EU said readying cross-industry sanctions against Israel over E1 settlement project

The European Union is reportedly preparing a package of sanctions against Israel if it goes through with its plan for a major, controversial settlement expansion in the hot-button E1 area of the West Bank.

The sanctions, reportedly covering commerce, academics and security, would add teeth to a range of Western condemnations of the plan.

The government on Tuesday issued a tender for the construction of seven residential compounds with 1,234 housing units in the E1 area east of Jerusalem, which Israeli settlement activists seek to develop in order to prevent the establishment of a Palestinian state.

Channel 13 reported, citing two Western diplomats, that the EU has devised a list of initial sanctions if the construction begins.

The list was said to include specifically labeling products from Israel — not only from West Bank settlements — as well as scaling down academic collaborations with Israel and halting certain security and diplomatic collaborations between Brussels and Jerusalem. This aspect of the unconfirmed report would go against longstanding EU policy of differentiating between Israel and West Bank settlements.

The E1 expansion would connect the Jerusalem and Ma’ale Adumim areas, effectively scuttling the prospect of contiguous Palestinian sovereignty between the population centers of Bethlehem, East Jerusalem and Ramallah.

The project was frozen for long years amid fierce opposition from the international community, including past US administrations, which feared that building a new settlement neighborhood on the mostly empty tract of land would rule out a viable Palestinian state.

The housing units in the tender are some of the roughly 3,400 E1 housing units that the government greenlit in August 2025. Finance Minister Bezalel Smotrich lauded the E1 expansion plan at the time, saying it “practically erases the two-state delusion.”

France, Italy, Britain and Germany on Thursday piled on mounting international condemnation of the project, warning businesses against bidding for the construction tenders by saying they would be at risk of “involving themselves in serious breaches of international law.”

Belgian Foreign Minister Maxime Prevot also called the tenders “unacceptable” on Thursday, saying the project “would seriously undermine the viability of the two-state solution.”

The project was also slammed Wednesday by UK Secretary of State for Foreign and Commonwealth Affairs Ed Miliband, who called it “unacceptable and destructive” and threatened action.

Foreign Minister Gideon Sa’ar hit back at Miliband in a lengthy post on X the following day, saying he “reject[s] outright” the “patronizing” statement, asserting that “the Jewish people have the right to live throughout the Land of Israel, just as the British have the right to live in London and throughout the United Kingdom.”

I reject outright the statement of the UK Foreign Secretary and the patronising tone of his words.

The Jewish people have the right to live throughout the Land of Israel, just as the British have the right to live in London and throughout the United Kingdom. More than a century… https://t.co/eCazg1CU7A

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— Gideon Sa'ar | גדעון סער (@gidonsaar) August 20, 2026

“The UK Government’s systematic policy of blaming only Israel while ignoring Palestinian extremism has already contributed to a massive wave of antisemitic hatred and attacks against the British Jewish community,” Sa’ar charged, saying London’s “decision to damage the relationship between our countries is deeply unfortunate.”

Far-right ministers Smotrich and Itamar Ben Gvir, who vehemently oppose Palestinian statehood, also hit back, with the latter tweeting in English that “someone should update Ed that the British Mandate for the Land of Israel ended in 1948 and that Israel is an independent state.”

He added: “Perhaps instead of playing make-believe about the Mandate era, he ought to look out of the window at his London, which is rapidly turning into an Islamic Caliphate.”

Smotrich similarly said the British Mandate “is over” and that he wouldn’t accept “dictates from foreign countries” or change course due to “threats and sanctions,” casting the project as a national security necessity to prevent danger to the state and “realize our historic and biblical right to our ancestors’ land.”

AFP contributed to this report.