Israeli Justice Minister Tzipi Livni warned on Monday that Israel might face a European economic boycott if it does not make progress in the peace process with the Palestinians, media sources have reported.
Speaking at an accountancy conference in Eilat, Livni said, "We cannot deal with economic issues away from politics and the two-state solution. The Europeans are to boycott settlement products, but they also have a problem with Israel, which they consider a colonial state."
She added her belief that boycotts will not be restricted to settlements, but "will be extended to cover all of Israel". She referred to the label used in the EU to distinguish goods produced in settlements instead of "Made in Israel".
The EU took this measure because it considers all settlements built in the occupied West Bank and Jerusalem to be illegal as, indeed, does international law. Such goods should not, says the EU, be given the same preference as goods made inside Israel.
However, Israel refuses to label settlement products as such. Haaretz newspaper reported in May that the EU had accepted a US demand to postpone a change in labelling for June. The EU denied the report.
Livni, who is responsible for negotiations with the Palestinians, said that the EU does not recognise the logic of building settlements which, she says, damages Israel-EU relations.
On the two-state solution, which has been denied by many senior Israeli officials in the past month, Livni said, "Most people in Israeli believe in the two-state solution, with certain security measures." She accepted that some do not, however, and it is these she pointed out, who want to confiscate more land and undermine any agreement with the Palestinians.
The minister closed by telling delegates that US Secretary of State John Kerry is concerned with what is going on in Israel-Palestine. "There are a lot of conflict areas around the world, but he prefers to spend time here and we have to help him. Some breathed a sigh of relief when he left the region. But we have to continue working."