• The true winner appears to be the EU, which has not budged at all from its insistence on using the agreement to impose its pro-Palestinian policies on Israel. Critics of the deal say it amounts to a de facto EU boycott of Israeli institutions.

  • "Not signing it," according to Professor Ruth Arnon, President of the Israel Academy of Sciences and Humanities, "will be an irreversible and disastrous failure for Israeli science and the entire country."

Israel and the European Union have reached a tentative agreement on a compromise formula that will make it possible for Israel to participate in a prestigious and financially lucrative European scientific research program.

The compromise paves the way for Israel to participate in Horizon 2020, the EU's flagship research and development program—despite Israeli objections to a contentious new policy that prohibits the EU from funding Israeli institutions that operate anywhere beyond the Green Line, including eastern Jerusalem.

The Israeli government has hailed the November 26 diplomatic breakthrough—in which both sides ostensibly agree to disagree—as a victory for Israel and the Israeli technology sector.

But the true winner appears to be the EU, which has not budged at all from its insistence on using the agreement to impose its pro-Palestinian polices on Israel.

Ariel University will be excluded from any funding provided by the Horizon 2020 program because it is located beyond the "Green Line". (Image source: WikiMedia Commons)

Israel and the EU both stand to benefit from Israel's involvement in the €70 billion ($95 billion) program, which begins on January 1, 2014 and will run for a period of seven years.

Israel—the only non-EU country that has been invited to join Horizon 2020—is expected to invest €600 million in the program and receive €900 million in inbound research grants and other investments. For its part, the EU will benefit from Israeli research and technology, which is widely believed to surpass the capabilities of many EU member states.

But Israeli participation in Horizon 2020 became jeopardized after the EU politicized the project by linking it to the Arab-Israeli conflict.

The new EU directive—the long title of which is "Guidelines on the Eligibility of Israeli Entities and their Activities in the Territories Occupied by Israel since June 1967 for Grants, Prizes and Financial Instruments funded by the EU from 2014 Onwards"—forbids EU organizations and institutions from funding or cooperating with any Israeli entities based in Judea and Samaria, eastern Jerusalem or the Golan Heights.

The directive—which was published on July 19, 2013 and will take effect on January 1, 2014—includes a requirement that all future agreements between the EU and Israel include a clause in which Israel accepts the EU position that none of the territory beyond the Green Line belongs to Israel.

"The EU does not recognize Israel's sovereignty over any of the territories, and does not consider them to be part of Israel's territory," according to the guidelines.

Up until now, Israeli officials have rejected the directive as untenable and have refused to sign any new agreements with the EU which include such a clause, based on the premise that to do so would be to forgo any future claims on the disputed territories.

But the EU has remained adamant that Israel's participation in Horizon 2020 be subject to its new funding directive.

The EU's foreign policy chief, Catherine Ashton, has faced mounting pressure not to concede to any of Israel's demands.

In a September 16 letter addressed to Ashton and the foreign ministers of the 28 EU member states, 15 members of the so-called European Eminent Persons Group expressed "great concern" at attempts to "delay, modify or even suspend the European Commission guidelines on funding of Israeli entities in the territories occupied by Israel since June 1967."

The letter—signed by longtime Israel critics including former EU foreign policy chief and NATO secretary-general Javier Solana, former French foreign minister Hubert Védrine, and former Spanish foreign minister Miguel Ángel Moratinos—argued that the "strict application" of the guidelines "serves to reiterate that the EU does not recognize and will not support settlements and other illegal facts on the ground."

On November 22, Pierre Vimont, an assistant to Ashton, sent a letter to the Israeli Foreign Ministry rejecting most of the proposed Israeli compromise language regarding the Horizon 2020 agreement.

The EU turned down Israel's demand to remove the new guidelines and also demanded that the agreement include an "attachment" stating that the agreement's conditions do not prevent the European Commission, the EU's administrative body, from implementing the guidelines on the so-called settlements.

The Israeli Foreign Ministry said the EU position breaches oral understandings between both sides and backtracks on positions that the EU stated during bilateral talks.

The EU also rejected Israel's demand to remove a clause prohibiting the indirect funding of agencies that operate in the settlements. The EU said it was unwilling to back down on the issue.

After weeks of fruitless negotiations with the EU, Israeli Prime Minister Binyamin Netanyahu decided at an urgent meeting on November 24 that a way needed to be found to enable Israel's participation in the Horizon program.

Foreign Minister Avigdor Liberman and Deputy Foreign Minister Ze'ev Elkin both warned that Israel should not give in to EU "arm-twisting." According to Lieberman, signing the agreement would have meant "surrender" to the European Union.

But with the deadline for signing onto Horizon 2020 less than a week away, Netanyahu directed Justice Minister Tzipi Livni to clinch a deal.

The "compromise" hashed out by Livni on November 26 involves two clauses in the Horizon agreement.

One clause relates to the EU's demand that an appendix be attached to the Horizon agreement stating that the contract will be subject to the new EU funding restrictions, namely, that the EU is entitled to block funding to any Israeli entities operating in territories claimed by the Palestinians.

In the compromise formula, Israel agrees to EU demands that the above-mentioned appendix will indeed be attached to the Horizon 2020 agreement. In exchange, Israel will attach its own appendix to the agreement in which it declares that it objects to the EU guidelines. The Israeli objections cannot, however, prevent the EU from implementing its funding ban.

The second clause relates to the establishment of a verification mechanism to ensure that no EU money makes its way into the so-called Palestinian territories.

On this clause, the two sides agree that any Israeli entity that operates within the Green Line can apply for European loans, provided that Israel and the EU establish a verification system to ensure that any monies these Israeli entities receive will be invested solely within the Green Line.

Critics of the deal say it amounts to a de facto EU boycott of Israeli institutions.

Indeed, the deal means that Ariel University, which is based in the West Bank, will not be eligible for EU grant money. It remains unclear how the deal will affect Hebrew University in Jerusalem, a leading research university, which has dormitories in an east Jerusalem neighborhood.

According to Livni, "The agreement fully respects the EU's legal and financial requirements while at the same time respecting Israel's political sensitivities and preserving its principled positions. The agreement will allow Israel's scientific community to benefit from one of the most important EU programs and facilitate its further integration into the European space of research and innovation."

Netanyahu has been under pressure from Israel's academic and research community to find a way to join Horizon 2020, which they say is essential to preserving Israel's status as a high-tech powerhouse.

The president of the Israel Academy of Sciences and the Humanities, Professor Ruth Arnon, has said that Israel's participation in the program is "absolutely essential to the future of science in Israel." According to Arnon, "Not signing it, will be an irreversible and disastrous failure for Israeli science and the entire country."

Soeren Kern is a Senior Fellow at the New York-based Gatestone Institute. He is also Senior Fellow for European Politics at the Madrid-based Grupo de Estudios Estratégicos / Strategic Studies Group. Follow him on Facebook. Follow him on Twitter.

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