The U.S. State Department responded Tuesday to the new anti-boycott law passed in Israel, saying that the freedom to organize and protest is a democratic value Israel and the U.S. have long shared.

The Knesset passed a law Monday night which penalizes persons or organizations calling for the boycott of Israel or the settlements. The new law sparked uproar throughout Israel, with Israeli leftist organizations launching a series of protests against the law and one movement submitted a petition to the Supreme Court claiming the law is unconstitutional and anti-democratic.

Open gallery view Israeli leftist activists protest the boycott law in Jerusalem, July 12, 2011. Credit: Emil Salman

When asked to comment on the anti-boycott law, the U.S. State Department said the law was an "Israeli internal matter" but also hinted its criticism by pointing out the right to peaceful protest in democratic countries.

"Freedom of expression, including freedom to peacefully organize and protest, is a basic right under democracy," a State Department official said. "It is a right that the American people hold dear and it is among the democratic values that the Israeli and American people have long shared."

The Anti-Defamation League also expressed its criticism regarding the new law on Tuesday, saying that despite its opposition of boycotts of Israel, it is concerned the new law impinges on the "basic democratic rights of Israelis to freedom of speech and freedom of expression."

"To legally stifle calls to action – however abhorrent and detrimental they might be – is a disservice to Israeli society," ADL National Director Abraham Foxman said in a statement.

"We hope Israels Supreme Court will quickly take up a review of this law and resolve the concerns it raises."

Americans for Peace Now also expressed concern regarding the new law passed by the Knesset, calling it a flagrant attack on freedom of speech.

J Street condemned the Knessets passage of the bill as well as a clear and unabashed violation of the fundamental democratic precept of freedom of speech.

According to newly passed law, a person or an organization calling for the boycott of Israel, including the settlements, can be sued by the boycott's targets without having to prove that they sustained damage. The court will then decide how much compensation is to be paid.

The second part of the law says a person or a company that declare a boycott of Israel or the settlements will not be able to bid in government tenders.