An Israeli soldier shoots towards Palestinians demonstrating against the expansion of the settlement of Halamish, in the occupied West Bank village of Nabi Saleh, in February. Issam Rimawi APA images

Israeli banks, businesses and public bodies will lose access to hundreds of millions of euros in European Investment Bank loans, under new European Union guidelines on Israeli settlements, Palestinian campaigners said today.

This could be the most serious impact of the EU’s decision to ban future subsidies to Israel unless agreements explicitly exclude the West Bank (including East Jerusalem), the Gaza Strip and Syria’s Golan Heights, occupied by Israel in 1967.

Effect on Israel’s leading banks

The Boycott National Committee (BNC), the Palestinian steering group for the global campaign for boycott, divestment and sanctions, published an interpretation of the new guidelines which found that:

The new guidelines exclude any Israeli entity with activity in occupied Palestinian territory from participating in EU financial instruments such as loans. Among those excluded from receiving loans from the European Investment Bank (EIB) will be major Israeli banks including Bank Hapoalim, Mizrahi Tefahot Bank and Bank Leumi because they all operate illegally in the occupied Palestinian territory (OPT), including by having branches in illegal Israeli settlements. Bank Hapoalim received a €75m credit line from the EIB in 2006 and is likely to have put some of that credit towards its wide-ranging settlement financing operations. Recent EIB loans such as the €120m lent to national Israeli water company Mekorot in 2011 or the €40m lent to electric car company Better Place in 2012 would not have been granted under the new rules as both companies have sizeable illegal settlement activities. The EIB has provided finance amounting to almost €1 billion to Israeli entities since 1981.

The EIB describes itself as “the European Union’s bank,” owned by the 28 member states. It provides financing for projects inside and beyond the EU on favorable terms.

“Virtually all Israeli ministries and national authorities, major Israeli banks and other private businesses participate in the discrimination and oppression of our people and the colonization of our country,” said Zaid Shuaibi, spokesperson for the BNC. “Many of them play a key role in maintaining and expanding illegal Israeli settlements and infrastructure of the occupation regime. These new guidelines should all but end Israeli eligibility for EIB loans.”

The EIB did not respond to a written request for comment from The Electronic Intifada asking how it will implement the new EU guidelines.

Bigger impact than thought?

While Israeli officials and commentators have termed the EU’s move an “earthquake,” other observers, including The Electronic Intifada’s David Cronin, have cautioned that it may be less significant than thought and that the European Union has a long and ongoing record of complicity with Israeli colonization and other crimes.

The BNC’s Shuaibi added, “Although these guidelines are an important step in the right direction, they do not absolve the EU from the legal responsibility to not recognize and support Israel’s regime of occupation, colonization and apartheid in many other areas.”

Nevertheless, if the guidelines do indeed restrict access to financing for major Israeli companies and banks, that is likely to set off further alarm bells among Israelis who fear the days of freely colonizing Palestinians while enjoying fully normal relations with the rest of the world are coming to an end.

The US State Department, which has long opposed any practical steps to rein in Israeli colonization and land theft, declined to issue a rebuke to the EU over the new regulations.

Audio: What does the European Union move mean?

The Electronic Intifada’s Ali Abunimah discussed the EU’s decision on the 17 July edition of Worldview on WBEZ radio. Listen: