Britain is considering recalling its ambassador to Israel, Matthew Gould, in response to the Israeli government's decision to build 3,000 housing units on the West Bank, beyond the Green Line, in the area known as E1 (the corridor connecting Ma'aleh Adumin with Jerusalem), the Etzion block south of the city, and in Ariel, according to a report by British television network Sky News. The BBC however reports that a recall of the ambassador "seems unlikely" at this stage
The main concern is that Israeli construction in the E1 area wuold be liable to render impossible the formation of a Palestinian state with territorial contiguity on the West Bank of the Jordan.
Sky News quotes sources as saying that the Foreign Office is considering what action to take saying "all options are on the table". The British government is due to discuss its response to the Israeli move today. According to the Sky News report, apart from recalling its ambassador, the British government is also considering suspending trade agreements with Israel.
The Israeli government decided to approve construction of 3,000 residential units in response to the Palestinian Authority application to the United Nations to receive non-member observer status, which was accepted by an overwhelming majority in the United Nations General Assembly last week. United Nations Secretary General Ban Ki-moon described the Israeli response as "an almost fatal blow" to peace efforts.
According to the Sky News report, any move by the British government will be coordinated with other main EU countries, with France playing a central role in liaison between them. Britain and France have both summoned the Israeli ambassadors to their countries to register a protest at Israel's retaliatory steps, as has Sweden. Sources told Sky News that there was "an appetite for action" on the part of the Foreign Office, which could lead to a review of Israel's trade agreements with the EU as a whole. Britain could bring about suspension of the trade agreements with Israel on the grounds of infringement of human rights.
Israel's Minister of Finance Yuval Steinitz, interviewed by Galei Tzahal (Army Radio) this afternoon said in response to the Sky News report, "I don't think that this is a possibility that is on the agenda. The trade agreements are good for all the parties. We cannot remain indifferent. We are attacked with missiles from Gaza, there is a diplomatic assault of de-legitimization of the very recognition of Israel as a Jewish state, we cannot remain indifferent."
Steinitz defended the government's decision to approve construction of 3,000 housing units beyond the Green Line and suspend transfer of tax collections to the Palestinian Authority, saying, "Israel would have acted stupidly if it had not responded with some counter-measure to the Palestinian move. After all, the Palestinians acted unilaterally, and then they expect that we will continue to talk to them bilaterally, as though nothing had happened. The response so far has been fairly moderate. I daresay that on the Palestinian side, there were fears of harsher responses. I should like to remind you that the Olmert-Livni government froze transfers of money to the Palestinian Authority in protest against the participation of Hamas in elections, for eighteen months, and not for a month or two."
Britain abstained in the UN vote last week. Foreign Secretary William Hague said this was because assurances were not forthcoming from the Palestinian Authority that it would return to peace talks with Israel without preconditions and that it would not seek prosecution of Israelis for war crimes in the International Court in The Hague. France voted in favor of the resolution.
The EU accounts for about a quarter of Israel's exports, and the UK for about 5%.
Published by Globes [online], Israel business news - www.globes-online.com - on December 3, 2012
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