UK Sanctions on Settlements Could Ripple Through Israeli Exports

Israeli exporters are facing significant pressure following the UK's announcement of economic sanctions targeting settlements in the West Bank, with 11 other European nations signaling their intent to join the measures. Roey Fischer, director of foreign trade at Israel's Economy Ministry, stated that the direct export volume from these areas, which include the West Bank, East Jerusalem, and the Golan Heights, to the UK and the joining countries is relatively small, estimated at around $34 million annually compared to Israel's total exports of $44 billion. A significant portion of this amount, approximately $45 million, consists of fresh agricultural produce, particularly dates, which are crucial for the growers.

The Economy Ministry has developed a contingency plan, including direct outreach to affected exporters to help them find alternative markets. They are also offering grants of up to 200,000 shekels to assist in establishing new market access. Fischer expressed concern that the sanctions, coupled with a UK minister's statement about ethnic cleansing in these territories, could create a 'chilling effect' on all Israeli exports, not just those originating from the settlements. He is traveling to London to engage with 33 Israeli corporations at the London Stock Exchange, aiming to demonstrate the mutual benefits of ongoing business ties and to separate politics from commerce.

Abraham Novogrodsky, president of the Manufacturers Association of Israel, urged a proportional view of the situation, acknowledging that while direct trade damage with the UK might be limited, the cumulative impact from multiple countries joining the sanctions could be substantial. He noted that companies operating in the settlements are primarily in sectors like electronic components, food, and plastics. Novogrodsky also highlighted the potential negative impact on approximately 18,000 Palestinian workers employed in Israeli factories in the West Bank.

Novogrodsky called for diplomatic action to prevent the expansion of these measures and for governmental support for Israeli companies facing foreign regulators. He suggested diversifying export markets, strengthening ties with the US, India, and Asia, and investing in Israeli technological innovation as a countermeasure. He warned that the precedent set by these sanctions is dangerous and could lead to the delegitimization of businesses in the West Bank, emphasizing that advanced technology is harder to boycott than specific products.