Israeli Settlement - Economy

Economy

Goods produced in Israeli settlements are able to stay competitive on the global market, in part because of massive state subsidies they receive from the Israeli government. Farmers and producers are given state assistance, while companies that set up in the territories receive tax breaks and direct government subsidies. An Israeli government fund has also been established to help companies pay customs penalties.

Palestinian officials estimate that settlers sell goods worth some $500 million to the Palestinian market. According to Israeli government estimates, $230 million worth of settler goods including fruit, vegetables, cosmetics, textiles and toys are exported to the EU each year, accounting for approximately 2% of all Israeli exports to Europe.

European Union law requires a distinction to be made between goods originating in Israel and those from the occupied territories. The former benefit from preferential custom treatment according to the EU-Israel Association Agreement (2000); the latter don't, having been explicitly excluded from the agreement. In practice, however, settler goods often avoid mandatory customs through being labelled as originating in Israel, while European customs authorities commonly fail to complete obligatory postal code checks of products to ensure they have not originated in the occupied territories.

In 2009, the United Kingdom's Department for the Environment, Food and Rural Affairs issued new guidelines concerning labelling of goods imported from the West Bank. The new guidelines require labelling to clarify whether West Bank products originate from settlements or from the Palestinian economy. Israel's foreign ministry said that the UK was "catering to the demands of those whose ultimate goal is the boycott of Israeli products"; but this was denied by the UK government, who said that the aim of the new regulations was to allow consumers to choose for themselves what produce they buy. Denmark has similar legislation requiring food products from settlements in the occupied territories to be accurately labelled.

A Palestinian report argued in 2011 that settlements have a detrimental effect on the Palestinian economy, equivalent to about 85% of the nominal gross domestic product of Palestine, and that the "occupation enterprise" allows the state of Israel and commercial firms to profit from Palestinian natural resources and tourist potential.

The Israeli Supreme Court has ruled that Israeli companies are entitled to exploit the West Bank's natural resources for economic gain, and that international law must be "adapted" to the "reality on the ground" of long-term occupation.