EN    EN EN 
EN    EN  EUROPEAN COMMISSION  
Brussels, 12.5.2010 
SEC(2010) 520 final 
  
COMMISSION STAFF WORKING DOCUMENT 
Accompanying the 
 
COMMUNICATION FROM THE COMMISSION  
TO THE EUROPEAN PARLIA MENT AND THE COUNCIL 
Taking stock of the European Neighbourhood Policy (ENP) 
  
Implementation of the Europe an Neighbourhood Policy in 2009 
Progress Report Israel  
 
  
 
{COM(2010) 207 final} 
{SEC(2010) 513 final} {SEC(2010) 514 final} {SEC(2010) 515 final} {SEC(2010) 516 final} {SEC(2010) 517 final} {SEC(2010) 518 final} {SEC(2010) 519 final} {SEC(2010) 521 final} {SEC(2010) 522 final} {SEC(2010) 523 final} {SEC(2010) 524 final} {SEC(2010) 525 final} 
EN 2   EN 1. BACKGROUND AND OVERALL ASSESSMENT  
Israel and the European Comm unity first establis hed contractual relations in 1975 by signing 
a Cooperation Agreement. An EU-Israel Association Agreement entered into force in 2000. It sets out in more detail the specific areas in which the relations can be  developed bilaterally. 
On this basis, the EU-Israel ENP Action Pl an was approved in April 2005, initially for a 
period of three years. The framework for regi onal co-operation is the Euro-Mediterranean 
Partnership, inaugurated in 1995 and reinforced in 2008 with the creation of the Union for the 
Mediterranean (UfM), which establishes a pol icy with ambitious and long-term objectives. 
EU–Israel meetings took place at the level of  the Association Council, the Association 
Committee and subcommittees, nine of which ar e activated. In addition, a wide range of 
contacts are maintained at all levels.  
This document reports on progress made on th e implementation of the EU-Israel ENP Action 
Plan between 1 January and 31 December 2009, although developments outside this period 
are also taken into consideration when deemed relevant. It is not
 a general review of the 
political and economic situati on in Israel. In addition, for information on regional and 
multilateral sector processes, please refer to the sectoral report. 
EU-Israel bilateral relations re mained strong in 2009. At the same  time, deterioration in the 
overall political context, in part icular as regards the Gaza conflict1 (see section on the 
situation in the Middle Eas t) in December 2008-January 2009 and a lack of progress in the 
Middle East Peace Process, negatively affected  the process of upgradi ng bilateral relations 
between the EU and Israel. In December 2009 the Council concluded that the EU remained 
committed to a decision, taken in 2008, to upgrade relations with Israel within the framework 
of the European Neighbourhood Policy. Howe ver, the situation on the ground was not 
conducive to the resumption of the upgrading pr ocess. The 2005 ENP Action Plan remains the 
reference document of EU-Israel bilateral relati ons. Its validity has been extended by mutual 
consent until June 2010.  
Israel remained an active partner in the fram ework of the ENP, as demonstrated by progress 
made in implementing a large number of priori ties of the Action Plan. In November 2009 the 
EU and Israel signed an agreement on agricultura l, processed agricultura l and fish and fishery 
products, which entered into force in January  2010. An EU-Israel agreement on Conformity 
Assessment and Acceptance (ACAA)  of Industrial Products was in itialled in June 2009. More 
than 800 projects including at least one Israel i participant were sele cted under the Seventh 
Framework Programme. Four twi nning projects are currently being implemented in areas 
covered by the Action Plan and selected by the Israeli authorities. International democracy 
indexes rank Israel at levels comparable to EU Member States. As regards human rights and 
fundamental freedoms, more efforts are needed to address the economic and social situation 
of the Arab minority and enhance thei r integration in Israeli society.  
As regards the situation in the Middle East, Is rael’s occupation of th e West Bank and of the 
Gaza Strip has continued to affect the situation of the Palestinians. Israeli military operations 
                                                 
1 Over 1,400 Palestinians, including more than 1,0 00 civilians were killed and more than 5000 were 
wounded. Thirteen Israelis were killed, including th ree civilians. Controversy exists over the precise 
number of casualties as well as the number of civilians within those figures, but UN and the Amnesty 
International give credit to the figures.  
EN 3   EN in Gaza have tarnished Israel’s international st anding, and have given rise to concerns as to 
international humanitarian law violations by all parties to the conflict.  At the start of 2009 
Israeli peace talks with  the Palestinians and the Syrians both stalled. In late 2009, Israel 
announced a 10-month moratorium on settlement c onstruction in the West Bank, of which the 
EU took positive note as a first step in the right  direction. However, the moratorium excludes 
East Jerusalem, where settlement activity, house demolitions and evictions continued in the reporting period. Israel took step s to ease restrictions on movement in the West Bank. While 
these made a contribution to economic grow th, further and sustained improvements are 
required. Israel needs to comply  fully with its commitments under internationa l humanitarian 
law. 
After the Gaza conflict the EU continued to call for an immediate, sustained and 
unconditional opening of crossings  for the flow of humanitari an aid, commercial goods and 
persons to and from Gaza. However, while in the course of 2009 a slightly wider range of 
materials was let in and permits were issued  for the export of some goods, there was no 
significant overall improvement. While the Military Advocate General’s office is reviewing 
cases that have been submitted since the G aza conflict including of alleged human rights 
abuses, an independent investigat ion, as called for in the report  of the UN fact finding mission 
on the Gaza conflict published in September 2009 (also referred to as the Goldstone Report), 
was not launched in 2009. The Israeli soldier abducted by Hamas, Gilad Shalit, remained in 
captivity. Rockets and mortars were also fired fr om Gaza into Israel since the end of military 
operations. 
2. P
OLITICAL DIALOGUE AND CO -OPERATION  
Shared values  
Democracy, human rights and fundamental freedoms 
Promotion of democracy, rule of law and respect for human rights and international 
humanitarian law were regularly raised with the Israeli authorities and thoroughly discussed 
during the meeting of the informal EU-Israel  Informal Working Gr oup on Human Rights in 
September 2009. 
As regards rights of minorities,  little progress was registered in the situation of the Arab  
minority. Arab citizens are still underrepresen ted in the civil service and in government 
offices, with a participation of only 6.7%, alt hough the Law for Fair Re presentation of Arabs 
and Women in Governmental Offices sets a target of 10% by 2010. There were further 
decreases in budget allocations to the Arab se ctor. More sustained efforts are needed to 
further increase employment of Arab employees in the public sector, as well as regarding 
housing and planning schemes, economic developmen t, investment in social infrastructure 
and justice (see also section on Employment and Social policy). With regard to the Bedouins, 
the Goldberg Commission, set up in 2008, reco mmended that the recognition of Bedouin 
villages takes place on a broad basis and follo wing an accelerated schedule. The Government 
appointed an implementation team for that purp ose in January 2009, but th is team made little 
progress in its work. Its detailed implementati on plan was due in July 2009 but had not been 
finalised by the end of 2009. 99 house demo litions took place in Bedouin communities in 
2009 and at least 39 houses were de molished in the Negev after th e reporting period, in early 
2010. 
EN 4   EN In the area of freedom of expression and assembly some large demonstrations and rallies 
were held peacefully during the Gaza conflict, but arrests of non-violent protesters, including 
minors, did occur, also in relation to peace protests in East Jerusalem. Throughout 2009 - 
especially in the wake of the publication of  the Goldstone report - government, media and 
public condemnation of human right s organisations as actors that purportedly contribute to the 
delegitimisation of Israel ha s increased. The working environment for NGOs in Israel was 
overall worsening during the reporting period. 
In this context, a draft law regarding "Recipien ts of monetary support from a foreign political 
entity for the purpose of funding political activ ities in Israel", curr ently debated in the 
Knesset, defines "political activ ity" as any activity th at aims to influence public opinion in 
Israel. It imposes very stringent transparency requirements and recalls the tax-exempt status 
these organisations currently en joy. If adopted in this form , the draft law could seriously 
curtail freedom of association and other fundamental rights. 
Israel continues to arrest and hold hundreds of Palestinians in administrative detention  
without formal charges. However, over the year the number of administrative detainees 
decreased, from 564 in January 2009 to 278 in December 2009. Some 8% have been detained for two to five years. Arrests and administra tive detention of human rights defenders were 
increasingly used particularly towards the end of 2009.  
Allegations of  torture and ill-treatment  are investigated by the Inspector for Complaints 
against Internal Security Agency (ISA). However, the Inspector is itself an organ of the ISA. 
In May 2009, the UN Committee ag ainst Torture recommended Isra el to create a "fully 
independent and impartial mechanism outside IS A". The Government has one year to address 
these recommendations. In the past three years, th ere has been an overall decreasing pattern as 
concerns the number of complaints fi led with the Inspector of Complaints. 
As regards gender equality,  the participation rate of wo men in the labour market grew 
steadily. However, the rate of participation of Jewish women is 55.7 %, three times the 
participation rate of Arab women, which is 18.5  %. Furthermore, wage inequalities between 
women and men overall narrowed only moderately a nd were still relatively high in all sectors 
of the market. The average monthly gross sala ry for women is only 64% of what men earn. 
After the entry into force of the January 2009 amendment of the Statistics Ordinance, accessibility to information pertaining to wome n had vastly improved. This law binds public 
agencies to refer to gender when conducting and publishing statistic operations relating to 
individuals.  
With regard to the situation of children ’s rights in January 2010 there were no children in 
administrative detention.  At the end of February 2010 ther e were 41 Palestinian children 
detained under the age of 16. Also , several cases of night incurs ions in Palestinian homes in 
East Jerusalem have been reported during which children were arrested on minor charges and 
subsequently released.
 The newly-established Military Court for Juveniles has yet to prove its 
capacity for improving the treatment of minors.  
Combating anti-Semitism - Fight against ra cism and xenophobia, including Islamophobia 
The EU and Israel pursued their cooperation in supporting initiatives tackling anti-Semitism, 
racism and xenophobia, which included joint semi nars on the subject. In June 2009, a joint 
European-Israeli declaration was signed, commit ting to fighting anti-Semitism, to promoting 
Holocaust education and to the restoration of stolen property. A new European Institute, the 
EN 5   EN European Shoah Legacy Institute, was establishe d in Terezin (Czech Republic) to help fulfil 
the goals of the declaration. The EU’s Fundamental Rights Agency published a new report on Anti-Semitism in the EU in April 2010. 
Regional and international issues
 
Co-operation under CFSP/ESDP, crisis management 
The Council of the European Union extended the mandate of the EU Border Assistance 
Mission in Rafah (EUBAM Rafah) until May 2010. The mission maintains its operational capability and remains prepared to redeploy it s personnel at the crossing-point as soon as 
conditions permit.  
Situation in the Middle East 
Events in 2009 were influenced by the Gaza conflict and by the coming into power of a new 
Israeli Government and a new US administratio n. Peace talks stalled a nd little progress was 
made towards a comprehensive settlement of  the Israeli-Palestinian conflict. The EU 
confirmed its position on a range of issues linke d to the situation in the Middle East, both 
through private contacts with th e parties and through public stat ements. The EU continued to 
work with its Quartet partners on a re-launch of peace talks aimed at a deal within an agreed 
timeframe. 
The new Israeli Government at first resisted demands from the international community to 
freeze settlements activity in line with Israel’s Roadmap obligations and the commitments taken by Israel at the 2007 Annapolis confer ence. Subsequently, in November 2009, the 
Government approved a temporar y 10-month moratorium on settlement construction in the 
West Bank. The freeze excludes East Jerusalem. Th e EU took positive note of the decision as a 
first step in the right directi on, but continued to express concer ns about the situation in East 
Jerusalem. House demolitions and evictions of Pa lestinians from homes in East Jerusalem and 
other areas of the West Bank continued. No progr ess was made in curtailing settlement activity 
in East Jerusalem. The total settler popula tion is now approaching 500,000 of which around 
200,000 are in East Jerusalem. Plans to build hundreds of housing units in settlements in 
Jerusalem neighbourhoods located beyond the 1967 Green Line were announced several times during the reporting period. 
During 2009, the EU repeatedly called on Israel to open the Gaza crossings for the flow of 
aid, trade and persons to and from Gaza. Wh ile towards the end of 2009 Israel granted 
permission for glass and a limited range of other products to be imported into the Gaza strip 
and a limited range of ag ricultural products to be  exported, including strawberries and cut 
flowers, there was no significant improvement  as regards access to Gaza. Only minimum 
access was granted to allow the delivery of humanitarian assistance. This undermines the 
ability of Palestinians to meet basic needs such as protection, shelter, food, water, and 
healthcare. Restrictions on the import of constr uction material also ha ve a negative impact on 
the population, 90% of whom are aid-dependent.  
The Israeli Security Agency in several inst ances denied authorisation, citing security 
concerns, to medical patients attempting to ex it the Gaza Strip in order to access medical 
treatment. NGOs protested about human rights workers being prevented from entering Gaza. 
Co-operation continued with Israel on securi ng the exit from Gaza of students with EU 
scholarships. As a result, 37 students le ft Gaza in 2009 through the Erez crossing. 
EN 6   EN Unilateral ceasefires were implemented by the de facto  government in the Gaza Strip and by 
Israel. However, since the end of the Gaza conflic t, rockets and mortar shells were fired from 
Gaza, and arms smuggling continued. Palestinia n sources reported attacks by the Israeli 
Defence Forces on Gaza. The Israeli soldier abducted by Hamas, Gilad Shalit, remained in captivity. The EU called for a complete halt to violence and for the release of the soldier. 
The 2009 Report of the United Nations Fact Fi nding mission on the Gaza conflict was widely 
debated. Israel’s Ministry of Foreign Affairs rejected the content a nd methodology of the 
Report. In November 2009, the Military Advocat e General’s office was reportedly reviewing 
140 different cases that had been submitted si nce the Gaza conflict, including most of the 
allegations raised in the Report. 28 such cases are being investigated by the Military Police. No 
independent investigation into  the alleged human rights viol ations was launched, though the 
Report requested both sides to the conflict to do so. 
During 2009, Israel took steps to ease restrictions on movement in the West Bank. In October 
2009, there were 578 obstacles to movement in the West Bank, including 69 permanently 
staffed check points, down from 632 monito red in May 2009. In July 2009 the Israeli 
authorities decided to expand the Allenby Border Terminal’s opening hours for Palestinian goods. The Jalama crossing connecting the Gilboa re gion in Israel with the Palestinian city of 
Jenin was opened to vehicles in November 2009 for the first time in eight years. While these decisions made a contribution to economic gr owth and on improving the economic and social 
conditions of the Palestinian population in the We st Bank, further and sustained efforts are still 
required, as the framework for such improvements remains severely constrained. 
Violence perpetrated by Israeli settlers agains t Palestinians and their property continued in 
2009, with a monthly average of about 29 such in cidents. In December 2009, a mosque in the 
West Bank village of Yasuf was torched, allege dly at the hand of settlers angry about the 
settlement freeze announced by the Government. The authorities arrested suspects in January 
2010. Several NGOs urged the Israeli Government to take measures in order to provide 
Palestinian residents of the We st Bank with full protection.  
Non-proliferation of weapons of mass destruc tion and their means of delivery, including 
ballistic missiles  
With regards to the EU-Israel Informal dial ogue on non-proliferation of weapons of mass 
destruction, the EU con tinued its efforts to make progress in the implementation of the 1995 
NPT Resolution on the Middle East. In the repo rting period, it announced  the intention to 
organise a follow-up event to the seminar “M iddle East Security, WMD Non-Proliferation 
and Disarmament”, which took place in 2008.  
Combating terrorism 
The Israeli Government continued to put considerable emphasis on terrorism as a challenge to 
security and political leadership . Israel expressed interest in deepening collaboration with the 
EU in this area, in the form of specialised working groups on va rious anti-terrorism issues.  
International organisations  
In line with the joint objective to promote effective multilateralism, the EU and Israel 
continued to develop regular contacts on a num ber of matters of common interest. This 
included discussions on UN-related matters, such as human rights, climate change, the 
EN 7   EN International Criminal Court, UN peacekeeping, and the UN reform process – System-wide 
Coherence. Good progress was made in rela tion to Israel’s accession to the OECD. 
Israel is party to most international huma n rights instruments but not to their optional 
protocols. It has four overdue  reports of UN Treaty Bodies and it has not extended an open 
invitation to all thematic special procedures. During the reporting period Israel did not cooperate with the Special Rapporteur on the si tuation of Human Rights in the Palestinian 
Territories occupied by Israel, accusing the Rapporteur of political bias in favour of the 
Palestinian side. Israel has not responded to requests for a visit by five UN Special 
Rapporteurs. 
Regional cooperation  
Trilateral cooperation (involving Israel, the Palestinian Au thority and the European 
Commission and covering trade, transport and energy) has considerable potential but has 
stalled.  
3. E
CONOMIC AND SOCIAL COOPERATION  
Despite its high integration with the US a nd European economies, the export-oriented 
economy of Israel was one of the least affected  by the global economic and financial crisis 
and among the earliest to stage a recovery. Seve ral factors – the export and import structure, 
the absence of a housing bubble or a bank credit  boom, high household sa vings rates and the 
specific policy responses – helped Israel to mini mise the impact of the crisis, so the economy 
was technically out of the recession  as from the second quarter of 2009. 
The reduction of the public debt and the structur al reforms of recent years as well as the 
decisive easing of fiscal and monetary polic y shielded GDP growth in 2009 which recorded 
an increase of around 0.5% compared to 4.1% in 2008.  
Fiscal policy was expansionary during 2009, in pa rt reflecting the financial cost of the Gaza 
conflict, the set up of an inclusive (0.7% of GDP) economic stimulus plan and the use of 
automatic stabilisers. The earlier well-established framework of fiscal rules – comprising 
ceilings on deficits and on the growth of real spending – was set aside while the Government 
adopted a two-year 2010-2011 budget, implementi ng the fiscal stimulus. Thus, despite that 
tax revenues were stabilised at  the end of 2009, the public defici t was expected to rise to 
around 5% of GDP in 2009 while public debt wa s expected to approach 79% of GDP.  
Monetary policy was eased deci sively by the Bank of Israel which reduced interest rates 
(from 2.5% in summer 2008 to 0.5% in April 2009), resorted to quantitative easing and 
intervened in the foreign exchange market  through programmed purchases of USD which 
were replaced later by discretionary purchases . In August 2009, the Cent ral Bank of Israel 
responded to higher than expected inflation ( 3.3%) and became the fi rst developed-economy 
central bank to raise its interest rate (to 0.75%) si nce the onset of the glob al financial crisis. In 
December 2009 and January 2010, it continued to tighten monetary policy by raising its key 
discount rate by 25 basis points (to reach 1 %).  Inflation for 2009 remained above the upper 
limit of the Bank of Israel’s 1-3% price st ability range. However,  stripping out seasonal 
factors and taxes and surcharges, th e annual rate of inflation was 2.6%. 
Both exports and imports fell since the beginn ing of 2009. Export value of goods and services 
dropped by 20.1.% and 7.5% respectively compared to 2008, while import value of goods and 
services decreased by 28.1% and 12. 1% with respect to the previous  year. This fall was due to 
EN 8   EN the economic crisis, but came also as a result of  the improvement in the terms of trade and 
real depreciation of the shekel  during the year. The decline in total exports of goods and 
services (16.4%) was more moderate than that in total imports of goods  and services (24.3%). 
The most notable fall in imports was in inve stment goods (producer dur ables) in the first 
semester; this trend reversed when the reco very of the economy began. Export activity was 
mainly based on services and electronic components while exports of goods excluding 
diamonds and electronic components remained sluggi sh particularly in the first quarters of 
2009. As a result, the balance of trade reco rded a surplus of around 2.1% of GDP in 2009 
while the current account surplus widened to around 3.5% of GDP in 2009.  
The banking sector remained solid and the various emergency fina ncial sector support 
initiatives remained in place at the end of  2009, even though thei r use by the banks was 
limited. However, the authorities launched procedures for taking  actions to strengthen the 
content of supervision ( see chapter 4, section on financial services ). 
Employment and social policy 
Poverty  and inequality remain widespread in Is rael. Over 20% of households are below the 
poverty line compared to the OECD average of  11%. Poverty is concentrated among the 20% 
of the population belonging to the Arab minor ity (of which 50% are below the poverty line) 
and the estimated 8% who are ultra-orthodox Jews  (of which 60% are below the poverty line). 
The Bedouin community suffers from a very high poverty rate estimated at 80% among the 
unrecognized villages. In November 2009, Israel cel ebrated for the first time the International 
day for the eradication of povert y. On this occasion, the Knesse t reported on the inability of 
the Government to address so cial and education gaps.  
The unemployment  rate stopped declining and was at 7.4% in November 2009. The highest 
rate of unemployment, 11.3%, was in the south of  the country and the lowest rates were in 
Jerusalem and Tel Aviv with some 4%. The Mini stry of Industry, Trade and Labour prepared 
in May 2009 an Emergency Plan for Unem ployment aimed at combating rising 
unemployment caused by the economic crisis. So me minority groups reportedly face specific 
difficulties in accessing the labour market. Labour force data reflect serious gaps in labour 
force participation for Arabs and Haredim, with  only 23% of Arab women in the labour force 
and one in four Haredi men engaged in paid work.  
In the area of social inclusion , the Knesset approved in June 2009 regulations enabling savers 
in pension funds to manage their portfolio them selves with some limits. It also approved in 
January 2009 a comprehensive social assistance  system (a “safety net”) for people over 57 
years old under certain conditions. The safety net will be activated in 2011. 
As regards social dialogue , the Government agreed in July 2009 to enact 15 laws that would 
secure employees’ rights in the work place. 
Israel continued to promote women's participation  in social, economic and political life. For 
the first time, in 2009, a female Deputy Minist er for the Advancement of Young People, 
Students and Women was appointed. Women’s organi sations hope that this constitutes a step 
towards appointing a (female) minister charge d with women’s affairs. However, there is 
pronounced inequality in women’ s participation in the political system in Israel. The 
percentage of women represented in the Kn esset (elected in 2009) is 19%. Women are 
continuously under-represented in the Kne sset in comparison to other countries. 
EN 9   EN The second phase of establishing sustainable development  indicators was finalised and the 
indicators were published in August 2009 by the Ministry of Environmental Protection, the 
Environmental Policy Centre of the Jerusalem Institute for Israel Studies and the Central 
Bureau of Statistics.  
4. TRADE -RELATED ISSUES , MARKET AND REGULATORY REFORM  
In the reporting period, the EU remained the first trading  partner for Israel, with imports 
(excluding diamonds) represen ting 37% and exports (excl uding diamonds) 29%. Bilateral 
trade was however reduced by 20% year-on-year reflecting the impact of the global crisis. 
During the 2008-2009 reporting period, EU imports from Israel fell by over 20% and EU 
exports contracted by 18%. Some market acce ss problems remain, but progress was made in 
tackling trade irritants at th e end of 2009 and in early 2010.  
As regards the liberalisation of trade in agricultural products, processed agricultural, fish 
and fishery products , the European Commission and Israel signed in November 2009  a new 
agreement that entered into force in January 2010.  
In 2009 the Israeli customs  worked on a pilot phase of the TRACK (Trade related authorities 
and customs keystones) system, which allows ope rators and customs agents to lodge requests 
to the competent authorities and to follow up the procedure on line. The system transmits 
electronic authorisations to  the customs authorities.  
On free movement of goods and technical regulations , the European Commission and 
Israel initialled in June 2009 a framewor k Agreement on Conformity Assessment and 
Acceptance (ACAA) of Industr ial Products, which includes an annex on good manufacturing 
practices for pharmaceutical products. This ag reement awaits ratification. Other priority 
sectors include pressure vessels and medical devi ces. In the field of medical devises, the draft 
law passed the first reading in the Knesset alr eady in 2008 and the prepar ations of second and 
third reading started in the relevant comm ittees after the 2009 elections. The way forward 
with pressure vessels is under discussion with stakeholders. Israel is  also considering its 
possible interest in machinery as another potential pr iority sector. 
Some progress can be reported on  consumer protection as the Knesset Economic Committee 
approved in November 2009 an amendment to th e law which improves customers' ability to 
withdraw from ongoing distance se lling deals. Accordingly, the customer would be able to 
cancel the ongoing deal, while paying only for th e time he actually used the service. The 
amendment has still to be approved in second and third readings. The new commissioner for  
consumer protection  and fair trade was appointed just after the reporting period, in early 
January 2010.  
Regarding sanitary and phyto-sanitary (SPS) matters, in March 2009 the new phyto-
sanitary law for import of plants  and plant products ente red into force. Isra el also adopted new 
sanitary rules for meat imports. In late 2009, the Food and Veterinary  Office (FVO) carried 
out several missions to Israel  on poultry, fishery products and milk products, respectively, 
which confirmed the high level of protecti on enforced by competent authorities.  
On the business climate,  the Government approved in June 2009 an amendment to the trust 
funds law that would enable foreign funds to offe r their products in Israel. No progress can be 
reported as regards company law . During the reporting period, Israel started work on 
amendments to the regulation requiring companies to submit documents to the Companies 
EN 10   EN Registrar not only in Hebrew but also in En glish. The Act on corporate governance is still 
under consideration in the Knesset.  
In the area of audit and accounting , the Ministry of Justice and the Securities Authority 
started working towards the establishment of  an independent institution to supervise 
accountants in public companies. 
The bilateral negotiations for the liberalisation of services and establishment continued in 
2009, focussing mainly on telecommunicat ion and financial services.  
In the field of financial services , the new Bank of Israel (B oI) law was approved by the 
Cabinet in July 2009 and then submitted to the inter-ministerial committee. The draft law will 
increase the independence of the central bank, establish a committee with power to set monetary policies, and a separate management committee to manage the bank’s administration. In June 2009, the Government a pproved an amendment prepared by Israel’s 
Securities Authority to the trust funds law that  would enable foreign funds to offer their 
products in Israel. The amendment still n eeds to be submitted to the Parliament. 
Other key areas 
A new OECD-compatible agreement on double taxation  between Israel and Germany was 
initialled in June 2009. The Isra eli tax authority proposed a new version of its proposal for a 
reform of the taxation of alc oholic beverages. The new tax re gime would put an immediate 
end to the discrimination between imports of whisky and of other alcoholic beverages and 
would eliminate the ad valorem uplift in price on imported spirits (TAMA) by 2014. The final 
version of the reform is subject to Knesset appr oval. In order to strengthen its administrative 
capacity to fight fictitious invoices which cause a considerable loss of revenue for the Israeli 
treasury, the Israeli tax authority set up a new system for the online VAT reporting of sales 
and inputs. In November 2009, the Knesset approved the 'green' car tax reform.  
With regard to competition policy , the Israeli Anti-Trust Authorit y (IAA) issued decisions in 
the banking and air transport s ectors in 2009. No progress can be reported in the field of state 
aid.  
Significant progress was made dur ing Israel’s accession process to the OECD in addressing 
the EU’s long-standing concerns in the area of  intellectual property rights, especially for 
pharmaceuticals. However, the IPR legislation needs to be further aligned with EU requirements to ensure full market access and fair competition on the world markets.  
Concerning  public procurement,  the “Blue & White” plan was launched in August 2009 to 
promote locally manufactured goods. The objectiv e is to create awareness among government 
institutions, public bodies and fi nal consumers to buy locally ma nufactured goods in order to 
boost the Israeli economy, create new jobs and save existing ones. The plan does not, however, impose any legal obligations to buy lo cal products. A group of Members of Knesset 
submitted in August 2009 a draft law granting pr eferences to local textile companies over 
foreign bidders in government te xtile procurements. The draft not es that it would be relevant 
only to cases which do not contradict Isra el's international economic obligations. 
In the area of statistics , Israel cooperated fully over th e reporting period in the regional 
working group bringing together re presentatives of the statistical  offices of Egypt, Jordan, the 
Palestinian Authority and Israel which aims in  particular at defini ng a work programme to 
reduce asymmetries in the future. 
EN 11   EN On enterprise policy , Israel continued to implement the Euro-Mediterranean Charter for 
Enterprise. A Small Business Act, which would combine all mechanisms of support to Small 
and Medium Sized Enterprises (SMEs), is under pr eparation and is expected to be finalised by 
2011. The Ministry of Industry, Trade and Labour also plans a new model for an executive 
agency for small businesses. The Chamber of Commerce signed an agreement on the pensions 
for proprietors of small businesses and the self-employed in December 2009 and it is hoped 
that it will pass in the parliament soon. La te payment to companies was eliminated in 
government ministries. Small Business Develo pment Centres (MATI) continued training, 
fund raising from foundations and banks, and coaching of new businesses. There are 25 
MATI organisations all over Israel. The thir d annual meeting of the EU-Israel Business 
Dialogue took place in October 2009. This business-led dialogue provides a platform for European and Israeli businesse s to network and to identify regulatory issues of common 
concern. The Israeli Industry Centre for Resear ch and Development, a fully fledged member 
of the Europe Enterprise Network (EEN) since 2008, participated actively in the EEN 
activities. In 2009, the Israel-EU Chamber of Commerce organised a seminar on the economic 
crisis and a public discussion on the environmen t and renewable energy in close cooperation 
with EU partners.  
5. C
OOPERATION ON JUSTICE , FREEDOM AND SECURITY  
In 2009, bilateral coopera tion in the field of migration  focused on exchange of best practices 
between Israel and EU Member States, both being destinations for immigration. Israeli 
authorities, guided by a rising aw areness that the country is increasingly becoming attractive 
for non-Jewish immigrants, invited experts from EU Member States to a seminar in December 
2009 with a view to sharing expe rience and policy options. In r ecent years Israel has become 
a destination country for African asylum-seekers , mainly from Sudan and Eritrea. 
With regard to the fight against organised crime , Israel did not proceed with the ratification 
of the remaining Protocols to the 2003 Un ited Nations Convention on Trans-National 
Organised Crime on the Illicit Ma nufacturing of and Trafficking in Firearms, Their Parts, 
Components and Ammunition. 
In the context of the fight against trafficking of human beings , the Ministry of Foreign 
Affairs organised a workshop on human traffi cking in May 2009 in cooperation with the 
IOM, to promote international cooperation and raise awarene ss of sanctions, protection and 
prevention measures. Israel also supported th e implementation of an  EU-funded project to 
build capacity to manage migration pressures including trafficking, in cooperation with civil 
society groups. Israeli officials participated in a study visit to  Austria and Belgium in April 
2009 on the identification of victims of traffi cking for forced labour and the operation of 
victim support services. Israel remains a key destination for persons trafficked for sexual 
exploitation. While law enforcement agencies continue working agains t human trafficking, 
their actions fell short of minimum international standards.  A successful conviction against 
employers and recruitment agencies for labour tr afficking has yet to emerge. As was the case 
in 2008, attention needs to be pa id to rehabilitation of victim s including housing and medical 
service support in the context of the implemen tation of the national plan to combat human 
trafficking.  
With regard to the fight against drugs , legislative measures were taken to include new 
substances into the Dangerous Drugs Ordinance. Israel cooperated with the work of the Mini 
Dublin Group in June 2009 which noted the need for intensified interna tional and regional 
EN 12   EN cooperation. Recommendations in cluded the establishment of a central anti-dr ug unit within 
the Israeli police as well as accurate inform ation exchange with ne ighbouring countries on 
precursors. Drug trafficking and its links with  national and internat ional organised crime 
networks remains an issue of concern. Israeli law enforcement officials participated in the 
EU-sponsored regional Lex Pro (Law Enfo rcement Exchange) programme including 
workshops on drug interdiction at seaports and strengtheni ng border controls against 
smuggling, in March and April 2009 respectivel y. In addition, Israeli Anti-Drug Authority 
officials participated in a re gional coordination meeting hosted by UNODC in Cairo in June 
2009 alongside representatives from Egypt, Jord an, Morocco and the occupied Palestinian 
territory.. Israel participated  actively in the regional Euro -Med Police II programme on drug 
cooperation and the annual meeting of th e UN Commission on Narcotic Drugs (CND-
ECOSOC) in March 2009 as well as the UN meeting of Heads of National Drug Law 
Enforcement in June.  
With regard to the fight against money laundering , the relevant supervision authorities 
continued implementing of the national control regime based upon the 40 plus 9 Special Recommendations of the Financial Action Task  Force (FATF) while due diligence, KYC 
(‘know your customer’) and KYB (‘know your business’) practices continued to be 
implemented within financial in stitutions and the financial se rvices industry in line with 
statutory obligations. 
In the area of police and judicial cooperation , work continued as in  2008, on the negotiation 
of operational agreements with Europol and Euro just. It is a precondition for the conclusion of 
such agreements that Israel ensure an adequate  level of protection of personal data. In this 
regard, implementation of a twinning project on  data protection star ted in June 2009. The 
project aims to ensure the effective enforcement of national legislation on privacy in line with 
European standards as set out in EU Directiv e 95/46/EC and to raise public awareness among 
the Israeli administration, persona l data controllers and the pub lic on personal data protection. 
In December 2009, the Working Party established under Article 29 of the latter Directive, 
delivered a favourable opinion on the level of ade quacy as regards protection of personal data. 
As regards civil judicial coope ration, Israel expre ssed interest in acce ding to the Lugano 
Convention on Jurisdiction and the Recognition a nd Enforcement of Judgments in Civil and 
Commercial matters.  
In 2009, Israel ratified the UN Convention against Corruption . In international surveys on 
corruption perception Israel ranks  similarly to EU Member Stat es. Investigations were opened 
during the year against high -ranking Israeli po liticians on grounds of corruption. 
6. T
RANSPORT , ENERGY , ENVIRONMENT , THE INFORMATION SOCIETY , RESEARCH AND 
DEVELOPMENT , SCIENCE AND TECHNOLOGY  
Israel cooperates with the EU in order to pr omote financially sustai nable, integrated multi-
modal transit networks in urban regions in Isr ael. The cooperation entails the establishment of 
necessary procedures, standards and requirement s to manage sustainable public transport and 
extends to the creation of a co re national transit authority to  oversee the provision of public 
transport  at national level. 
There were a number of delays in the construc tion of major railway an d road infrastructures 
as well as in the development of the first light rail lines in metropolitan Tel Aviv and an underground railway station in Jerusalem. 
EN 13   EN Negotiations on a comprehensive EU-Israel Euro-Mediterranean aviation agreement 
continued in 2009. The agreement should provide for gradual market opening combined with 
a high-level of regulatory convergence. As regard s aviation safety, Isr ael needs to further 
increase resources in order to ensure e fficient safety oversig ht of air carriers. 
Cooperation continued to progress in th e Global Navigation Satellite Systems  (GNSS) field. 
Israeli Representatives took part in an FP7 event, called Growing Galileo, in January 2009 in 
Brussels. The first interim review of pr ojects was carried out by the European GNSS 
Supervisory Authority. Four new projects were selected for funding for a total of EUR 1.9 
million. The setting up of the European Geosta tionary Navigation Overlay Service (EGNOS) 
ranging and integrity monitoring stat ions on Israeli te rritory is ongoing. 
As regards the maritime sector, in May 2009 the Israel Ports Company (IPC) completed the 
construction of the new Carmel container termin al and turned it over to the Haifa Port 
Company for operations. It is expected that th e terminal's infrastruct ure will facilitate more 
efficient service for importers  and exporters and benefit th e Israeli economy. The IPC has 
already begun design work on the next stage co ntainer terminals that will be needed during 
the coming decade. In September 2009 the mini sterial committee for pr ivatization approved 
the sale of 15% of the government's holdings  in the Haifa and Ashdod port companies in 
2010. A Maritime Rescue and Coordination Cent re (MRCC) was established as of June 2009 
by the Israeli Maritime Admini stration on its premises and unde r its direct supervision.  
Within the regional MEDAMOS I (MEDA Motorways of the Sea) programme, the axis Haifa 
/Trieste (Italy) was selected as one of the four  pilot projects and rece ived additional technical 
assistance. 
Since March 2009 a twinning project with the Ministry of transpor t and road safety aims to 
promote financially sustainable, integrated multimodal public transport networks in urban 
regions, and to develop the capacity of the Ministry. 
In the field of energy , Israel took steps towards the priv ate production of el ectricity. Israel 
continued the construction of internal gas pipelines and further prepared the future 
construction of LNG facilities. With a view to fu ture gas supplies, Israel confirmed its interest 
in importing Caspian energy resources. 
Israel pursued the implementation of its obj ectives to reach, by 2020, 20 % energy savings 
and a 10 % share of renewable energy sources in  electricity generati on. In November 2009, 
the Government launched a new energy efficiency  plan and media campaign. Israel adopted a 
strategy to advance renewable energies part icularly in the Negev and the Arava valley, 
established a Clean Energy Forum of stak eholders and announced a tender for the 
establishment of a renewable energies centre. It also launched various projects for new wind 
farms, solar thermal and photovoltaic power plants . Israel furthermore started preparations for 
a master plan for the development of renewabl e energies. These actions are of particular 
relevance in the context of the develo pment of a Mediterranean Solar Plan.  
The trilateral energy cooperation between Isra el, the Palestinian Authority and the European 
Commission, which was re-launched in 2008, stalle d in the context of the Gaza conflict. The 
aim remains the establishment of a joint energy office and the facilitation of projects of common interest, such as the jo int Israeli-Palestinian “Solar for Peace” initiative. In 2009, an 
EU funded study to support the “Solar for P eace” project was completed. The European 
Commission encouraged partners to fully  re-activate the tr ilateral cooperation. 
EN 14   EN In the field of climate change , work continued on greenhouse gas emission inventories and 
Israel started preparing its Second Na tional Communication to the UN Framework 
Convention on Climate Change.  A Ministerial Committee on E nvironmental Protection and 
Climate Change was set up. Sect oral committees started prepar ing a national action plan on 
mitigation issues. Work teams were appointed to  prepare a recommendation for a national 
plan relating to preparedness fo r and adaptation to climate change in the fields of energy 
demand for heating and cooling, water resour ces, agriculture, construction, public health, 
coastal infrastructure, drainage and erosion, eco nomy and insurance, geo-strategic aspects, 
biological diversity and natural habitats and tour ism. Israel took steps to prepare and approve 
further Clean Development Mechanism (CDM) Projects. Three new such projects were registered at UN level, bringing the overall number of registered  CDM projects to 16. 
Israel associated itself with  the Copenhagen Accord and provided information on targets and 
actions that it will implement.  
The Ministry of Environmental  Protection announced its main priorities for 2010, including 
waste management, air pollution, climate cha nge, environment education, strengthened 
enforcement and promoting a sustainable lifestyle.  The Government decided to make 
government ministries more environmentall y efficient through se tting quantitative, 
measurable targets inter alia  for the reduction of electricity, water and paper consumption and 
the reduction of waste.  
New or amended regulations on freedom of information, air quality, waste, hazardous 
substances, nature protection, protection of the coastal environmen t and non-ionizing 
radiation were adopted.  Preparations continued with regard to new or amended legislation on 
asbestos, packaging waste, the marine environm ent, enforcement, wild life protection and non-
ionizing radiation as well as new or amended regulations on air quali ty, marine pollution, 
non-ionizing radiation, noise a nd the landscape protection fund.   
Israel took steps to prepare a pa ckaging and packaging waste policy.
 “Green taxation” was 
introduced to promote the pur chase of less polluting priv ate vehicles. A strategy on 
sustainable household consumption and sustaina ble consumption processes in industry is 
under preparation, as well as a stra tegy on industry and the environment.  Work continued to 
implement existing strategies and plans,  where continued attention is required.  
Steps were taken to strengthe n administrative capacity, inter alia  the establishment of a unit 
under the nature and parks authority to id entify and accompany enforcement of waste 
offences.  New local environment units were set up in  some municipalities. Action was taken 
towards the establishment of uniform, shorter and consistent administrative enforcement 
procedures. Overall, the administ rative structures still need to be strengthened. Steps were 
taken to integrate environment considerations in other policy areas, such as transport and 
agriculture. Some steps were taken to promote integrated permitting, notably in Haifa Bay. Technical guidelines for the industry on integrated permitting were prepared. 
Israel continued to publish  environmental information on a re gular basis, and carried out 
activities to inform and involve the public. Steps were taken to prepare a set of environmental 
indicators to reflect the state of the environmen t in recent years. Preparatory actions continued 
on a pollutant release and transfer register, includ ing a draft list of its sc ope, preparations for a 
pilot study and examination of required legi slative, administrativ e and organisational 
adjustments. 
EN 15   EN There were no significant developments in the reporting period concerning ratification of the 
remaining Protocols to the Barcelona Conve ntion for the Protection of the Marine 
Environment and the Coastal Region of the Mediterranean2. Israel continued to participate in 
the Horizon 2020 Initiative, in th e preparation of a strategy fo r water in the Mediterranean 
(which failed to get approval at the recen t ministerial meeting of the Union for the 
Mediterranean), in the Mediterranean Action Plan  and in the EU Water Initiative. Cooperation 
and information exchange took place between the Eu ropean Commission a nd Israel, including 
on water, pollution reduction in the Mediterranean region and environmental reporting.  
In the field of civil protection , Israel took part in the a new phase of activities of the Euro-
Mediterranean Programme for the Prevention, Preparedness and Response to Natural and 
Man-Made Disasters that st arted in 2009, continuing the pr ocess of strengthening civil 
protection activities in the regi on, enhancing capacities at regi onal, national and local levels, 
and promoting institutional coop eration. Hereby, further steps were taken to bring Israel 
closer to the European Civil Protection Mechan ism, contributing at the same time to the 
development in the region of a civil protectio n culture based on an integrated approach 
covering disaster prevention, preparedness and response. 
As regards regulatory developments in the information society  sector, in 2009 the Ministry 
of Communications only partially  implemented the recommendations set out in the report of 
the Committee for Promotion of Competition in th e Telecommunication Industry in Israel (the 
Gronau Committee). The communications market in Israel is still not effectively liberalized. 
The Ministry of Communications launched a public consultation on the adjustment of the 
regulatory regime for cellular Internet services to the market environment, as regards cellular 
broadband service tariffs, quality, and variety.  
In October 2009, Israel’s leading electronic co mmunications provider a nnounced the sale of 
approximately 30% of the company’s share ca pital. The Ministry of Communications in 
charge of promoting competition in the sector, is closely examining the implications of such a transaction for the development of competition a nd for the growth of the telecom sector. The 
same month the leading provi der also announced the deploym ent of the most advanced 
communications network in Isra el, while speeds on existing ne tworks already reach around 10 
MB. In addition, they announced a number of adva nced services such as a new standard 
wireless router, a storage portal on the ne twork, High Definition telephony, self-service 
services for telephone line management through the internet, and internet telephony. 
The Ministry of Communicati ons granted a Voice Over Br oadband (VOB) licence to a 
company owned by the leading provider. The licence will enable the company to deliver VOB services to private custom ers and business clients.  
In December 2009,
 the Ministry of Education and the Mi nistry of Communications decided to 
carry out an extensive programme to increase Internet safety awareness among children and teenagers. The programme will cover unsafe usag e, such as network bullying or exposure to 
violent or illegal contents. 
Exchanges of view s on cultural and audiovisual  policy took place in various frameworks 
such as European Film Festivals and training workshops.  
                                                
 
2 Israel has signed but not ratified the Barcelona Convention’s New Emergency Protocol, nor the 
protocols on Specially Protected Areas and Biodiversity and Integrated Coastal Zone  Management 
(signed in January 2008). It has not ratified the amendments to the Dumping protocol. 
EN 16   EN In the area of science and technology , the already extensive coope ration between the EU and 
Israel was further developed. Is rael has been associated to the 7th Framework Programme for 
Research and Development (FP7 ) since its inception. By November 2009 nearly 700 Israeli 
research entities had been selected for funding, pa rticularly in the Ideas programme and in the 
Information and Communication Technologie s (ICT) and the Health themes. The 
performance of Israeli universities and research  institutes was particul arly strong, with these 
organisations receiving some 63% of the ove rall funding of EU R 243 million in grants going 
to Israeli participan ts up to November 2009. 
In November 2009, Israel and the EU organised their fifth Joint Research Committee meeting 
at which both sides expressed satisfaction wi th the development of S&T cooperation. Beyond 
the Israeli participation in FP7 the parties also discussed the participation opportunities for EU 
researchers in Israeli resear ch programmes and projects. 
The Scientific Council of the European Research Council (implementing the Ideas 
programme of FP7 in frontier re search) met in Israel in December 2009. On that occasion, an 
information day on the Ideas programme, aimed ma inly at Israel's research universities was 
held.  
Eleven Israeli research organisations are coll aborating with European Commission the Joint 
Research Centre of the in 14 competitive ac tivities (FP6 projects) (food safety and quality, 
nanotechnology, photovoltaics, health, envi ronment, chemicals and energy). 
7. PEOPLE -TO-PEOPLE CONTACTS , EDUCATION AND HEALTH  
In May 2009, a first senior offi cials meeting on implementation of  the Joint Declaration with 
the European Commission on cooperation and dialogue on education  and training took place 
in Brussels with an exchange of views on a pproaches to lifelong lear ning, recognition of study 
credits and utilization of information and communication technologie s in education. The 
Ministry of Education published plans to deve lop of school education in peripheral areas by 
providing financial incentives for teachers and to increase the number of high schools entitled 
to Government aid by some 100 schools. Howe ver, investment in education per capita 
remains far below comparable international indicators at all systemic levels including salary levels and pupil-teacher ratio.  
In October 2009 the Israeli Counc il for Higher Education presen ted the Knesset with data 
showing that Israel has the highe st rate of brain drain in the world, warning against continued 
erosion of higher education  and the status of academics. However, inadequate funding of 
higher education contin ues to be an area of concern alongside academic freedom and 
movement of people including Palestinian students and academics. 
Israel participated actively in the second Ca ll for Proposals for Tempus IV benefiting from 
one project, on quality assuranc e at regional level for the aca demic year 2009-10. In addition, 
Israeli students and scholars benefited from  Erasmus Mundus scholarships, including 69 
mobility grants. Israeli universities are encouraged to continue submitting high-level applications for projects unde r the Jean Monnet programme. 
In the field of culture , nine projects were selected under a call for proposals for local and 
regional cultural activitie s including Arab-Israeli intercultura l cooperation. At regional level, 
Israel participated actively in the ne w Euro-Med Heritage IV programme.  
EN 17   EN As Israel is not a party to the 2005 UNESCO Convention on th e Protection and Promotion of 
the Diversity of Cultural Expressions, a dialo gue and exchange of views on cultural and 
audiovisual policy did not emerge. On the same  grounds, Israeli cultural organisations could 
not participate in the Call for Proposals for the 2009 ENP Sp ecial Action unde r the Culture 
Programme. 
Extensive contacts continue between the EU Delegation and representatives of Israeli civil 
society . A seminar for European, Israeli and Pale stinian NGOs was organised in Ireland in 
February 2009 to learn from peace-building experience before and during the Irish Peace 
Process. A successful means of developing links between Israeli and EU civil society within 
the ENP framework remains to be formulated.  
Israel and the EU sustained health  sector dialogue. Is rael took measures to combat influenza 
A (H1N1) including through vaccination and an awareness campaign. In October 2009, Israel 
participated in the newly established EU en larged health information committee. Israel 
pursued participation in the ‘Episouth’ network on communi cable diseases for the EU, 
Mediterranean and Balkan countries.  
8. FINANCIAL COOPERATION – 2009  KEY FACTS AND FIGURES  
The European Neighbourhood and Partnership Instrument (ENPI) envelope for Israel under 
the National Indicative Programme 2007-2010 is EU R 8 million, initially divided into four 
yearly EUR 2 million tranches. The proposal was slightly reduced in 2009 to EUR 1.5 
million.  
As a developed country, Israel is not a typica l beneficiary of ENPI assistance. Instead, the 
programme is geared towards supporting the achie vement of key policy objectives as outlined 
in the EU-Israel ENP Action Plan and pursu es the approximation of Israeli norms and 
standards to those of the EU. 
Currently, implementation of the measures c overed by the 2007 Annual Action Programme is 
still underway with two tw inning projects in the field of data  protection and transport. A third 
twinning project will start in  March 2010 with the overall obj ective of strengthening the 
capacity of the Equal Employment  Opportunity Commission in Israel. A call for proposals to 
select the twinning Member Stat e counterpart is ongoing in the fi eld of veterinary standards. 
Identification of projects from the 2009 allocation is still in progress. 
An indicative financial envelope of EUR 6 m illion will be available to support co-operation 
activities in Israel in peri od 2011-2013, based on a European Commission decision of March 
2010. 
In addition to the bilateral allocation, Isra el also benefited from cooperation activities 
financed under the ENPI multi-country and regional programmes, as well as horizontal thematic programmes, such as the "Partner ship for Peace" Programme for civil society 
organisations, the European Instrument for Democracy and Human Ri ghts (EIDHR) and the 
Non-State Actors and Local Authorities in Development (NSA/LA) programme.  
Israel also participates in the Cross-Bord er Cooperation (CBC) Mediterranean Sea Basin 
programme (EUR 173.6 million for the whol e programme in the period 2007-13).