News and analysis from Palestine, Israel and beyond.

EU Labeling: Carrots and Sticks Work

Last November, when the European Union announced the implementation of long-standing regulations regarding the labeling of products from Israeli settlements, the government of Prime Minister Benjamin Netanyahu played one of its biggest cards, suspending contact with the EU regarding the Israeli-Palestinian conflict. After nearly three months, which saw accusations of European anti-Semitism and Congressional condemnation of the European decision, Netanyahu backed down. The EU held to its position and refused to grant Israel any compensation for it. The episode reveals the enormous amount of untapped potential for altering the status quo with regard to Israel’s occupation of the West Bank and its siege on the Gaza Strip.

The EU decision to label certain products as coming from Israeli settlements was both the long-delayed implementation of existing policy and a show of impatience with the Netanyahu government’s intransigence on the peace process. It was also a counter to the attempts by Netanyahu and his supporters, particularly in the United States, to blur the line between Israel within its internationally recognized borders and the settlements in areas captured in 1967.

EU Foreign Affairs chief Frederica Mogherini and Israeli PM Benjamin Netanyahu, May 20, 2015. (Source: flickr user eeas)

EU Foreign Affairs chief Frederica Mogherini and Israeli PM Benjamin Netanyahu, May 20, 2015. (Source: flickr/eeas)

That’s why Netanyahu reacted so harshly to a seemingly minor decision, one which would have only a negligible impact on the settlements’ economy, let alone all of Israel’s. Netanyahu went after the EU labeling regulations with every tool he could realistically employ. Israel could, of course, take measures to restrict trade with Europe or even break off all diplomatic relations. But since the EU is Israel’s top trading partner, has a great many friendly trade deals with Israel, and accounts for some 27% of Israel’s export business, that would be unwise to say the least.

Netanyahu did not just climb down from his position, he unconditionally surrendered. In a last-ditch effort, he tried to get EU Foreign Affairs chief Federica Mogherini to state that there would be no further EU measures in this vein, which Mogherini flatly refused to do. Netanyahu was left with the choice of a serious erosion in EU-Israel ties or accepting the labeling measure and moving on. He chose the latter.

The labeling controversy is a reminder that Israel needs not only the EU, but the United States, a lot more than either entity needs Israel. It lights a path out of the morass in which the Israeli-Palestinian conflict is now stuck, setting the stage for more productive negotiations in the future.

Speaking to the Jerusalem Post on February 21, the United Nations Special Envoy to the Middle East, Nikolay Mlednov said, “If I were to say to you today, let’s get the (Palestinian) president (Mahmoud Abbas) and prime minister (Netanyahu) in the same room tomorrow, that would be daydreaming. Our role is to actually figure out how we can create the conditions under which such a process can resume in a meaningful manner.”

Like many other diplomats and observers, Mlednov is saying that conditions are not ripe for talks. But he also rightly notes that there is a task before the world’s diplomats beyond simply waiting for the respective leaderships of Israel and the Palestinian Authority to declare themselves ready.

Calling regional conferences, as some have suggested, is a fine idea, but only if there will be more than empty statements emerging from them. What must emerge from such conferences is a determination by the Middle East Quartet and each of its members (the United States, United Nations, Russian Federation and European Union) as well as the Arab states involved to create the conditions that Mlednov speaks of.

In order to create those conditions, they must be conceived with certain basic understandings. One is that, while it is true that ultimately the Israelis and Palestinians will have to negotiate any agreements themselves, this cannot occur in a vacuum. Israel is a regional superpower, the most stable state in the Middle East and the military giant in the region. The Palestinians are a stateless people who have lived under occupation for nearly half a century with little leverage in negotiations. This imbalance is a key reason why talks have not been productive in the past two decades.

Another issue is that negotiations have dragged on so long and yielded so little that both publics, but especially the Palestinians, have lost faith in the process. Only pressure from the outside, particularly from other Arab states, can give Palestinian President Mahmoud Abbas, or any other Palestinian leader, the cover he needs to reenter talks.

The conditions that need to be created are ones which establish incentives for progress toward a resolution and consequences for intransigence or failure to meet obligations. It also needs to be clear that the “carrots” are granted after the parties have achieved progress, not before.

There also needs to be an immediate change in the status quo in order for both Israelis and Palestinians to buy in to renewed talks. At this point, two decades of frustration and recrimination have soured too many people on both sides on further discussion. This can be addressed with two simultaneous steps.

First, an international declaration stating that the West Bank and Gaza Strip are, according to international law, held in belligerent occupation, meaning Israel is responsible for the security of West Bank Palestinians; it is also responsible for ensuring that the border crossings of the Gaza Strip allow for legitimate import and export of goods and materials sufficient to sustain the needs of the people there; and that the settlements are, as a result of that declaration, clearly illegal.

Second, an international committee charged with monitoring and reporting violations by any official spokesperson or media outlet, Israeli or Palestinian, would be created. Any incitement (which would need to be defined by the committee in very specific language) would be reported publicly, and repeated violations would trigger specific consequences.

Consequences for the Palestinians are clear enough: the loss of some amount of international aid. If this were done today, it would threaten to topple the Palestinian Authority. But if Israel is charged with fulfilling its obligations as an occupying power under international law, it would impact the PA, but would not cause the West Bank to descend into chaos.

For Israel, consequences are more politically complicated. Netanyahu may have overreached with the EU, but Israel is still a valued partner to Europe and the United States for many reasons, and even with its lurch to the right in recent years, Israel still has a great deal of popular support. Still, there are also so many facets to the relationships between Israel and both the EU and US that there are options for action.

The United States, for example, has, on several occasions, withheld loan guarantees from Israel.  While those guarantees only enable Israel to borrow money at a considerably lower interest rate, it was enough to force Israel to do as the United States insisted for both George H.W. Bush in 1990 and his son over a decade later. Other options include temporary suspension of arms shipments, altering of trade deals, and action or inaction in international fora, such as the United Nations Security Council or even the International Criminal Court.

Incentives are also easy to imagine. For the Palestinians, these include eventual statehood, independence, increased overseas trade and participation in international bodies. For Israel, opening up the Arab markets and the ability to work with Arab states to address regional concerns, the de-fanging of the international opprobrium against it that is growing today, and involvement in regional security measures.

The specifics are less important than the sheer political will to enact consequences. Reluctance to apply significant pressure to the Palestinians has been rare, but Israeli actions which displease its international benefactors have generally been met with polite statements of disapproval.

No matter how well-crafted a peace process may be, it depends on the international community being willing to stand firm on both the carrots and the sticks, and to apply the standards evenly to both sides. Only by doing so can the mistrust, anger, and frustration of both sides, as well as the imbalance of power between Israel and the Palestinians, be countered.

The experience of the EU labeling fight shows that, when the determination is there, it can be done.