Differentiation Tracker

Newly released mapping project from ECFR explores Europe’s “differentiation” policy with Israel: Italy lags behind EU

A new project from the European Council on Foreign Relations (ECFR) and policy fellow Hugh Lovatt provides a detailed look at Europe’s relations with Israel and the extent to which these comply with EU’s policy of differentiation and with UNSCR 2334.

As this project – the Differentiation Tracker – shows, despite noticeable progress in advancing differentiation measures at the level of EU relations, member state practices have often lagged behind. As a result, there is a clear risk that European states are directly supporting the maintenance and growth of Israeli settlements, their residents, and businesses – in contravention of European policy positions and international law.  

The absence of a differentiation clause risks compromising bilateral agreements with Israel, exposing European states to the internationally unlawful situation the settlement project has created in the West Bank and East Jerusalem. ECFR’s Policy Fellow Hugh Lovatt explains the significance:

“Amid the failure of international efforts to curtail Israel’s policy of settlement and annexation of occupied territory, a fuller and more diligent implementation of legally necessitated differentiation measures remains one of the few effective means of defending the territorial footprint for a two state solution.

In order to comply with UNSCR 2334, bilateral agreement signed with Israel should contain a ‘differentiation’ clause defining the territorial scope of an agreement’s application to within Israel’s pre-June 1967 borders (the ‘Green Line’). Correcting pre-existing agreements that have fallen short of such a requirement is undoubtedly more laborious but just as important.”

About ECFR’s Differentiation Tracker

ECFR’s Differentiation Tracker analyses over 260 bilateral agreements with Israel signed by the EU, the EU’s 28 member states, and Norway. These cover over 35 subjects, including: agriculture, cultural exchanges, data protection, economic cooperation, financial investments, research and development projects, social security and taxation agreements, and tourism. The searchable database provides information on relevant domestic legislation, EU regulations, statements by European officials and governments, as well as business and human rights news relating to Israeli settlements.

The project traces the efforts undertaken by European governments since the beginning of the occupation to exclude Israeli settlements, which they consider illegal under international law. Despite these efforts, ECFR’s Tracker reveals that Israeli settlements continue to benefit from a wide-range of bilateral relations with the EU and European states.  

Main findings for Italy

• By differentiating between Israel and the settlements, the EU has acted as a trailblazer, setting down important markers for others to follow. Since December 2013, the EU has insisted on the inclusion of a differentiation clause within all new agreements with Israel. Yet the EU’s job is by no means finished and work remains to consistently apply its differentiation principle to all areas of its relations with Israel.
• Despite Italy’s rhetorical support for the two state solution, and international law, it continues to lag behind the EU.
• There is a risk that the bilateral agreements signed by Italy with Israel could directly benefit Israeli settlements, their residents, and companies. Italy’s 1995 agreement on the avoidance of double taxation, and 2015 social security agreement, do not differentiate between Israel and the settlements. This raises question as to whether companies and Italian nationals located in the settlements benefit from these agreements. Other potentially problematic Italian agreements without a differentiation clause includes areas relating to law enforcement, energy, film co-production and cultural cooperation.
• Of the 268 European agreements reviewed by ECFR, only 10 were signed with a strong territorial clause explicitly excluding the occupied territories. 158 were signed without any territorial definition defining their scope of implementation. A further 65 agreements contain either vague or ambiguous clauses, including definitions of Israeli territory according to ‘the laws of the State of Israel’ or ‘the territory where it levies taxation’ – descriptions that could justify the inclusion of Israeli settlements. (The remaining 35 agreements were inaccessible). 

Main Findings

• By differentiating between Israel and the settlements, the EU has acted as a trailblazer, setting down important markers for others to follow. Since December 2013, the EU has insisted on the inclusion of a differentiation clause within all new agreements with Israel. Yet the EU’s job is by no means finished and work remains to consistently apply its differentiation principle to all areas of its relations with Israel, including trade with settlements, police cooperation, cross-border data transfers, and marketing standards for fruit and vegetables.
   
• At the level of EU member states, Denmark has become a leader in differentiating between Israel and the settlements within its bilateral relations in line with UNSCR 2334.
   
• A number of European states have undertaken their own differentiation measures. One of the oldest examples can be found in the UK’s 1957 social security agreement – pre-dating the occupation – which limits its applicability to the “territory administered by the Government of Israel on the 19th of July, 1956”. The British government has also pledged to exclude the settlements in full from its new post-Brexit trade agreement. Denmark, Germany, the Netherlands too have also taken measures to exclude settlements from some aspects of their bilateral relations relating to social security, and research and development projects. 
   
• Although harder to track, ECFR research indicates that in a few instances negotiations over new agreements (including new social security provisions) may have stalled over member state insistence, and Israeli refusal, on the inclusion of a differentiation clause. In 2017, the Israeli government also backed out of the EU’s ‘Creative Europe’ programme over its exclusion of Israeli settlements, although it signed onto other such deals before and after.
   
• A majority of EU member states have published advisories warning their businesses of the legal, financial and reputational consequences they could expose themselves to by dealing with Israeli settlement entities.
   
• Despite positive examples of differentiation measures, a majority of European bilateral agreements with Israel potentially benefit its settlements, their companies, and residents – including with regard to social security, taxation provisions, and the burgeoning cooperation in research and development. National governments have also done very little to enforce the European Commission labelling guidelines for settlement products.
   
• Of the 268 European agreements reviewed by ECFR, at least 158 were signed without any territorial definition defining their scope of implementation. A further 65 agreements contain either vague or ambiguous clauses, including definitions of Israeli territory according to ‘the laws of the State of Israel’ or ‘the territory where it levies taxation’ – descriptions that could justify the inclusion of Israeli settlements. Some of the most common agreements relate to social security, taxation, research and development, and financial investments.