A diplomatic spat has erupted between Israel and Romania after Bucharest reportedly refused to allow Romanian construction workers to be employed in Israel's illegal West Bank settlements, Israel's military radio said Tuesday.

The row comes in the wake of tensions between Israel and the European Union over new guidelines that bar EU funding for any Israeli entity operating in the internationally recognized occupied Palestinian territories.

Talks with Bucharest on importing Romanian manual labor broke down in 2012, the radio said, but resumed at Israel's initiative after a new Romanian government came to power in May that year.

Differences center on Bucharest's request that Israel guarantee no Romanian construction workers would be employed on settlements on occupied Palestinian territory that are considered illegal under international law.

There was no immediate comment from the Romanian embassy in Tel Aviv.

It was Israel's second diplomatic row with an EU country this week following a dispute with the Netherlands over a new security scanner to be installed on the Gaza border that Dutch Prime Minister Mark Rutte was to have inaugurated last Sunday.

The Dutch government had hoped the scanner would serve to facilitate an increase in the export of goods from Gaza to the West Bank, but Israeli officials accused the Dutch of trying to impose "political conditions."

Also on Sunday, Dutch Foreign Minister Frans Timmermans refused to accept an Israeli military escort around Palestinian-ruled areas of the West Bank city of Hebron.

The European Union guidelines, which go into effect in January, ban funding for and financial dealing with projects linked to Jewish settlements in the West Bank and annexed east Jerusalem.