18.12.2014 analysis by Avishay Ben Sasson-Gordis
Putin and Netanyahu in Moscow, by: GPO
Putin and Netanyahu in Moscow, by: GPO    

Updated: Alliance in crisis

Israel's Standing in the World and the Question of Isolation Update: December 2014
This paper follows up Molad’s December 2013 report on Israel’s international standing, which confronted hyperbole on this issue with empirical data and objective measures.[1] Key events that took place over the past year, such as international boycotts, state-backed sanctions, and changes in Israel-US relations, are tied together to outline a general trend.
A careful examination of recent developments reveals a significant increase in the trend identified by Molad a year ago. Apocalyptic scenarios of Israel’s imminent isolation are still exaggerated and unfounded. In reality, many countries maintain economic, cultural and diplomatic ties with Israel and are interested in furthering those associations.
Also, contrary to popular perception and the daily messages issued by the prime minister’s office, Israel does not suffer from international delegitimization. Boycotting the entire state of Israel – as opposed to boycotting the West Bank only – is a relatively marginal phenomenon that in 2014, too, did not gain mass popularity. This is because almost all political actors who come into contact with Israel unequivocally accept its right to exist and do not doubt the justification for that.
In fact, virtually all of the instances in which Israel's foreign relations are less than optimal are directly linked to Israel's presence in the Occupied Territories. The only boycotts and sanctions that had any effect at all in 2014 were explicitly aimed at the West Bank only.
The friction between Netanyahu’s government and various Western governments stems primarily from a longstanding, unusually broad international consensus spanning Beijing, Moscow and Washington, rejecting Israeli policies in the Occupied Territories. An equally vigorous international consensus recognizes Israel’s right to exist within 1967 borders, and there is no reasonable cause to expect that to change in the foreseeable future.
Israel’s geo-political position and its export-driven economy render a strong system of international ties crucial to the country. Yet, over the past five years, Netanyahu’s foreign policy has consistently harmed this national interest: Israel has markedly distanced itself from strategic allies in the West, while negotiations with the Palestinians stagnate. The frequent crises in US-Israel relations are especially troubling, given the vital role these ties play in Israel’s existence.

Key developments in 2014
Over the past year, international pressure on Israel has taken two forms: restriction of Israeli diplomatic and economic activity, and heightened responsiveness to Palestinian moves in the UN.
  • November 2013: A diplomatic crisis breaks out over the government’s demand to include Israeli academic and businesses from the West Bank in Horizon 2020, the EU’s scientific research program. Funding of Israeli universities and hi-tech companies amounting to billions of shekels is almost stopped, as Economy Minister Naftali Bennett insists on including the settlements in the European Fund’s grant program – contrary to the EU’s longstanding official position.2
  • December 2013: The UK government officially declares that it does not recommend investing in businesses in the Occupied Territories.3
  • December 2013: The Romanian government allows Israel to import laborers, mostly for construction, but only in Israel proper (within the Green Line).4
  • December 2013: Holland’s largest water company stops working with Israel’s national water company, Mekorot.5
  • During 2013: Income from Israeli agriculture in the Jordan Valley drops by more than 14% - a loss of almost NIS 100 million. Food chains, mostly in the UK and Scandinavia, refrain from purchasing peppers, grapes, dates and herbs grown in the area. According to the head of the agriculture committee in the Jordan Valley Regional Council, sales of peppers and grapes to Western Europe dropped by about 50% in a single year.6
  • January 2014: GFPG, Norway’s national pension fund, renews its 2010 resolution to boycott Africa Israel Investments and its subsidiary, Danya Cebus, due to their activity in the Occupied Territories.7 The fund, one of Israel’s largest foreign investors, holds billions of shekels’ worth in Israeli securities. In October 2014, Africa Israel announces cessation of activity in the West Bank.8
  • January 2014: The world’s largest security company, G4S, announces the termination of all contracts with the Israeli government relating to settlement security, as of next year.9 The British government opens an investigation into the company’s work, on the suspicion that it provides security services and technology to the settlements, in contravention of OECD guidelines. The Conservative government publicly opposes Israel’s policy in the Occupied Territories and urges corporations to refrain from investing in the Occupied Territories.10
  • January 2014: The largest pension management company in the NetherlandsPGGM, divests from the five largest Israeli banks (Bank Hapoalim, Bank Leumi, First International Bank of Israel, Israel Discount Bank, and Mizrahi-Tefahot) because of their involvement in the “financing of settlements in occupied Palestinian territory.” Financial newspapers in Holland report that other large firms intend to withdraw investments from Israeli financial institutions tied to settlements.12
  • February 2014: Luxembourg's government pension fund, DFC, divests from Israel's five largest banks due to their involvement in "illegal settlements in occupied territory" and lists several companies, including "Elbit" and "Africa Israel", in which it will not invest due to activity beyond the Green Line.13
  • February 2014: Denmark’s largest bank, Danske Bank, includes Israeli Bank HaPoalim, which is active in the West Bank, on a list of companies that are ethically questionable for investment.14
  • February 2014: At least two foreign infrastructure companies — Dutch company Royal Boskalis Westminister and Italian company Condote de Agua — withdraw from bidding process to build private seaports in Haifa and Ashdod due to concern over negative political consequences of business activity in Israel.15
  • February 2014: The largest bank in Scandinavia, Nordea, demands clarifications from Israeli banks Leumi and Mizrahi-Tefahot regarding the extent of their activity in settlements, citing concern over “violation of international norms”.16
  • May 2014: Germany retracts discount of several hundred million dollars given to Israel for purchasing missile boats to protect the gas rigs off Israel’s shore.17
  • June 2014: One year after announcing it would no longer operate in the Occupied Territories, security giant G4S, which employs 8,000 in Israel, declares it will not renew contracts with Israeli prisons.18
  • August 2014: Scottish government issues official document “strongly discouraging” public sector trade with companies active in settlements.19
  • September 2014: EU tightens restrictions on import of Israeli produce from the Occupied Territories and bans import of organic produce from there. Israel requests, and is given, a 30-day extension to establish a mechanism separating live produce from within Israel proper and live produce from the OPT; import of the latter into the EU will be completely banned.20
  • October 2014: UK parliament votes in favor of motion calling upon government to recognize Palestinian state within 1967 borders.21
  • October 2014: Upper House of Irish parliaments votes in favor of motion calling upon government to recognize Palestinian state within 1967 borders.22
  • October 2014: EU formulates “red lines” concerning Israeli settlement construction as last warning before taking measures against it. Planned measures include reexamination of the 1995 free trade agreement with Israel and personal sanctions against settlers convicted of violence.23
  • October 2014: Croatian Foreign Minister announces that government likely to recognize Palestinian state in near future.24
  • October 2014: Spanish congress to vote on motion calling for recognition of Palestinian state.25
  • October 2014: SodaStream company relocates plant from Mishor Adumim in West Bank to Israel proper.26
  • October 2014: Swedish government officially recognizes independent Palestinian state.27
  • January 2014: The German government conditions transfer of grants to Israeli hi-tech companies and academic institutions on a territorial clause to guarantee that monies will not be invested in companies with activities beyond the Green Line. Included in this are NIS 12 million designated for research projects, and a much larger sum for the private sector.11
Given these developments on the international front, one would expect Israel to invest in reinforcing ties with the West. It was these relations, the cornerstone of Israeli foreign policy from day one, that enabled Israel to flourish despite its geopolitical isolation in the Middle East.
In practice, the opposite occurred: Netanyahu’s government has done all that is within its power to alienate Israel’s closest allies. Major junctures in US-Israeli relations in the last year include:

November 2013: Israel is the only Western government to condemn the interim agreement with Iran signed by the P-5+1. Netanyahu harshly criticizes the deal, defined by Obama as a major US policy goal.28 In the following months, Israel promotes a Congress bill to impose sanctions on Iran, aided by its supporters in Washington.29 In a highly unusual move, Obama threatens to veto the bill as it would derail nuclear talks. The presidential step is so blatant that even AIPAC, the powerful pro-Israel lobby, is forced in February 2014 to retreat on the bill, contrary to Netanyahu’s position.

December 2013: Ron Dermer, political consultant and top advisor to Netanyahu, is appointed Israeli ambassador to the US. Give his explicit affiliation with the Republican Party, this is viewed by the Obama administration as an act of defiance.30 Since taking up the position, he has been consistently shunned by US National Security Advisor Susan Rice.31

January 2014: Israeli Defense Minister Moshe Ya’alon calls Kerry “obsessive and messianic”, creating an unprecedented diplomatic incident.32 Two months later, in March, Ya’alon accuses the Obama administration of weakness in its response to Russia’s invasion of the Ukraine.33 In both cases, Ya’alon was forced to apologize for his statements. Last month (October), US administration sources leaked that, unlike other Israeli ministers including the previous defense minister, Ya’alon was denied meetings with White House and State Department officials on a recent visit to the US.34

March 2014: On orders from Jerusalem, the Israeli ambassador to the UN does not attend a US-initiated vote to condemn Russia’s annexation of Crimea. Almost all Western states support the resolution, with abstentions including Iran and neighbors of Russia. Israeli officials continue to issue ambivalent, softer statements on Russia in the following months, incurring US wrath.35

April 2014: Israeli-Palestinian talks collapse, as the government announces more construction in West Bank and Israel refuses to carry out the fourth round of prisoner releases.36

July-August 2014: During Operation Protective Edge in Gaza, Netanyahu clashes with US officials over the extent of harm caused to uninvolved civilians. Israeli government officials actively attempt to exclude US Secretary of State from ceasefire talks. Consequently, at the height of the operation, the US halts the transfer of Hellfire missiles and ignores requests made by Israel’s defense procurement delegation in Washington for several days.37

September 2014: US criticizes Israel’s policy of construction in the West Bank. In response, Netanyahu accuses Obama administration of practising un-American values. The White House responds sharply, noting that "it is American values that have led us to fund and build an Iron Dome system that protected the lives of countless innocent Israeli citizens."38

October 2014: Economy Minister Naftali Bennett and Communications Minister Gilad Erdan slam US Secretary of State Kerry, claiming that he accused Israel of responsibility for young Muslims joining the Islamic State. Kerry had originally said: “There wasn’t a leader I met with in the region who didn’t raise with me spontaneously the need to try to get peace between Israel and the Palestinians, because it was a cause of recruitment and of street anger […].” In response, the State Department accused the two ministers of distorting Kerry’s words “for their political purposes”.39


The Eastern Strategy

In the last decade, and especially since Netanyahu regained power in 2009, Israel has simultaneously overestimated its power and underestimated the potential damage of frayed relations with the US and Europe. As every new crisis arises between Israel and its allies – a matter of increasing frequency – leaders try to divert public attention from the latest skirmish and laud promising new targets such as India, Eastern Europe, South America and China.
Economy Minister Bennett described this policy explicitly in a letter to his supporters in October 2013: “Something bad is happening in Europe…  The State of Israel must understand that this is a slow but stable trend, and we have to prepare accordingly… We are working very aggressively to expand trade east”.40 However, Bennett’s “Eastern Strategy” suffered blow after blow this year, as China and Iran tightened their security and economic ties. Just last month, the Chinese defense minister declared that his country wants closer military ties with Iran.41
While neglecting ties with the West, Netanyahu’s government decided to strengthen relations with Russia.42 This policy, too, has been remarkably ineffective. Russia built the Iranian nuclear reactor at Bushehr and is preparing to build more reactors in the Islamic republic. It also intends to sign a trade agreement with Tehran, funneling billions of dollars into the Iranian treasury. At the same time, Russia is generously supporting the Assad regime and providing it with advanced weaponry that regularly ends up in Hezbollah hands.
Importantly, Israel is not at all prepared for relinquishing its abiding alliance with the West, with the implications that would bear for diplomacy, security, economy and culture. Strengthening ties with non-Western countries is certainly desirable, but only as a “second tier” upon existing alliances with the US and Europe.
The fallacy of Netanyahu’s and Bennett’s hopes for China and Russia is especially evident where the Israeli-Palestinian conflict is concerned. Russia has already announced that it will back a Palestinian UN Security Council resolution setting a deadline for Israeli withdrawal from the Occupied Territories.43 China has called for the establishment of a Palestinian state within 1967 borders, with East Jerusalem as its capital. India, also mentioned by Bennett as an important diplomatic target, has declared its support for a Palestinian state with East Jerusalem as its capital.
From East to West, therefore, there is a clear consensus that the existence of Israel is justified, yet its policy in the West Bank, including settlement construction, is not.44
In their foreign policy, Netanyahu and Lieberman are blatantly overlooking the growing rift between Israel and its strategic allies. Not only are the prime minister and minister of foreign affairs not taking sufficient steps to bridge this gap, but the actions of their government are clearly expanding it.
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