Israel will compensate settlers and settler institutions that suffer financial damage from the European Union's ban on transferring scientific research funding beyond the Green Line, Haaretz has learned.



Israel accepted the ban on Tuesday during a marathon series of phone calls between Justice Minister Tzipi Livni and the European Union foreign policy head Catherine Ashton. It refers to loans and funding that are allocated to Israeli institutions in terms of the Horizon 2020 scientific cooperation agreement, of which Israel is the only non-European member.



The decision to compensate settlers was reached at a late-night meeting of the ministers involved, prior to the Livni-Ashton agreement. Economy Minister Naftali Bennett was charged with creating a mechanism for the implementation of the compensation.



The compensation will be proportional and will come from the budget of the Chief Scientist in the Economy Ministry.



Livni and Ashton agreed on a formula to bridge the disagreements between the sides over two key clauses in the Horizon 2020 agreement – the EU demand for an appendix specifying its new guidelines regarding the funding of entities in the West Bank, East Jerusalem and the Golan Heights, and the requirement that Israeli entities receiving funding not have branches or extensions in the occupied territories.



On the first clause, the two sides "agreed to disagree," with the result that the agreement will have two appendices, one setting out the EU position and the other Israel's position.



On the second clause, it was agreed that any Israeli entity operating within the Green Line can apply for European loans, and both sides would examine ways to make sure that the money does not reach the settlements in any form.



What this seems to mean is that Israeli companies or organizations that do business in the territories and want loans from the EU would have to set up a system to ensure that any money it gets from the EU would be invested solely within the Green Line.



The European Commission's guidelines regarding EU funding of entities in the West Bank settlements prohibit funds and agencies from giving grants, scholarships or prizes to Israeli entities in the settlements or to activities in the settlements. In some cases, the guidelines forbid giving loans to Israeli entities that operate directly or indirectly beyond the 1967 lines.



The Horizon 2020 agreement would provide Israeli research institutes and high-tech companies with hundreds of millions of euros in funding over the next several years. Without the agreement, the country’s R&D stood to lose about 500 million euros (roughly NIS 2.5 billion) over the period. The Committee of University Heads and the Council for Higher Education’s Budgeting and Planning Committee expressed great concern over the damage to Israeli academia if the agreement was not signed.

Open gallery view An Israeli flag flies near the settlement of Ma'alah Adumim. Credit: AP