On May 11, 2026, the foreign ministers of European Union (EU) member states convened in Brussels and declared the imposition of sanctions on senior figures and leading organizations in the settlement movement. By this decision, the ministers drew a reprehensible and absurd equivalence between them and Hamas murderers, against whom similar measures were directed at the same time. Although the EU has not yet officially published the names of those targeted by the sanctions, reports indicate that they will be imposed on the organizations Regavim, Nachalah, and Amana, along with their respective leaders. This already represents a dangerous escalation from previous sanctions, which were imposed on individuals suspected of committing violence against Palestinians in Judea and Samaria. Regavim, Nahalah, and Amana are certainly not involved in acts of violence – their only “offense” is building Jewish communities in Judea and Samaria.
In June 2025, several countries imposed sanctions on Ministers Smotrich and Ben-Gvir, among them the United Kingdom, Canada, and Norway. The EU is under heavy internal pressure to impose sanctions on the right-wing ministers as well. This amounts to a declaration of war against the Israeli national camp. Furthermore, there is an entirely justified concern that a future Democrat administration in the United States will renew and intensify the sanctions that were introduced by the Biden administration. Israel must act now, decisively and swiftly across legal, legislative, and diplomatic arenas, before the momentum gathers strength.
Petitions and More Petitions
On the most basic level, those targeted by sanctions should petition against them in The Court of Justice of the European Union, as soon as possible. To date, no Israeli affected by European measures has pursued this avenue of legal remedy. As Adv. Sarah Scialom recently reviewed in a comprehensive article, we have at our disposal a legal toolkit within the EU’s own judicial system to counter EU sanctions. The primary route is an Action for Annulment. Under Article 263 of the Treaty on the Functioning of the European Union (TFEU), any individual or entity harmed by a decision may petition the EU’s General Court within two months of its publication to annul their inclusion on the sanctions list. It is important to understand that the jurisdiction of EU judges to hear such cases is absolute and well-established – even when they concern foreign and security policy, as determined by the landmark Rosneft ruling.
The most significant hope for listed Israelis lies in the evidentiary standard established by the European Court in the Kadi II judgment, where the Court ruled that the burden of proof rests on EU authorities, not on the individual listed. Judges cannot be satisfied with general assertions or a mere “appearance” of reasoning; they must verify that every allegation rests on a solid and specific factual basis. In the case of the Judea and Samaria residents who are being pursued under the EU’s “human rights regime”, in which there is no requirement for a prior judicial process in their own country, the Court will be required to carefully scrutinize the quality of the sources used by the European External Action Service. Claims based on reports from political organizations lacking corroborating information or temporal proximity to the relevant events will not be able to withstand the rigorous standard of European law.
Alongside the annulment action, the European system offers three complementary avenues: administrative review – submitting a reasoned request directly to the EU Council for removal from the list; referral to the European Court via national courts (Article 267) – anyone whose accounts have been frozen by a local European bank can challenge the legality of the sanction in a national court, thereby compelling referral of the matter to the EU’s Court of Justice; and damages claims – the Bank Refah ruling established that anyone whose listing was annulled due to unlawfulness is entitled to claim compensation for the economic and reputational harm suffered.
A “Financial Firewall” Operation Model
The key to overcoming the sanctions is to nullify their harm to the sanctioned. In an ironic twist, it is the EU itself that can teach us how to circumvent international sanctions. In August 2018, the United States withdrew from its nuclear agreement with Iran and renewed its sanctions against the Iranian regime. In response, the EU adopted Regulation 2271/96 (the “Blocking Regulation”). The regulation prohibits European companies from complying, directly or indirectly, with the American laws listed therein. Under Article 2 of the Regulation, every European company is required to notify the European Commission how the blocked laws affect its business. Companies harmed by compliance with American sanctions may sue the offending party in a European court. The effect is to make compliance with American sanctions economically unviable.
Israel should enact a similar blocking law that prohibits Israeli banks from cooperating with foreign administrative sanctions that have not been ratified by an Israeli judicial authority. A combination of a blocking law together with a “state indemnification fund” that would support banks in the event of foreign fines would neutralize the economic incentive for banks to cooperate with foreign orders, and would create a balance of legal deterrence vis-à-vis EU authorities.
To address the risk that such a law might prompt international banks to avoid doing business with Israeli banks, Israel should adopt a “split banking lane” strategy. The mechanism is based on a complete physical and digital separation between the domestic activity of Israeli citizens and the international clearing infrastructure (SWIFT). Within this framework, “sovereign protection accounts” would be established to manage the flow of funds for sanctioned individuals exclusively within the boundaries of the Israeli banking system and in New Israeli Shekels. Under this method, the commercial bank would not be exposed to the risk of “contaminating” the global monetary system, since the funds would not cross Israel’s borders or pass through correspondent banks in New York or Frankfurt.
Technically, the system would be based on the Bank of Israel’s Real-Time Gross Settlement (RTGS) clearing system as an intermediary. Instead of private banks clearing transactions directly against one another for “flagged” customers, the Bank of Israel would serve as the central counterparty and settle transactions within a confidential internal balance sheet. In this way, Israel would build a domestic “financial internet”, similar to the models established by other powers such as Russia (SPFS) and China (CIPS), ensuring that its citizens’ property rights are not subject to the whims of officials in Brussels. This model is similar to the “bypass mechanism” INSTEX, established by Germany, France, and the UK in 2019, designed to allow European companies to trade with Iran without using the American banking system and thus evade US sanctions. If the EU saw fit to create a bypass clearing channel for the Ayatollah’s regime, there is no legal or moral reason why Israel should not establish a similar mechanism for its own citizens.
Exacting a Diplomatic Price from the EU
The European Union must internalize that its hostile stance toward Israel will condemn it to complete irrelevance. The Knesset should enact a law imposing restrictions on European donations to political NGOs in Israel, such as denying tax benefits or imposing heavy taxation. The EU funds largescale illegal Arab construction in Judea and Samaria, and it can be assumed that Regavim found itself a target of sanctions due to its demand that Israeli law be enforced. The appropriate response is for the Israeli Civil Administration to launch a broad demolition operation against unauthorized buildings that were constructed with EU funding, and immediately freeze all construction underway.
Furthermore, foreign countries would not have been aware of the activities of those targeted by sanctions were it not for informants at home. The Knesset should amend the boycott law to prohibit calls for imposing sanctions on Israeli citizens, and enable those harmed by such calls to file tort claims.
Finally, the absurdity of the continued operation of European consulates to the Palestinian Authority in the heart of Israel’s capital is striking. Some eight countries operate general consulates in Jerusalem that do not recognize Israeli sovereignty over the city, and represent their countries to the Palestinian Authority. Spain, for example, recalled its ambassador from Israel, while the Spanish Consul-General sits in Jerusalem and operates vis-à-vis “State of Palestine” entities in Ramallah. These consulates are a relic of the colonial era, and are entirely contrary to international law, which requires every diplomatic mission to seek permission to operate from the host country. European countries refuse to seek such permission from Israel lest it be interpreted as a recognition of Jerusalem’s status. A year ago, the government promised an appropriate Zionist response to the British and French recognition of a Palestinian state, yet nothing has been done. The illegal consulates must be shut down immediately, sending a clear signal to the Europeans that the State of Israel will not remain silent in the face of such contempt for its sovereignty.
(First appeared in Hebrew on MiDA website)
