If anyone needed a reminder of Israel's deteriorating standing on the international stage, they got one on Thursday in the report by the UN Human Rights Council's fact-finding mission on the settlements. While Israel's coalition talks are focusing on the state budget and drafting ultra-Orthodox men into the military, every future member of the next cabinet should be disturbed by the report.

All right, we know that the UNHCR, which commissioned the investigation, is a biased, anti-Israeli organization whose agenda is held hostage to a handful of countries that trample on the rights of women, gays and ethnic minorities every day. But that argument is convincing only to the already convinced. For most governments around the world, not to mention international public opinion and the business community, a UN report comes with an international seal of approval.

Next to the report by the International Fact-Finding Mission on Israeli Settlements in the Occupied Palestinian Territory, to give the UNHCR document its formal name, the Goldstone report on Israel's Operation Cast Lead in the Gaza Strip in 2008-09 is child's play. Whereas the Goldstone report dealt with a single event, the report on the settlements addresses policies pursued by Israeli governments in the 45 years since the occupation of the West Bank in 1967.

While more than a few Western countries rejected the Goldstone report and showed understanding of Israel's position and recognition of the complexities of fighting terror in Gaza, not a single country supports construction in the Jewish settlements of the West Bank. Even Israel's greatest friends are fed up with the Netanyahu government's settlement construction policy, which they believe jeopardizes the realization of the two-state solution.

The implications of the mission's report are also much more serious than those of the Goldstone report. For the first time, a UN agency is calling on the world's governments to reconsider their relations with Israel and is recommending multinational corporations to withdraw their investments and sever all direct or indirect dealings with the settlements.

Sanctions like these were imposed on South Africa's apartheid regime and are imposed now on the Iranian regime, which refuses to suspend its nuclear program. Israel is not Iran, nor is it, at this stage, an apartheid state. Still, the report is a flashing light, warning of what could be waiting around the corner for Israel if it continues its current policy in the West Bank.

In addition to the tailwind for organizations promoting economic, academic and cultural boycotts of Israel, the report will further accelerate Israel's international isolation. After its expected adoption by the UNHCR plenum in Geneva in March, the report could make its way to the UN General Assembly or the Security Council in New York. In that event, it would go from a PR nuisance to a foreign-relations catastrophe.

As much as Israeli politicians and voters tried to escape the Palestinian issue during the election period, the UN report came and bit them on their bottoms. Yair Lapid, who is shaping up to be the next foreign minister, got a small taste yesterday of the political reality he will face.

Any sanction imposed on Israel will hurt more than the settlements. It will affect the daily lives of all Israelis, especially Lapid's middle-class voters. If he seeks to stop the decline he will need more than his photogenic appearance and verbal eloquence. He must pursue a policy that will prove to the world that Israel is genuine about wanting to end the occupation and impose on Prime Minister Benjamin Netanyahu new rules on settlement building.