EU Differentiation FAQ

What is differentiation and why does it matter?

The EU must do more to counter Israeli efforts to build up a substantive case with which to put Europeans on the defensive, make EU consensus more difficult to attain, and block stronger EU action on settlements. The below Q& is an additional resource to ECFR’s publication on “EU Differentiation and the Push for Israeli-Palestinian Peace” and is intended as first step in solidifying the arguments in favour of differentiation, and going on the offensive against those who are trying to roll back the legal processes that are underway.



What is EU Differentiation?

Differentiation refers to a variety of measures taken by the EU and its member states to enforce the exclusion of settlement-linked entities and activities from their bilateral relations with Israel. The EU has never recognised the legality of Israeli settlements in the occupied territories (including those in East Jerusalem and the Syrian Golan Heights that have been formally annexed by Israel). As a result, it must make the necessary provisions in its agreements with Israel to explicitly and unequivocally exclude Israeli settlement-based entities and activities.

Differentiation is essentially “reflexive” as it is driven by the internal necessity of states and international actors such as the EU and its member states to protect the integrity and effectiveness of their own legal orders. To do so, they are obligated under existing imperatives of their domestic legal order to ensure that they are not giving legal effect to internationally unlawful acts. Given the EU and its member states’ positions and commitments on the status and consequences of Israeli actions in international law, they are under an internal obligation to ensure that their actions do not confer recognition of the occupying power’s sovereignty over the occupied territory, and that EU citizens and businesses act in accordance with the law.

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Is this just an EU obligation?

No. Under the law of state responsibility, all third states such as the United States and EU member states have a duty to ensure that they do not aid or assist the occupation or give legal effect to the occupying power’s unlawful acts.

The United States, for example, has implemented its own quiet form of differentiation for the past few decades. On a number of occasions it has restricted the territorial scope of its agreements with Israel to within the Green Line, including in areas relating to free trade, loan guarantees, and R&D cooperation. In January 2016, US Customs also issued a reminder to American importers that goods produced in the West Bank must be labelled as such, and not as products of Israel, according to a 1995 regulation.

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Do businesses have the same obligations?

Third States — like the EU member states — are under a legal obligation to ensure that their own citizens and businesses comply with domestic law in a manner that guarantees its full and effective implementation. To do so, states need to issue guidance to national regulatory authorities. This includes the adoption of informed compliance measures to inform domestic subjects of the liabilities they may incur in domestic law if they engage in business that entails contracting, trading, or investing with settlement entities.

A 2013 Fact Finding Mission Commissioned by the UN Human Rights Council called on private companies to “assess the human rights impact of their activities and take all necessary steps – including by terminating their business interests in the settlements – to ensure they are not adversely impacting the human rights of the Palestinian People in conformity with international law as well as the Guiding Principles on Business and Human Rights.”

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Isn’t differentiation just shorthand for sanctions or “BDS lite”?

Differentiation should not be considered as a politically coercive action (such as sanctions or other punitive measures) but rather as the correct implementation of EU and member state legislation. The genesis, goals, and policies that flow from differentiation contrast starkly with those of BDS. BDS seeks to isolate Israel diplomatically, economically, and culturally. This is the complete opposite of differentiation which offers a way of insulating deepening bilateral relations with Israel from the internationally unlawful act of annexation.

BDS is an approach that European leaders have rejected to date, but this has not prevented Israeli leaders from misrepresenting differentiation as a boycott of Israel in order to discourage further action against its settlements and discredit EU policy. Comparing European measures with historical imagery of Jewish suffering to accuse the EU of anti-Semitism is, similarly, designed to halt differentiation in its tracks.

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Are the Palestinian territories occupied or disputed?

Since the earliest days of Israel’s occupation of Palestinian territory in 1967, Israel has sought to avoid recognition of the applicability of the Fourth Geneva Convention to the OPTs so as to allow for the annexation of East Jerusalem and leave open all options regarding future borders. Israel argues that the Palestinian territories are disputed rather than occupied, and that, as such, the laws of occupation do not fully apply. It has sought to de facto annex swathes of West Bank territory through the extension of Israeli domestic legal and executive jurisdiction to occupied territory. It has also sought to portray Palestinian self-determination as no different from the myriad of other independence movements around in the world. At the same time, it has advanced an international campaign to legitimise its hold over the Palestinian territory it has annexed.

But the heavy weight of international opinion leaves little doubt as to the status of Palestinian territory. There exists an international consensus and accumulative body of legal opinion recognising the “occupied” status of Palestinian territories and the unlawful nature of many Israeli practices and policies vis-a-vis the occupied Palestinian territories. With the exception of Israel, no government in the world supports Israeli territorial claims to the Palestinian territories, nor does the United Nations Security Council, the US, EU, or the International Court of Justice. In addition, the state of Palestine has been bilaterally recognised by 136 states in addition to being a member of international institutions and party to a host of international treaties.

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What does international law say about Israel’s responsibilities as an occupying power?

As an internationally recognised occupying power Israel is bound by certain legal obligations that govern its actions in the Occupied Palestinian Territories (Gaza, East Jerusalem, and the West Bank). The same obligations also apply to the occupied Syrian Golan Heights. These stipulate clear provisions for the welfare of the local population in the occupied territory, including prohibiting the occupier from transferring parts of its own civilian population into that territory and from deriving any economic or financial benefit from the occupied territories.

In addition, United Nations Security Council Resolution 465 (1980) calls upon all states not to provide Israel with any assistance to be used specifically in connection with settlements in the occupied territories. It is worth noting that, according to the Office of the UN High Commissioner of Human Rights, Israeli settlements are understood “to encompass all physical and non-physical structures and processes that constitute, enable and support the establishment, expansion and maintenance of Israeli residential communities beyond the Green Line of 1949 in the Occupied Palestinian Territory.” The structural elements that underpin the existence and maintenance of settlements include the extension of Israeli domestic legal jurisdiction into occupied territory in contravention of international law.

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But don’t the Oslo Accords give Israel administrative jurisdiction over Area C (where the settlement blocks are located) until a peace agreement is reached?

Under international law, there is no difference between Areas A, B, and C of the West Bank, nor between the West Bank and East Jerusalem – all are considered to be occupied Palestinian land. The Oslo Accords do not abrogate international humanitarian law, which affirms in Articles 7, 8 and 47 of the 1949 Fourth Geneva Convention that protected persons cannot waive their rights and the occupying power cannot alter the status of the territory, including by special agreement. Nor can the Oslo Accords absolve Israel of its international legal obligations as an occupying power. Moreover, the 1995 Oslo Accord was meant to be an interim agreement leading to a final peace agreement by 1999. It was not intended to establish prolonged Israeli control over Palestinian territory.

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Why focus on Israel? What about the Palestinians?

To be clear, there is much that can and should be done by the EU on the Palestinian track, starting with a more concerted effort to push for reconciliation and democratic revival – the non-resolution of which will complicate any future agreement with Israel and produce further instability. Tackling violence and accusations of incitement on both sides is also necessary and important.

But it should be remembered, that as on occupying power it is Israel that bears the main responsibility in the territories. Nor should cause and effect be confused. While in no way justifying these phenomena, it is Israeli practices in the Palestinian territories that feed the cycle of instability and violence – not the other way round. Israel’s policy of settlement expansion and fragmentation of Palestinian territory and the domestic dynamics driving these policies represent the greatest and most immediate threats to the two state solution. This view is shared by the Quartet (consisting of the UN, Russia, US, and EU) which recently emphasised its strong opposition to ongoing settlement activity, which is an obstacle to peace, and expressed its grave concern that the acceleration of settlement construction and expansion in Area C and East Jerusalem […] are steadily eroding the viability of the two state solution.”

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How does this help the peace process?

Because of dynamics on the ground the conditions do not exist for a meaningful relaunching of peace negotiations. If the EU is serious about preserving the territorial basis for a two-state solution (i.e., respect for the pre-1967 Green Line) then differentiation is the minimum it should do. Given the unprecedented amounts of European political and financial capital invested in the furtherance of a two state solution, the EU has a duty to ensure that its relations with Israel do not undermine its foreign policy objectives and legal order.

Within the context of the current political impasse and vanishing two-state solution the EU and its member states should recognise how politically counterproductive and legally harmful constraining the functioning of differentiation can be. They should appreciate the work that this legal tool can perform in support of EU policy positions. They should also understand the political good that results from repairing the deficiencies in its domestic legislation vis-à-vis Israel and the settlements.

In allowing its laws to function as intended to protect the EU legal order from the harmful effects of Israel’s actions, legal necessity can translate into normative power. Increased integration and access to Europe requires Israeli compliance with European regulations, policies and values. The history of differentiation measures shows that activating the EU’s legal machinery, and its resulting implications for Israeli authorities, has led to a debate within Israel in which the contradictions between maintaining the settlements and thickening (or simply continuing) relations with Europe emerge.

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Won’t differentiation hurt Palestinian jobs?

The argument that Israeli settlements represent an economic lifeline for the West Bank has been widely debunked, most recently in a UNCTAD report which found that the Palestinian economy would be at least twice as large without Israeli occupation. Israel’s continued occupation costs the Palestinian economy far more than can be recuperated through the provision of cheap Palestinian labour to Israeli settlement businesses and greater Palestinian access to Area C would lead to a 35 percent increase in jobs. As the April 2016 report to the Ad Hoc Liaison Committee by the Office of the UN Special Coordinator for the Middle East peace process highlighted, “severely limited Palestinian access to land and natural resources in Area C of the West Bank continues to constrain economic development and hinder private investment.”

Ultimately it is the Palestinians themselves that are best placed to assess which actions are harmful to their interests. When it comes to excluding Israeli settlements from agreements with Israel, EU actions actually fall far short of the full boycott of settlements called for by Palestinian civil society, trade unions and PLO leadership. The clear Palestinian consensus is therefore for the EU to do more, not less, to curb settlement activity.

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Why doesn’t the EU adopt the same differentiation measures in other conflicts?

There is no denying that the EU continues to dedicate considerable time, money, and energy in dealing with the conflict, reflecting both its historical role and deep commitment to Israel. There is also no denying that Israel has often been treated differently from other states. But far from being singled out for punishment, Israel has consistently been treated with a degree of exceptionalism that has benefitted and shielded it from the full force of international accountability.

One of the few other territorial disputes that bears a similarity to Israel’s occupation of Palestinian territory is Russia’s annexation of Crimea in 2014. In the case of Crimea, the EU has actually been much more forceful in upholding its duty of non-recognition of Russian sovereignty over the territory, in large part out of a desire to send a clear political message to Moscow. The measures deployed by the EU and its member states in this instance significantly raised the bar when it comes to disincentivising annexation and occupation.

The trend should be towards enhanced compliance with legal imperatives, not less. The EU can do more to develop its positions on the scope and effects of internationally unlawful acts by third countries and authorities involved in territorial disputes. Given the accumulation of EU legal practices towards various situations of annexation and occupation, more attention is needed in exploring how to achieve the full and effective implementation of EU law through a principled rules-based approach across the ensemble of the EU’s relations.

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What about Western Sahara?

There exist a number of significant differences between Western Sahara and the Palestinian territories. For one, there is a lack of consensus in Europe on whether the territory of Western Sahara is indeed “occupied” by Morocco or whether, as non-sovereign administrator of the non-self-governing territory, it is otherwise obligated to protect the people’s right to self-determination. Notwithstanding this, all states and international organisations, including the ICJ, maintain that Morocco has no sovereign claims to the territory. This has led to uncertainty in state positions on the scope of Morocco’s wrongdoing and the precise legal consequences of its activities under international and EU law.

Given that the EU has never clarified whether or not it deems the law of occupation to be applicable to Western Sahara, the bar that it has to meet in order to comply with its own laws is lower than in the case of the occupied Palestinian territories. The EU is however still fully beholden to its duty of non-recognition of Moroccan sovereignty over the territory and its obligations to uphold the rights of the Sahrawi people. That includes an obligation to ensure that any agreement entered into with Morocco including the Western Sahara does not violate the rights of its inhabitants and their peoples’ rights to future self-determination in the territory. It is against this yardstick that the EU should measure its dealings with Morocco in order to ensure that it is not giving legal effect to Moroccan claims to sovereignty over the territory.

Absent too in the Western Sahara context is the issue of overlapping jurisdictions. This has been a major driver of EU action vis-à-vis Israeli settlements given the mutually exclusive territorial scopes that resulted from 1997 Interim Association Agreement on trade and cooperation with the PLO and the 1995 Association Agreement with Israel. The result being that EU-Israel agreements do not apply to the OPTs which are instead covered by EU-PLO agreements. This legal driver has not arisen in the context of Morocco and Western Sahara given that the EU has not entered into any agreements Polisario nor recognised the Sahrawi Arab Democratic Republic (SADR).

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The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of their individual authors.


Senior Policy Fellow

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