The government warned that firms could face legal action tied to “land, water, mineral and other natural resources” as well as “reputational risks.”
The step could have implications for the Israeli economy far beyond activities limited to Israeli settlements themselves.
The Palestinian Boycott, Divestment and Sanctions National Committee (BNC) welcomed the move.
Spain, Germany, Italy, Sweden and Luxembourg are expected to publish similar guidance in coming days in what appears to be a coordinated move by European states.
The French warning follows similar steps by the UK and Netherlands, prompted by an advocacy effort by civil society groups and members of the European Parliament.
The new guidance published by the French foreign ministry states that “The West Bank, including East Jerusalem, Gaza and the Golan Heights are territories occupied by Israeli since 1967. The settlements are illegal under international law.”
As a consequence, “there exist risks tied to economic and financial activities in the settlements. Financial transactions, investments, purchases, procurements as well as other economic activities in the settlements or benefitting the settlements, entail legal and economic risks tied to the fact that the Israeli settlements, according to international law, are built on occupied territories and are not recognized as being part of the territory of Israel.”
The French warning is worded in language almost identical to that issued by the UK last December, suggesting a high degree of intergovernmental coordination.
While some may spin the warning as affecting only the settlements and not the Israeli economy more broadly, the phrase “benefitting the settlements” – which appears in both the UK and French statements – could be significant.
It signals that firms may also be wise to steer clear of business transactions or activities that may not necessarily be located within settlements themselves.
An example of this in practice was the decision of Dutch pension giant PGGM earlier this year to divest from all five of Israel’s main commercial banks.
While the move was prompted specifically by the banks’ “unethical” involvement in settlement activities, PGGM concluded that it was impossible to separate out the banks’ settlement-related and non-settlement-related business activities.
At the time, Palestinian activist Omar Barghouti called the PGGM decision “unprecedented” in its scope since the pensions giant divested from all Israeli banks, not just their operations within the occupied West Bank.
Given that the economy of the settlements is deeply intertwined in the rest of the Israeli economy, the “benefitting the settlements” clause may encourage cautious firms to follow the precedent set by PGGM and avoid involvement with any Israeli firms with substantial business interests in the colonization of Palestinian land.
This has been a point made by the European Coordination of Committees and Associations for Palestine (ECCP) coalition, which has called on the EU to urge firms to “cease all trade with Israeli export companies that operate inside illegal Israeli settlements, since trade with such companies provides capital to businesses involved in the maintenance and expansion of Israeli settlements.”
Zaid Shuabi, a spokesperson for the BNC, the Palestinian civil society coalition that leads the boycott, divestment and sanctions movement, welcomed the news in an emailed statement.
“European governments are continuing to react to Israel’s intransigence and the groundswell of public support for Palestinian rights by taking action against Israel’s settlement regime,” Shuabi said.
“European businesses such as G4S, Veolia, JCB and Alstom play a key role in Israel’s settlement enterprise. We urge other European countries to follow the example set by France, the UK and the Netherlands and take similar action.”
While he hoped that today’s announcement would “encourage French businesses to abandon their complicity in Israel’s illegal settlement enterprise,” Shuabi added that “France, the EU and all European states must do much more to end the involvement of European businesses in Israeli human rights abuses, including by explicitly prohibiting business relations with Israeli public and private entities in the occupied Palestinian territory, and by ensuring that companies involved in war crimes are brought to justice.”