Israel bows to EU trade pressure over Palestine

Date: 23/07/1998

By Mark Turner

JERUSALEM is considering easing restrictions on Palestinian businesses in a bid to defuse its festering trade row with the EU, according to Israeli officials.

They say Premier Benjamin Netanyahu will soon discuss "mutually acceptable solutions" to the problems raised in a European Commission report which criticised Israel for impeding Palestinian development.

"We hope we will come up with something constructive which will better the conditions for Palestinians," Eytan Bentsur, director-general and acting head of Israel's foreign ministry, told European Voice.

In return, suggest Israeli officials, Jerusalem would expect its settlers in occupied territories to be allowed tariff-free access to EU markets in the same way as goods from Israel itself.

This new initiative follows recent Commission warnings that Jerusalem was breaching the terms of its EU trade accord by exporting non-Israeli goods under a 'made in Israel' label. These included products from the Golan Heights, the Palestinian territories and East Jerusalem.

The warning initially provoked outrage from Netanyahu, but insiders say Israeli officials have since proved flexible and open to constructive talks.

If Jerusalem makes real economic changes in response to European trade pressure, it would mark a major victory for the much maligned EU foreign policy - and for Mediterranean Commissioner Manuel Marín, who has called for Europe to play a greater role in the Middle East peace process.

But Commission officials say that they are unlikely to make any concessions before Israel fulfils its promises. "If the Israelis were to lift restrictions, we would be very satisfied," said one. "But there is a lack of credibility. Israel has a record of procrastination, or not doing what it promises to do."

Israeli officials say, however, that it could be difficult for EU governments to reject an agreement which was ostensibly good for Palestinians. They add that Austria's less abrasive style of management could make it easier to broker a deal, and point out that EU special envoy to the Middle East Miguel Moratinos is calling on the Union to show flexibility. But Commission officials insist the matter is now out of the hands of governments, which endorsed the institution's tough stance at a meeting of foreign ministers late last month.

"The Israelis are mistaken if they think they can deal with member states directly," said one.

The Commission is studying a new Israeli paper which aims to dispel some 'misconceptions' about the irregular use of the 'made in Israel' label. It claims that Palestinian flowers were exported with Israeli documents simply because the region's merchants had not provided the necessary Palestinian papers in 1996.

The Commission is withholding judgement but warns that if it is not satisfied, it will take concrete steps in September. In the meantime, Israel says it wants to prevent the dispute escalating. "We would like to depoliticise the whole issue," said Bentsur.