On September 8th, a group of 12 countries – including the United Kingdom, France and Canada – announced plans to introduce national and/or support European restrictions on trade in goods with West Bank settlements, which are illegal under international law. (Ireland, Spain, the Netherlands, Norway and Belgium have already adopted measures targeting trade with Israeli settlements in the occupied Palestinian territories).
What will be the immediate impact?
The ban distinguishes between items manufactured in the settlements and Israel proper, so the immediate impact will be limited.
Passengers who recently flew to Amsterdam on a flight from Tel Aviv reported that Dutch customs authorities searched their luggage for products from West Bank settlements or the Golan Heights. (A Netherlands ban on goods originating from Israeli settlements in the occupied territories, including the West Bank, came into force last week.)
Europe is Israel’s most important trading partner, with the European Union accounting for around a third of Israel’s imports and exports. But it is estimated that only a few per cent of Israeli exports come from settlements.
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So why is Israel so worried?
Israel is concerned that measures initially targeting settlements and businesses operating beyond the 1967 Green Line (defined as the border at that time between Israel and its neighbours) could ultimately be extended to companies inside Israel, given the difficulty of separating their activities and supply chains.
Israel fears that the mechanisms to be established to verify the origin of Israeli goods, combined with a growing anti-Israel sentiment in the West, will put off many companies from trading with Israel.
The main concern among Israelis is that the sanctions are only the beginning and could mark the start of a wider boycott and lead the EU to suspend its association agreement with Israel, which forms the basis for trade, diplomatic, cultural and other relations.
How has Israel reacted?
Israel announced the closure of the British consulate in East Jerusalem, expelled the British representatives from the international Gaza support centre in southern Israel and barred the entry of a number of British lawmakers.
The credentials of Dutch diplomats operating at the Netherlands Representative Office in Ramallah were revoked on Sunday. The government said measures would be taken against other states that implement sanctions.
What about the United States?
In 2024 the Biden administration imposed sanctions on Israeli settlers accused of violence and destabilising activity in the West Bank. Donald Trump rescinded those sanctions immediately upon taking office in January 2025, but the precedent was set.
Support for Israel has plummeted in the US in recent years, particularly among the Democrats and the younger generation. Last week a group of US Senate Democrats introduced legislation to sanction individuals or groups that facilitate the E1 building project east of Jerusalem, which would bisect the occupied West Bank.
A shift in the balance of power after the midterm elections or the election of a Democratic president is likely to increase the pressure for fresh sanctions.
Is an arms embargo possible?
Some countries stopped the sale of weapons to Israel after the 2023 Gaza war began. But the US, by far Israel’s biggest supplier, providing Israel with 69 per cent of its total arms purchases, and Germany, Israel’s second biggest supplier, are continuing sales.
Israel is the world’s seventh biggest arms exporter and the defence sector is a key element of the Israeli economy. A number of countries have cancelled contracts with Israel, but defence exports have increased overall, boosted by the sale of state-of-the-art air defence systems.
[ Israel closes UK consulate over West Bank sanctions rowOpens in new window ]
Will Israel’s upcoming election affect sanctions?
British sanctions announced this month will take six to nine months to come into force – well after the October 27th election – and London stressed that it “will judge a new Israeli government by its actions”.
A new government that limits settlement expansion and acts to curb West Bank settler violence against Palestinians is likely to reduce significantly the scope of the sanctions.
