Haaretz reports: The European Union has published a guideline for all 28 member states forbidding any funding, cooperation, awarding of scholarships, research funds or prizes to anyone residing in the Jewish settlements in the West Bank and East Jerusalem. The regulation, which goes into effect on Friday, requires that any agreement or contract signed by an EU country with Israel include a clause stating that the settlements are not part of the State of Israel and therefore are not part of the agreement.

A senior Israeli official, speaking on condition of anonymity, described the new ruling, which was published on June 30, as an “earthquake.”

“This is the first time such an official, explicit guideline has been published by the European Union bodies,” the senior official said. “Until today there were understandings and quiet agreements that the Union does not work beyond the Green Line [the pre-1967-war border]; now this has become a formal, binding policy.”

The official noted that the significance of the regulation is both practical and political: From now on, if the Israeli government wants to sign agreements with the European Union or one of its member states, it will have to recognize in writing that the West Bank settlements are not part of Israel.

In the Prime Minister’s Office and Foreign Ministry there is great tension and anxiety over the new regulation and its implications for Israeli-EU relations. The efforts of Prime Minister Benjamin Netanyahu and Deputy Foreign Minister Ze’ev Elkin to stop the move have all failed. Senior EU officials say they would like to hold talks with Israel concerning the new guideline, but since it will go into effect by the end of this week, the chance of its being amended is extremely slim.

“We will have to decide what to do from this day forward,” a senior Israeli official said. “We are not ready to sign on this clause in our agreements with the European Union. We can say this to the Europeans, but the result could be a halt to all cooperation in economics, science, culture, sports and academia. This would cause severe damage to Israel.” [Continue reading…]

Update: It turns out that these guidelines are not binding on EU member states, they will not be applied to all entities in the occupied territories and they do not go into effect until 2014. More details when I have them.