and those from settlements. These guidelines will not be legally binding, Hotovely said, vowing to convince the Continent’s key powers not implement them. Those who do carry out the Commission’s recommendations risk diplomatic tensions with Israel, she threatened.

“The Foreign Ministry has mapped the most important European capitals, where Israeli diplomacy has a chance to convince them not to actually implement the European guidelines,” she said.

Senior EU officials dispute, however, Hotovely’s assertion about labeling being entirely voluntary, saying that all 28 member states will be obligated to indicate on certain settlement goods — though not all — that they were not produced in Israel proper.

“Europe is Israel’s number one trade partner, which means that not only we have something to lose,” the deputy foreign minister told The Times of Israel in her office at the Foreign Ministry in Jerusalem. “They, too, have something to lose.”

The Europeans are interested in maintaining strong economic ties with Israel, but they are also keen to be seen as significant players in the Israeli-Palestinian conflict, Hotovely, 36, continued. By implementing a labeling regime for settlement goods, Europe is in effect forcing its solution for the conflict on Israel and declaring on which sides it stands. It thus can no longer be considered an honest broker, she said. “Any country that accepts guidelines on labeling cannot be a player that Israel is ready to accept.”

‘We see it as a boycott of Israel for all intents and purposes. We view it as a slippery slope’

Hotovely, who in the absence of a full-time foreign minister functions as de facto head of Israel’s diplomatic apparatus, plans to travel to Spain, France and Germany in the coming weeks in a bid to halt these countries from enacting the EU’s settlement guidelines. Great Britain, Belgium and Denmark have already implemented voluntary guidelines on labeling.

In addition to advocating against labeling in European capitals, Hotovely also promised to initiate “positive countermeasures” in a bid to promote settlement goods in Israel and Jewish communities around the world, including by creating a “positive buzz” around them. The Knesset is also sending parliamentary delegations to nearly a dozen European countries, hoping to persuade lawmakers to reject labeling.

Israel is fully aware that European labels on products from the West Bank will not lead to great economic harm, as exports from the settlements to the EU make for less than one percent of Israel’s total exports to the EU.

“Our concern is that once you put a label on Judea and Samaria, you put a label on Israel,” she said, using the biblical terms for the West Bank. “We see it as a boycott of Israel for all intents and purposes. We view it as a slippery slope. It’s simply a sweeping disqualification of Israel.”

The EU vehemently rejects such accusations, arguing that it is merely implementing a longstanding policy of differentiating between Israel proper and the settlements. West Bank goods, they assert, will be labeled but not banned.

But Hotovely doesn’t buy the distinction EU officials make. Labeling equals boycotting, she insisted, pointing to the political context in which Brussels decided to call for this measure. “Europe is doing this to create diplomatic pressure on Israel regarding a very central issue that Israel and Europe are deeply divided on.”

The EU wants to make the point that the West Bank is not a part of Israel, she said. But according to the official policy of the Israeli government, “[Handovers of] Judea and Samaria aren’t even on the list of options we’re offering the Palestinians,” she announced. Prime Minister Benjamin Netanyahu, while professing to support the creation of a Palestinian state in principle, “never said that the evacuation of Judea and Samaria is an option. He says we learned the lessons of the [2005 Gaza] Disengagement and that the world needs to get used to this idea. That’s one of the messages that I place great emphasis on.”

The world needs to internalize that the West Bank is to remain under Israeli “de facto sovereignty,” Hotovely said. “It’s not a bargaining chip. It does not depend on the Palestinians’ goodwill. It’s the land of our forefathers. We don’t intend to evacuate it, certainly not for the Islamic State or al-Qaeda or other extremist organizations that would sure to gain control over the territory.”

And yet, Hotovely, while staunchly advocating the annexation of the West Bank to Israel, acknowledged that her efforts to prevent the labeling of settlement goods might not bear fruit. “It’s a diplomatic journey the outcome of which I cannot promise,” she said. “What I can promise is that Israel’s position will be very forceful and tough on this matter.”

‘The world has started to lose hope about a direct dialogue’

Taking a broader look at what worries world leaders these days, the deputy foreign minister assessed that the Israeli-Palestinian conflict has lessened drastically in importance. “If in the past they saw it as number one or two on a list of strategic threats in the world, today it’s in the fifth or sixth spot,” she said.

The rise of Iran and of Islamic State, the wave of immigration toward Europe, and the Greek financial crisis are seen as more urgent global challenges than reviving the peace process, she posited. “That creates a problem for the Palestinians. If in the past every piece of Palestinian spin would make the international community go wild, today you see that many are indifferent to the Palestinian provocations. The world is much less attentive to ‘Palestinian suffering.’ People understand somehow that this isn’t what’s going to solve the problems.”

While international pressure on Israel regarding the settlements persists, the “feverish ambition” to reach a final-status peace deal has subsided recently, according to Hotovely.

Palestine will not come into being because of declarations at the UN, she said. “I also don’t think that today there is anybody on the European side who believes that the Palestinian Authority is viable to the extent that if Israel were to, God forbid, lose control [over the West Bank], that there wouldn’t be Islamic State in its stead. They understand that.”

“The world has started to lose hope for a direct dialogue,” she continued. But only direct bilateral talks can lead to results, she added, as “there’s no conflict between two nations that can be solved from the outside. That’s what the world is doing in fact, when it goes for labeling, or allows the Palestinians to wave their flag [at the United Nations].”

The world leaders she meets regularly haven’t abandoned the two-state paradigm, she clarified. “But they understand more and more that if they thought that the solution only depended on an assertive leader or on someone who exerts pressure — they understand that it doesn’t work.”

Disillusionment about the prospects for peace is widespread, Hotovely said. Foreign dignitaries still profess the need for a two-state solution, but today’s Israel “can stand its ground and say honestly, we tried this formula for decades now, it didn’t work. It’s about time they understand that concessions strengthen only the radical elements in the region.”