In July 2013 the EU Commission published guidelines providing for non-eligibility of Israeli entities established in the territories occupied in 1967 (hereby: 'the territories'), or activities held in the territories by entities established in Israel to grants, prizes and financial instruments provided by the EU.This initiative is meant to make a political statement regarding EU's view on the Israeli presence in these territories, attempting to create an economic incentive for the parties in the region to speed up towards a permanent settlement of the ongoing dispute between them. It is complementary to a former EU step, taken since late 1990's, whereby exports originating in the territories occupied by Israel in 1967: the West Bank, Gaza Strip, East Jerusalem and the Golan Heights are deprived of economic benefits emanating from the EU-Israel Association Agreement. It further corresponds to other, recent EU guidelines which follow the same pattern. According to the EU, this pattern is based on the legal analysis regarding the relationship between Israel and the territories made by the ECJ in Case C-386/08 Brita GmbH v. Hauptzollamt Hamburg-Hafen OJ C 100 (2010). The paper will challenge this decision, proposing alternative interpretation to the relevant EU law.The paper will analyze the two EU initiatives regarding the territories and their effect on the ground, attempting to evaluate whether the EU's measures form a diplomatic achievement or rather a Pyrrhic victory. It will first address the denial of Association agreement's benefits from exports originating in the territories and its legal implications. It will then compare between the two sets of measures, to evaluate their relative effectiveness in terms of achieving EU goals. Conclusion will attempt to draw a lesson from this comparison.
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