“Permit me to express myself directly. Up until now, Israel has greatly objected to European involvement in managing the Israeli-Palestinian conflict. Israel is inclined to keep its political distance from Europe, and put all its eggs in the US basket. Under this one-dimensional policy, Israel confined its request for support for its disengagement plan to the US.
"The European Union (EU) welcomes Israel’s plan to withdraw from Gaza, and has stated that this could be a significant step towards implementing the road map, providing that a number of conditions are fulfilled. The EU believes that the plan is an opportunity that the international community should endorse, and in this spirit, has expressed its willingness to consider making a contribution to its implementation. Israel, however, made no such request.”
EU Ambassador to Israel Giancarlo Chevallard made this combative statement yesterday. Shortly before the EU expansion on May 1, which will make the EU a bloc of 25 countries and 450 million people (compared with 375 million at present), Chevallard sounds as if the Israelis have exhausted him. He is tired of the disputes with the government, which always prefers the US, and of having every economic and commercial position interpreted as part of European anti-Semitism.
Chevallard is unable even to get used to the mutual accusations between Israeli ministers, which somehow seem to get him involved in their petty disputes. In the confrontation between the EU and Israel on Israeli exports from the territories (which the EU calls “exports from the settlements”), Minister of Industry, Trade, and Labor Ehud Olmert and Minister of Foreign Affairs Silvan Shalom sparred verbally, and Chevallard was at a loss. In all of his previous diplomatic experience, he has never encountered a case in which one senior minister accused another of derailing negotiations with the EU.
Olmert promised the EU to solve the problem of the exports by marking the origin of goods, which would inform EU customs authorities which exports were from Israel (and enable them to exempt those exports from customs duties), and which were from the territories (on which customs duties would be charged). The affair, which affects a negligible annual volume of exports from the territories, is liable to cause delays and customs duties for exports totaling $7.75 billion, on which customs duties would amount to $600 million.
Later, in a written commitment communicated to the EU, Olmert significantly qualified his proposal, thereby upsetting the European Commission, and then retracted his qualification verbally and returned to his original proposal. Negotiations between the parties are now underway to formulate a solution. Olmert is trying to gain a few more benefits in Israel from these negotiations, consisting mostly of an accumulation agreement.
”Globes”: How far off is a solution of the problem?
Chevallard: ”Only last week, Olmert said that the problem was solvable, and that Ministry of Foreign Affairs representatives were the cause of the delay, because the solution was unacceptable to them. To quote what he said in a lecture at the Hebrew University of Jerusalem, ‘Actually, the problem must be solved quickly; otherwise, starting May 1, Israel exports will suffer even more, and will be subject to customs duties levied by the countries joining the EU.’ A meeting between representatives of the parties has therefore been scheduled for April 26 in Brussels. I expect to receive the written Israel position acceptable to us by then, to the effect that Israel is willing to identify the source of all merchandise on the bills of lading.”
Israel ignores us
The announcement of EU support for the disengagement plan during Prime Minister Ariel Sharon’s visit to Washington, when US support for the plan was obtained, could be interpreted as a softening of the EU position, in favor of Israel. On the other hand, you are now attacking Israel for not seeking your support at all.
”We don’t support the initiative 100%; we’re attaching conditions, such as non-recognition of the settlement blocs, and regarding the plan as part of a granting of autonomy to the Palestinian Authority (PA). At the same time, we have recently managed to set these issues aside, and continue cooperation between the EU and Israel in trade, education, etc. These issues have in the past been used as hostages for political issues and disputes between Israel and the EU.
”In my opinion, Israel will find it hard to maintain its attitude towards the EU in the long run. Despite the tragic legacy of European history, we are linked in a complex network of common interests. We seek a better dialogue, and I’m also referring to mutual willingness to listen.”
EU sources say they are not sure that they want to continue economic and trade cooperation with Israel on specific issues, such as Israeli participation in the valuable R&D projects, outer space, etc., while Israel ignores the EU. They assert that Israel regards the EU as economically important for Israeli interests (the EU accounts for 30% of Israel’s exports and 40% of its imports), but ignores it where political issues are concerned.
Chevallard says, “the EU, and I personally, have made a major effort not to allow our political differences to affect our close bilateral relations, but we may not be able to maintain this separation in the long term.”
Backyard interests
How interested is the EU in becoming involved in the diplomatic process between Israel and the PA?
”It is unreasonable to expect the EU not to take a growing interest in making a contribution to the stability of its own backyard. Basic European security and economic interests are involved, and there is no doubt that the EU will promote them. EU expansion is coming at a difficult time (because the US supported the disengagement plan, while no request was made to the EU, H.M.).
”The EU does not oppose the US position in the driver’s seat, but Israel should take into account that the EU can be of great help. We have good relations with most of the Arab world, especially with the Palestinians, and we therefore constitute a potential lever for influencing them, provided that we can have a similar influence on Israel, in order to achieve a balanced compromise for peace.
”Another enormously important factor, which is not correctly assessed in Israel, is that following the expansion, the EU will for the first time have minister of foreign affairs and defense, helped by an administrative team, consisting of thousands of people in Brussels, and over 130 embassies around the world. In addition to the EU’s proven conflict management tools, the EU will have substantial armed forces for rapid response. In the coming years, the EU will become an extremely significant international player. The EU’s foreign policy will focus on the Balkans, and then on the Middle East. Our relations with Egypt and Jordan are becoming more and more intensive, while at the same time, we’re exercising an increasing moderating influence on countries like Syria, Iran, and Libya. Israel may be making a mistake if it ignores the EU’s rising power.”
How will the EU be willing to finance the withdrawal?
As part of the its terms for the disengagement plan, the EU will be willing to help transfer property from the Jewish settlements. We may consider financing purchases through a consortium of the EU and the UN, and participation in the effort to buy infrastructures and agricultural property. The property must not be destroyed, or given to the Palestinians immediately; this must only be done later. Of course, the EU will not help relocate settlements, however sympathetic we may be to their situation.”
Ten countries will join the EU on May 1. What effect will the expansion have on Israel?
”The addition of Estonia, Hungary, the Czech Republic, Latvia, Lithuania, Malta, Slovenia, Slovakia, Poland, and Cyprus will affect all aspects of the EU’s activity. Expansion will also affect Israel, whose largest trading partner is the EU. The closest EU country to Israel, Cyprus, is only 200 kilometers away. Israel should prepare accordingly, in order to exploit opportunities, and respond to the challenges posed by this significant change.”
How will expansion affect Israel’s export market and competition between local Israeli industry and cheap imports from the new EC members?
”On the one hand, Israel’s export potential to the EU will increase, because the new EC members will accept European legislation requiring the removal of barriers to free movement of goods, services, capital, and workers, as well as the trade agreement between Israel and the EU. The number of potential consumers will rise by 20%, although the purchasing power of people in the new EU countries is inferior to that in the current member countries.
”On the other hand, Israeli exports will encounter more intense competition than previously for European consumers. Production costs inn the new EU member countries are relatively low. In addition, the opening of the Israeli market to imports, especially from the Baltic countries, which currently have no free trade zone agreement with Israel, will increase the competition facing Israeli industry in its home market.”
In which fields will cooperation grow between Israeli companies and investors and EU companies?
”The new EU members will provide ample opportunities for investors seeking low production costs in countries about to become part of the EU. While the attractiveness of these countries is liable to divert investment from Israel, many foreign investments have already been made in these countries. Their membership in the EU will not create new competition for Israel. Furthermore, Israeli investors have also taken advantage of the opportunity to invest in these countries.
”In the monetary field, the new EU members will not adopt the euro at this stage. When they become part of the EU’s inner market, however, it is likely that an increasing number of companies will use the euro in their foreign trade deals. In addition, I don’t want to create excessive expectations, but the new member countries will benefit from enormous financial aid from the EU to promote rapid growth. Israeli investors setting up companies in the expanded EU can benefit from this aid. High-tech, telecommunications, construction, and environmental companies can use their capabilities in cooperation with European companies.”
What is the good neighbor policy that the EU is proposing that Israel join?
”The policy concerns countries on the EU’s geographic borders: Russia, the Ukraine, Moldavia, Belarus, and the Mediterranean countries, including Israel on the south. In principle, the EU is offering these countries an extensive economic partnership, but not membership.”
What are the advantages and drawbacks for Israel of this partnership?
”Israel will obtain better access to goods and services, such as banks, security, insurance, etc. People will also enjoy freer access, including access to the labor market and freedom to set up a business in Europe for members of the liberal professions, such as Israeli doctors and lawyers.
”The EU is also offering to open its internal market, to its neighbors, in addition to infrastructure networks, such as transportation, energy, telecommunications, and environment. Israel will obtain access to a market of 450 million people, and we will gain a market with six million people. Israel will benefit from cooperation in telecommunications, space projects, transportation, research, education, and programs enabling Israeli students and lecturers to study for one or two years at European universities, which will be recognized in Israel.
”From an economic and business standpoint, Israel’s inclusion in the plan could constitute a powerful growth lever. In many aspects, including manufacturing, trade, and participation in tenders and projects, Israel companies will be considered as European.”
What price will Israel have to pay for its European adoption?
”In exchange, we demand an economically free market, harmonization of legislation, the meeting of certain standards in the rule of law; democracy; civil rights; rights of minorities, such as Arabs, women, and homosexuals; and mutual transparency and consideration.
”For example, we will take into consideration Israel complaints about anti-Semitism in the EU. We don’t want to dictate Israel’s relationship with minorities, or the character of its regime, but we want a dialogue, in which we will be able to express our opinion, for example, on administrative arrests and torture, in the hope that Israel will want to adopt Western democratic policy, while preserving its security interests.
You recently said that after the expansion is completed, one out of every six Israelis will have European citizenship. How comfortably can we really live in Europe?
”The accession of Eastern and Central European countries has led many Israelis to contact embassies with requests for European citizenship. In the short term, citizens of these countries will not benefit from full freedom of residence and labor in the EU, but within a few years, this restriction is expected to disappear, and Israelis with citizenship in the new EU members will be able to work and live in the EU more easily, in addition to freedom of enterprise for member of the liberal professions.”
When will Israel actually be included in the good neighbor policy?
”A large Israeli delegation will visit Brussels at the beginning of May to formulate concrete measures. We want Israel to adopt the necessary steps by mid-July, as part of the forming of a list of the first countries designated for the policy.”
”The current EU expansion includes countries in which many Jews once lived. Bulgaria and Romania are expected to join in 2007, and the EU is scheduled to decide at the end of the year whether to begin negotiations for granting membership to Turkey and the Balkan countries.”
Published by Globes [online] - www.globes.co.il - on April 22, 2004