Israel refuses to lend its signature to any future agreements which restrict EU funding to Israeli bodies that have connections to occupied territories and which would limit the country to its 1967 borders, a cabinet meeting decided.

The decision comes in response to a new EU policy in which European assistance grants – including funds, stipends, scholarships and investments – would be restricted from Israeli entities with any direct or indirect connection to the West Bank, East Jerusalem, or the Golan Hieghts, Haaretz reported.



Israel will also refrain from signing any agreements that require it to recognize that its sovereignty does not extend past its 1967 borders. Under new guidelines taking effect on January 1, the EU would require the inclusion of a clause indicating that the West Bank, East Jerusalem, and the Golan Heights are not a part of the state of Israel.



A cadre of top ministers were called to a meeting early Thursday by Prime Minister Benjamin Netanyahu in Tel Aviv. It was determined during the talks that Israel would state its position during an upcoming phone conversation between Netanyahu and the High Representative of the European Union for Foreign Affairs, Catherine Ashton.

A spokesman for Aston, Michael Mann, said Brussels was willing to clarify the new guidelines in talks with Israel.

"We stand ready to organize discussions during which such clarifications can be provided and look forward to continued successful EU-Israel cooperation, including in the area of scientific cooperation," Mann told Reuters on Friday.

The decision comes ahead of scheduled August 14 negotiations with EU representatives on a scientific cooperation agreement known as Horizon 2020. Under that plan, the EU is expected to invest over 600,000 euros in Israeli high-tech companies.



“We will not sign the guidelines in their present form,” said a senior official present at the meeting. "On the other hand, we want to conduct negotiations with the EU so that the Horizon 2020 agreement for scientific cooperation, as well as other agreements, can in fact be implemented.”



The EU guidelines were first publicly reported on July 18. A senior diplomatic source present at the meeting believed that the guidelines would significantly undermine the current peace process with the Palestinians.



“It was agreed that we will request additional clarifications from the EU in order to better understand the significance of the guidelines,” the diplomatic source told Haaretz.



“We will work with EU headquarters in Brussels and with all 28 capitals of the member countries and explain that this is a genuine crisis situation that requires a solution,” said the senior official.



Israel has in the past reacted strongly to suggestions that the country should adopt its pre-1967 borders, which it believes would leave the country “indefensible.”



A 2011 speech prepared for President Obama stated that a cornerstone of Israeli-Palestinian peace should be for a slightly modified return to Israel’s 1967 borders. After learning this, Netanyahu demanded that all references to the borders be cut from the President’s comments. The request was made during a telephone conversation with former Secretary of State Hillary Clinton.



Israel has defined both East Jerusalem and most of the Golan Heights as falling within its sovereign borders since the aftermath of the 1967 Six-Day War during which it fought against Egypt, Syria, and Jordan. The West Bank, which had been controlled by Jordan prior to the conflict, is considered a Palestinian territory although some 60 per cent is effectively controlled by Israel.



An Israeli official confirmed to Reuters on Thursday that initial plans to build 800 additional settler homes on the West Bank had gone through the day prior, although final approval from the government is needed before construction can begin.



Palestinians previously demanded a freeze on all Israeli settlement construction before peace talks could resume, though Israel rejected the preconditions.



Hanan Ashrawi, a Palestine Liberation Organization executive and former peace negotiator, told Reuters that Israel was "deliberately destroying the two-state solution and killing any sort of hope."



US State Department spokeswoman Jen Psaki addressed new settlements in a Thursday statement.



“The United States does not accept the legitimacy of continued settlement activity and opposes any efforts to legitimize settlement outpost,” Psaki said.



Israeli and Palestinian negotiators are set to engage in their first peace talks in almost three years in Jerusalem on August 14. According to US Secretary of State John Kerry, both sides have given themselves about nine months to try and reach an agreement.



Settlements in the West Bank, Gaza, and East Jerusalem are now home to some 560,000 Israelis. Direct talks between Israel and Palestine collapsed in late 2010 over Israel’s building of settlements in the West Bank.

