Europe's Fight Over Israeli Settlement Products Comes to Washington

U.S. President Barack Obama meets with Israeli Prime Minister Benjamin Netanyahu in the Oval Office of the White House in Washington on November 9. Kevin Lamarque/Reuters

Ever since March, when Israeli Prime Minister Benjamin Netanyahu abandoned his commitment to a Palestinian state, President Barack Obama effectively put the Israeli-Palestinian conflict aside and moved on to other diplomatic challenges, believing there was little more he could accomplish to resolve one of the Middle East's longest-running feuds.

Yet the White House is now focusing on the conflict once again, as the thorny issue of Israeli settlements has complicated U.S. efforts to reach a free trade agreement with Europe, one of Obama's top priorities before the end of his presidency.

It turns out that Congress, encouraged by AIPAC, the influential pro-Israel lobby, has been conducting a quiet campaign over the past year in support of Israeli settlements. The group's effort has focused on inserting pro-settlement language into new trade legislation that effectively rewrites nearly five decades of official U.S. opposition to the settlements, which are widely seen obstacles to a final peace accord with the Palestinians.

In what supporters of the campaign have framed as a move to counter the Boycott, Divestment, Sanctions (BDS) movement in Europe against the Israeli occupation, the language redefines "Israel" to include all Jewish settlements and neighborhoods built in the occupied West Bank, East Jerusalem and the Golan Heights since Israel seized those territories in the 1967 Middle East war. The result: Under a new trade law that would affect the talks with Europe, U.S. political support for Israel would now include the settlements, requiring the administration to oppose any attempt to differentiate between the two. Another bill awaiting Obama's signature includes even more forceful pro-settlement language.

"Backers of this campaign clearly believe they have found a winning strategy, one that involves hijacking more and more elements of U.S. foreign policy and working to tie them, in law, to U.S. support for settlements," notes Lara Friedman, an expert on settlements at Americans for Peace Now, the U.S. branch of an Israeli group that opposes the occupation of the West Bank. Friedman's group is one of several pro-Israel U.S. organizations that argue the new trade measures would, for the first time, confer American recognition of Israeli sovereignty in the occupied territories.

The State Department regards the pro-settlement language in one of the laws—a trade promotion authority measure that Obama signed in June—to be worrisome enough to push back. In July, American officials said the U.S. will not enforce the provisions that call on the administration to combat BDS actions when it comes to Israeli settlements in occupied territory. "By conflating Israel and 'Israeli-controlled territories,'" State Department spokesman John Kirby said, "a provision of the Trade Promotion authority legislation runs counter to long-standing U.S. policy."

Kirby's statement won applause from government critics in Israel, who say Netanyahu is the éminence grise behind Congress's effort to erase the lines between Israel and the territories. The U.S. State Department "punched a big hole in Israel-led efforts to induce the Obama administration to regard boycotts of settlements as identical to boycott of Israel proper," wrote columnist Chemi Shalev in the left-wing Hebrew daily Haaretz. "The boycott of settlements, in effect, has now been officially stamped 'kosher' by the State Department."

Once the State Department signaled its intention to defy the pro-settlement provisions in the trade law, it was only a matter of time before the law itself came up for a practical test. That moment came in November when the European Union announced that imported agricultural goods and cosmetics produced in Jewish settlements must be labeled as such, instead of "Product of Israel."

The EU has characterized the move as a technical measure, meant to help consumers distinguish between products made inside Israel's internationally recognized borders and those produced in the settlements. For the EU, the settlements are illegal under Article 49 of the Fourth Geneva Convention, which prohibits an occupying power from transferring its citizens to the occupied territory.

Israel and its American supporters have blasted the move as discriminatory, noting the EU hasn't imposed the same labeling requirement on imports from Turkish-occupied northern Cyprus or Moroccan-occupied Western Sahara. "Europe's policy of 'differentiating' between pre- and post-1967 Israel can only be understood as a politically motivated campaign to force Israel to accept Europe's vision on Israeli-Palestinian final status issues," AIPAC said.

Meanwhile, pro-Israel lawmakers are demanding that the Obama administration intervene, using the pro-settlement language in the trade law. In a letter last month to Michael Froman, the top U.S. trade negotiator, a bipartisan group of lawmakers echoed AIPAC's arguments and adopted the lobby's use of the term "post-1967 Israel." Critics say the term deliberately blurs the distinction between Israel and the occupied territories as part of the effort to legitimize the settlements.

Once again, the State Department felt compelled to clarify long-standing U.S. policy. "We continue to oppose boycotts against Israel and any effort to delegitimize Israel," Edgar Vasquez, a State Department spokesman, said in November. But he reiterated that the U.S. does not recognize the occupied territories as part of Israel and does not see labeling the origin of the products in question as a boycott.

The combination of the EU labeling campaign and the administration's refusal to challenge it has sent some Israelis into an increasingly familiar defensive crouch. In a column published in Newsweek and other U.S. outlets, Michael Oren, a former Israeli ambassador to the U.S. described the EU's move as "a return to the darkest chapters of the continent's history" that recalled "the word Jude painted on Jewish stores by the Nazis." Though Oren didn't mention the U.S., his tirade strongly implied American culpability for its refusal to view the EU's actions as a boycott.

With anger and frustration building on both sides, the battle over the settlements has continued on Capitol Hill. Last week, Congress cleared a second trade bill that includes pro-settlement language far stronger than that of the previous measure. While the earlier law urges the administration to oppose any moves by foreign partners that might harm trade with Israel and its settlements, the second bill compels such action—and requires the president to report it to Congress. More ominously, the bill obliges all foreign companies listed on U.S. stock exchanges to disclose if a foreign government has advised them to discriminate against trade with "Israel or Israeli-controlled territory." Critics fear this is the first step toward blacklisting European companies that comply with EU labeling rules and denying them access to the American market.

Obama is expected to sign the trade bill into law, but the pro-settlement language is likely to force him to issue a signing statement—a device presidents use to explain how they plan to enforce—or ignore—certain provisions. President George W. Bush issued hundreds of them during his two terms—a practice that Obama has used sparingly. But analysts say Congress's attempt to legislate U.S. recognition of Israeli sovereignty in the occupied territories probably will force Obama's hand, even it means critics slam him for making an end-run around Congress.

By inserting the language into the second bill, Peace Now's Friedman notes that Congress is not only contradicting 48 years of U.S. policy but also breaching the president's exclusive constitutional authority to recognize a country's borders. Just six months ago, the Supreme Court upheld that principle when it rejected the bid of a dual U.S.-Israeli citizen to have his birthplace listed in his American passport as "Jerusalem, Israel."

For the past 67 years, the U.S. policy has regarded Jerusalem's sovereign status as a matter to be determined by peace negotiations. In the face of a campaign by Congress that shows no sign of abating, Obama is trying to make sure that the same policy applies for the settlements too.