JOINT STAFF WORKING DOCUMENT Implementation of the European Neighbourhood Policy in Israel Progress in 2011 and recommendations for action Accompanying the document JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Delivering on a new European Neighbourhood Policy
Date: 2012-05-15
Institutions: European Commission, High Representative of the Union
Subjects: European neighbourhood policy, Israel, Palestine question, economic policy, education policy, environmental policy, human rights, judicial cooperation, migration policy, rule of law, social policy, trade cooperation

EUROPEAN COMMISSION 

HIGH REPRESENTATIVE OF THE
EUROPEAN UNION FOR 
FOREIGN AFFAIRS AND 
SECURITY POLICY

Brussels, 15.5.2012  
SWD(2012) 115 final 

JOINT STAFF WORKING DOCUMENT 

Implementation of the European Neighbourhood Policy in Israel 
Progress in 2011 and recommendations for action 

Accompanying the document 

JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, 
THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE 
COMMITTEE OF THE REGIONS 

Delivering on a new European Neighbourhood Policy 

{JOIN(2012) 14 final} 
{SWD(2012) 110 final} 
{SWD(2012) 111 final} 
{SWD(2012) 112 final} 
{SWD(2012) 113 final} 
{SWD(2012) 114 final} 
{SWD(2012) 116 final} 
{SWD(2012) 117 final} 
{SWD(2012) 118 final} 
{SWD(2012) 119 final} 
{SWD(2012) 120 final} 
{SWD(2012) 121 final} 
{SWD(2012) 122 final} 
{SWD(2012) 123 final} 
{SWD(2012) 124 final} 

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1. 

OVERALL ASSESSMENT AND RECOMMENDATIONS FOR ACTION 

This document reports on overall progress made on implementation of the EU-Israel 
ENP Action Plan between 1 January and 31 December 2011, although developments 
outside  this  period  are  also  considered  when  deemed  relevant.  It  is  not  a  general 
overview of the political and economic situation in Israel. For information on regional 
and  multilateral  sector  processes  readers  should  also  refer  to  the  Partnership  for 
Democracy and Shared Prosperity progress report. 

Overall, Israel made reasonable progress in implementing the Action Plan.  An effort 
was  made  to  infuse  greater  dynamism  into  EU-Israel  relations  notwithstanding  the 
ongoing  freeze  of  the  "upgrade"  that  was  initially  agreed  in  2008.  The  Association 
Council  met  on  22  February,  and  the  EU  and  Israel  agreed  to  further  explore  the 
opportunities under the current Action Plan in a number of sectors and policy areas, 
and  to  pursue  “technical  talks”  in  order  to  identify  areas  for  future  potential 
cooperation.    By  January  2012,  a  full  cycle  of  sub-committees  and  working  groups 
was completed, and work under the technical talks advanced and preparations began 
for a meeting of the Association Committee, last held in May 2008. 

The  Israeli  economy's  performance  was  strong  but  slowed  in  2011,  as  domestic 
demand  dropped  and  the  worsening  global  outlook  coupled  with  continued 
appreciation  of  the  shekel  led  to  a  reduction  in  exports.  Social  justice  protests 
highlighted concerns about the increased cost of living and the high and rising rate of 
relative poverty. This led the government to take steps to gradually decrease housing 
and  commodity  prices,  encourage  competition  and  limit  the  influence  of  business 
conglomerates  in  the  local  market.  In  some  cases,  this  led  to  lower  prices  for 
consumers. 

On  the  domestic  front,  a  trend  that  became  apparent  in  2010  continued  with  an 
unprecedented  number  of  potentially  discriminatory  or  even  anti-democratic  bills 
being tabled in the Knesset. The democratic process still ensures that many of these 
bills  do  not  become  law,  but  their  number,  and  the  scant  effort  made  by  their 
proponents  to  hide  the  fact  that  they  were  intended  to  benefit  or  target  specific 
individuals or organisations, is worrying. These bills tend to antagonise relations with 
the  Arab  minority,  complicate  the  space  in  which  civil  society  organisations  of  one 
side  of  the  political  spectrum  operate,  attempt  to  rein  in  the  Supreme  Court  and 
potentially infringe on the freedom of speech. 

Israel  took  some  steps  towards  aligning  with  European  and  international  norms  and 
standards. On intellectual property rights, it amended the data exclusivity legislation, 
but  fell  short  of  its  OECD  commitments.  For  public  procurement,  Israel  decided 
gradually to phase out the offset requirements under the Agreement on Government 
Procurement (GPA), as requested by the EU. Co-operation in science and technology 
continued successfully. 

On justice and home affairs, a committee set up in 2010 at the Ministry of Justice to 
formulate a proposal for a comprehensive migration law has not completed its work. 
The  signing  of  bilateral  agreements  on  migrant  workers  is  a  positive  development. 

 
 
However, an area of concern is new legislation reinstating the binding arrangements 
for migrant care-givers. 

The government seeks to deter as far as possible the entry of asylum seekers. Israel 
grants  asylum  seekers  from  Eritrea  and  Sudan  group  protection  from  deportation, 
unlike  those  from  other  countries  who  are  either  deported  or  return  voluntarily.  
Medical care, welfare and employment opportunities are not provided for those under 
group  protection.  Since  only  a  very  few  obtain  refugee  status,  the  overwhelming 
majority is either deported or returns voluntarily. 

The  EU  remains  one  of  the  largest  donors  supporting  Israeli  civil  society  efforts  to 
promote  human  rights  and  conflict  resolution.  This  exposes  the  EU  to  some  public 
and government criticism. 

The  situation  in  the  occupied  territories  remained  tense,  given  the  stalled  peace 
process  and  worrying  developments  on  the  ground,  including  increased  settlement 
activity in East Jerusalem and the rest of the West Bank. Exercise of the freedom of 
association  and  freedom  of  expression  continued  to  be  problematic.  However,  the 
Israeli  army  recently  stepped  up  interventions  against  settler  violence,  following 
increased settler attacks in 2011 compared with 2010. The overwhelming majority of 
cases filed with the Israeli police against such attacks were closed without indictment. 
Israel’s widespread use of administrative detention of Palestinians increased in 2011, 
but the number of Palestinian prisoners in Israeli jails fell. The decision of the military 
authorities  to  rise  the  adult  age  from  16  to  18  in  military  law  applicable  to  the 
occupied Palestinian territory was positive. However, further steps need to be taken, 
especially  to  address  the  conditions  for  interrogation  of  juveniles,  including  the 
presence  of  parents  or  lawyers  during  juvenile  interrogations.  Palestinian  economic 
and social rights remain hampered by Israeli restrictions on the freedom of movement, 
especially as regards the economic and physical isolation of the Gaza Strip. 

On the basis of this year’s report and with a view to the sustained implementation of 
the ENP Action Plan in 2012, Israel is invited to: 

•  Enhance cooperation with the EU on exhausting the opportunities offered by 
the  current  Action  Plan  and  on  considering  possible  areas  of  future  co-
operation to be addressed when the regional situation allows. 

•  Continue  to  step  up  its  efforts  to  minimise  settler  violence  in  the  occupied 

Palestinian territory and to bring all perpetrators to justice. 

•  Address the excessive use of administrative detention. 

•  Step  up  efforts  to  reverse  the  trend  of  deteriorating  conditions  for  the 

functioning of a vibrant civil society. 

•  Ratify  the  Second  and  the  Third  Protocol  to  the  2003  UN  Convention  in 
Transnational Organised Crime on the illicit manufacturing of and trafficking 
in firearms, their parts, components and ammunition. 

•  Take the necessary measures to ensure the independence of the Israeli Equal 

Employment Opportunities Commission. 

•  Address the control deficiencies for plants and plant products for export. 

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•  Sign and ratify the Regional Convention on Pan-Euro-Mediterranean Rules of 

Origin. 

•  Amend  the  legislation  on  intellectual  property  rights  in  line  with  OECD 

commitments. 

•  Take  measures  to  lower  carbon  emissions,  in  line  with  international 

agreements. 

2. 

POLITICAL DIALOGUE AND REFORM 

Towards deep and sustainable democracy 

Despite  Israel’s  democratic  tradition,  in  the  fields  of  freedom  of  association  and 
freedom  of  expression  and  the  media,  the  trends  set  out  in  previous  reports 
continued  in  2011.  An  increasing  number  of  bills  that  can  be  labelled  as  potentially 
discriminatory or even anti-democratic were tabled in the Knesset although only a few 
became  law.  The  “anti-boycott  law”,  the  “Naqba  law”  and  the  “acceptance  to 
communities' law”, all adopted in the reporting period, are examples of laws that raise 
concerns, as they can potentially curtail the freedom of Israeli citizen organisations to 
express non-violent political opinions and can alienate the Arab Israeli minority. 

The  adoption  of  an  amendment  to  the  law  of  defamation,  which  increases  the 
maximum  compensation  for  libel  violations  (without  proof  of  damage)  to  roughly 
EUR 60,000, could constitute a risk to the existence of free and independent media. 
This,  together  with  a  degree  of  politicisation  of  media  appointments,  indicates  a 
worsening climate for investigative journalism.  

The independence of the judiciary continues to be protected, although a number of 
bills were tabled to influence the composition and competences of the Supreme Court. 
A law was adopted on 2 January 2012 which seeks to shorten the minimum tenure for 
Supreme  Court  presidents  from  three  to  two  years,  thus  enabling  the  future 
appointment of a particular individual. 

Israel has a good performance in the fight against corruption, ranking 36 in 2011 in 
the Transparency International Corruption Perceptions Index, the highest level in any 
ENP  partner  country,  and  higher  than  a  number  of  EU  Member  States.  Its  score 
improved in 2011, although its relative position declined below that of 30 it achieved 
in 2010. 

Other human rights and governance-related issues 

Israel is party to most international human rights instruments but not to their optional 
protocols.  Specific  human  rights  cases  were  raised  with  the  Israeli  authorities  in 
demarches  and  day-to-day  contacts,  as  well  as  during  the  meetings  of  the  informal 
working group on human rights and the EU-Israel political dialogue sub-committee. 
The EU supported over 35 projects under the European Initiative for Democracy and 
Human Rights throughout the year. This had a positive impact on individuals whose 
rights  have  been  restricted  and  it  helped  raise  awareness  and  promote  structural 
change at national level.  An example of such change is the establishment, with EU 
support,  of  an  autonomous  Arab  pedagogic  council,  recognised  by  the  state.  This 

4

 
 
fosters the participation of Arab professionals in Israel in advancing a comprehensive 
framework for Arab education. 

As regards the rights of minorities, progress on the situation of the Arab minority was 
limited.  Israeli  Arabs  accounted  for  7.5  percent  of  the  civil  service  workforce  by 
September 2011, less than a one percent increase on the previous year and well below 
the ten percent targeted for 2012 by legislation.  

The  situation  of  the  Bedouin  community  became  the  focus  of  heated  debate  in 
September due to the adoption of the government’s Prawer Plan, which proposed the 
relocation  of  30-40,000  Bedouins  in  the  Negev  in  the  context  of  an  economic 
development  plan  but  without  full  recognition  of  land  ownership  and  with  limited 
scope for legalising construction.  The plan fell short of the Goldberg Commission’s 
earlier  recommendations  for  a  broad  recognition  of  Bedouin  villages  and  was 
criticised  for  the  limited  consultation  of  representatives  of  unrecognised  Bedouin 
villages – which would be the most vulnerable in the event of relocation. 

Women’s rights became the subject of increasing debate during the reporting period 
as  a  result  of  a  more  aggressive  attitude  of  the  ultra-Orthodox  groups  towards 
separating  men  and  women  in  the  public  sphere,  also  beyond  the  traditional  Jewish 
Orthodox communities, and as a result of questions relating to the role of women in 
the army. The debate has continued despite High Court rulings preventing segregation 
and public denunciation by religious leaders and top ranking politicians. The gender 
pay gap persists, with women earning around 30 percent less than men for the same 
work.  The  EU  is  providing  support  to  the  Equal  Employment  Opportunities 
Commission through a twinning project. 

On  children’s  rights,  in  December  2011  the  Knesset  adopted  a  new  law  on  the 
prosecution  of  Israeli  minors,  which  proposes  an  alternative  to  court  proceedings. 
Under the law, minors will not be criminally prosecuted, their offence will not be tried 
in  court  nor  entered  as  a  criminal  record,  but  they  will  be  subject  to  an  alternative 
procedure. 

The annual EU-Israel seminar on anti-Semitism, racism and xenophobia was held 
on 26-27 October 2011 in Brussels. It proved very useful for exchanging information 
on trends and developments in EU Member States and in Israel on these problems and 
for outlining possible responses. 

Regional and international issues 

The EU continued to encourage both the Israelis and the Palestinians to return to the 
negotiating table while also leading efforts to reinvigorate the Quartet. In its statement 
on 23 September, the Quartet called for the resumption of direct bilateral negotiations 
without  delay  or  preconditions,  aiming  to  reach  an  agreement  within  a  timeframe 
agreed to by the parties but no longer than the end of 2012. The Quartet called upon 
the parties to refrain from provocative action and reiterated their obligations under the 
Roadmap.  

The Palestinians refused to re-enter negotiations without an Israeli settlement freeze, 
including  in  East  Jerusalem,  a  demand  with  which  Israel  did  not  comply.  On  the 
contrary, in response to the Palestinian bid for full UN membership and to Palestine’s 

5

 
 
admission  as  a  member  of  UNESCO,  Israel  announced  plans  to  step  up  settlement 
building.  After  UNESCO  admitted  Palestine  as  a  member,  Israel  temporarily 
suspended  the  transfer  of  Palestinian  tax  revenues  to  the  Palestinian  Authority, 
contrary to its obligations under the Paris Protocol.   

On 9 October, the High Representative of the Union for Foreign Affairs and Security 
Policy  hosted  Quartet  envoys  and  the  parties  in  Brussels.  The  parties  stated  their 
readiness  to  engage  in  line  with  the  Quartet  statement.  Under  the  auspices  of  the 
Quartet, this process brought about the first direct meeting of the parties’ negotiators 
on 3 January 2012. 

On  2  September,  the  UN  Palmer  report  on  the  31  May  2010  flotilla  incident  was 
released. It found that the maritime blockade imposed by Israel on the Gaza Strip was 
“a legitimate security measure”, but criticised the excessive force that was used in the 
Israeli  navy’s  takeover  of  the  Mavi  Marmara.  It  was  also  critical  of  the  flotilla’s 
organisers and the Turkish government.  The report called on Israel to “continue with 
its  efforts  to  ease  restrictions  on  movement  of  people  and  goods  to  and  from  Gaza 
with  a  view  to  lifting  the  closure  entirely  in  order  to  alleviate  the  unsustainable 
humanitarian and economic situation facing the civilian population”. 

Settlement  construction  and  expansion  continued  in  the  West  Bank,  including  East 
Jerusalem, with a surge in settlement activity at the end of 2011. Building settlements 
that sever the geographic contiguity between Jerusalem and the rest of the West Bank 
(e.g. Givat Hamatos) are of particular concern as this undermines the prospect for a 
two-state solution with Jerusalem as the future capital of two states. 

3. 

ECONOMIC REFORM, SOCIAL REFORM AND DEVELOPMENT 

Macroeconomic framework 

Economic  growth  was  4.8%  in  2011,  unchanged  from  2010.  The  disaggregated 
picture  shows  a  rapid  expansion  in  Q1  (5.8%  year-on-year)  followed  by  slower 
growth in Q2-Q4 which is forecast to continue into 2012. Unemployment followed a 
similar although lagged trend, falling from 6.7% at the end of 2010 to 5.5% in Q2 (it's 
lowest level for 50 years) but beginning to rise again thereafter.  

Inflation  averaged  3.5%,  the  main  drivers  being  increases  in  the  prices  of  housing 
(5.9%),  food  (3.5%)  and  energy  (6.6%).  These  pressures  subsequently  eased  in 
August-December, as house prices stabilised following government measures to avert 
a real-estate bubble and the strength of the shekel helped curb imported inflation.  

The shekel remained strong compared to pre-crisis values. This affected the external 
sector  with  first-semester  exports  increasing  by  just  14.5%  (year-on-year)  compared 
to  a  surge  in  imports  of  30.2%.  The  current  account  balance  for  2011  was  close  to 
zero, contrasting the consecutive surpluses seen since 2003.  

The government reduced the fiscal deficit to 3.3% of GDP in 2011 (against 3.8% in 
2010),  slightly  overshooting  the  3%  target  and  in  2012  the  deficit  is  expected  to 
increase  slightly  to  3.4%,  mostly  on  account  of  lower-than-predicted  revenues.  The 
authorities  still  aim  for  a  deficit  limit  of  2%  in  2012  and  1%  in  2014.    There  is 

6

 
 
pressure  to  increase  social  spending  in  light  of  recent  social  justice  demonstrations 
against  the  increased  cost  of  living  and  a  perceived  deterioration  in  public  services, 
which  comes  following  the  recommendations  of  the  Trajtenberg  Committee, 
appointed 
the 
recommendations of the Committee to avoid overshooting the 2012 deficit target was 
to reduce spending in the politically sensitive area of defence. 

the  protestors'  concerns  (see  below).  One  of 

to  deal  with 

The  newly  adopted  taxation  structure  for  the  energy  sector  is  expected  to  boost  the 
government's  share  of  oil  and  gas  revenue  from  33%  to  52-62%.  The  recently 
discovered offshore gas reserves should facilitate the reduction of public debt and will 
also allow for the establishment of a sovereign wealth fund.  

In  an  important  step  towards  the  Action  Plan  goal  of  deepening  and  enhancing  the 
existing  economic  dialogue between the EU and Israel, the first meeting of the EU-
Israel Sub-Committee on Economics and Financial Matters (as established under the 
EU-Israel Association Council in 2005) took place in January 2012. 

Employment and social policy 

Despite good economic growth and low unemployment, Israel has the highest poverty 
rate  in  the  OECD  and  deep  socio-economic  disparities  persist.  Income  disparity  is 
marked (with a Gini coefficient of 0.38) and the rate of relative poverty (21%) is the 
highest amongst all OECD countries. While these are widespread issues, Arab-Israelis 
and ultra-Orthodox  Jews  continue to display the highest rates of unemployment and 
poverty.  Government  action  continues  to  focus  on  increasing  the  income  of  “the 
bottom one-fifth”. 

As regards social policy, in 2011 Israel experienced popular discontent, social unrest 
and  the  largest  demonstration  on  social  issues  in  its  history:  in  September,  460,000 
protesters  called  for  social  justice  at  rallies  across  the  country.  At  the  end  of 
September, an inter-ministerial committee chaired by Mr Trajtenberg presented a set 
of  structural  recommendations  covering  housing,  competition  and  the  cost  of  living, 
taxation, social services and measures to increase social spending.  

On social inclusion, implementation of the EU twinning project with the Israeli Equal 
Employment  Opportunities  Commission  continued,  including  through  a  major 
conference  in  March  on  diversity  as  the  engine  of  economic  prosperity.  In  October, 
Israel announced its intention to formulate a good practice equality plan with special 
emphasis on equal pay.   

4. 

TRADE-RELATED ISSUES, MARKET AND REGULATORY REFORM  

In 2011, the EU was the main trading partner for Israel with total trade amounting to 
approximately  EUR  29.5  billion  (increase  by  15%).  Both  EU  exports  and  imports 
registered positive growth although at lower rates than in previous year: imports grew 
by 14% and exports grew by 17%. EU imports from Israel reached EUR 12.6 billion, 
while  EU  exports  to  Israel  grew  to  EUR  16.8  billion.  Jointly,  exports  of  goods  and 
services grew in 2011 (by 4.5%), but less than in 2010 (13.4%) while investments in 
fixed  capital  climbed  almost  16%.  EU  imports  consisted  mainly  of  chemicals 
(32.9%),  machinery  and  transport  equipment  (18.8%),  and  manufactured  goods 

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(16.1%).  EU  exports  to  Israel  consisted  mainly  of  machinery  (38.9%);  in  particular, 
transport  equipment  (12.6%),  office  and  telecommunication  equipment,  chemicals 
(16.7%)  and  semi-manufactures  articles  (17.8%).  Technical  corrections  of  the 
agreement on agricultural products were agreed in September 2011 and will have to 
be  adopted  by  the  Council  after  receiving  the  consent  of  the  European  Parliament. 
Organic production in Israel is now certified according to EU compatible legislation 
by means of a private body authorised by the Israeli Plant Protection and Inspection 
services. 

On  customs,  Israel  finished  an  Authorised  Economic  Operator  (AEO)  pilot  project. 
Eight  large  companies  were  granted  AEO  status  and  the  AEO  program  became 
operational. Direct benefits of the AEO status include a lower probability of checks, a 
paperless  procedure  including  electronic  signature,  a  direct  contact  point  at  the 
customs office and customs clearance before the goods have arrived.  

On the free movement of goods and technical regulations, the EU-Israel Agreement 
on  Conformity  Assessment  and  Acceptance  of  industrial  products  (ACAA)  with  an 
annex on good manufacturing practices for pharmaceutical products, signed in 2010, 
still  awaits  European  Parliament’s  consent.  The  Agreement  would  allow 
pharmaceutical products attested as compliant with EU procedures to be placed on the 
Israeli market without any further approvals, and vice versa. A Committee nominated 
by the Prime Minister recommended that more international standards be adopted in 
Israel  and  that  goods  be  released  with  an  importer  declaration  regarding  their 
conformity  with  standards  similar  to  the  practice  in  Europe.  At  the  end  of  2011, 
approximately  80%  of  Israeli  standards  were  international  (60%  ISO/IEC,  35% 
CEN/CENELEC and 5% other). 

Another  Protocol  to  the  Association  Agreement  –  Framework  Agreement  on  the 
Participation  of  Israel  in  the  EU  Programmes  -  remains  pending.  Having  been 
signed  in  2007  on  the  basis  of  the  current  Action  Plan,  this  Protocol  awaits  EP 
approval.  Opening  the  Entrepreneurship  and  Innovation  Program  (EIP)  in  2008  was 
possible  due  to  the  provisional  application  of  the  Protocol.  However,  Israel’s 
participation  in  other  programs,  e.g.  the  ICT  program  and  the  “Intelligent  Energy 
Europe”  program  within  the  Competitiveness  and  Innovation  Framework  program 
(CIP) is still not possible.  

The EU and Israel continued cooperation on the sanitary and phyto-sanitary issues, 
including  a  twinning  project  signed  in  November  2011.  Several  animal  disease 
outbreaks were successfully managed without trade repercussions. In November 2011, 
the  European  Commission’s  Food  and  Veterinary  Office  carried  out  a  mission  to 
Israel to evaluate the system of official controls of plants and plant products for export 
to the EU. Israel will address the identified control deficiencies.   

On the business climate, the EU-Israel annual Business Dialogue (EUIBD) continued 
to  function  satisfactorily.  In  June  2011  the  EUIBD  adopted  its  first  set  of  business 
recommendations. Compared to the previous year, Israel fell from 32nd to 34th place in 
the ease of doing business ranking in the World Bank's 'Doing Business 2012' annual 
report. 

On company law, the Israeli Securities Authority (ISA) and the European Securities 
and  Markets  Authority  (ESMA)  agreed  in  March  2011  to  allow  Israeli  companies 

8

 
 
listed  in  the  Tel  Aviv  Stock  Exchange  to  use,  subject  to  certain  provisions,  their 
Israeli prospectuses to list their shares in any regulated EU stock exchange.   

Israel strengthened supervision of  financial services in February 2011 by amending 
the law on Pension Counselling and Pension Marketing. The Bank of Israel issued an 
order  imposing  an  obligation  on  Israeli  residents  and  non-residents  who  perform 
transactions in foreign exchange swaps and forwards of more than USD 10 million in 
one day, and on non-residents for transactions in certain government bonds of more 
than  shekel  10  million  in  one  day,  to  report  details  of  the  transactions  and  their 
balance  of  holdings  of  such  assets.  The  Bank  of  Israel  required  in  April  banking 
corporations  to  maintain  a  10%  reserve  requirement  for  foreign  currency  derivative 
transactions  vis-à-vis  non-residents.  In  July,  Israel  opened  clearing  of  credit  card 
transactions to wider competition. 

Other key areas 

In  August  2011,  Israel  and  Malta  signed  an  agreement  on  avoidance  of  double 
taxation. Israel and Cyprus (the remaining Member State without such an agreement 
with Israel) entered into similar discussions in 2011. 

In  the  area  of  statistics  Israel  has  made  good  progress  in  providing  increasing 
amounts of data to EUROSTAT but should focus future efforts on improving national 
accounts  (financial  accounts  and  satellite  accounts  for  environment)  and  strategic 
planning  (human  resource  policy,  training  policy  for  new  recruits  and  long  term 
planning). 

The  government  committee  for  competition  recommended  the  government  take 
action  against  excessive  ownership  and  concentration  in  the  Israeli  economy.  The 
main recommendations are: banning control/ownership of major financial institutions 
by  large  non-financial  corporations;  and  limiting  the  power  of  large  holding 
companies' owners in purchasing and selling companies and in taking decisions with 
major  implications  on  the  shareholders.  In  July,  the  Knesset  granted  the  Anti-Trust 
Commissioner  the  power  to  declare  business  groups  as  having  excessive  economic 
power  and  take  steps  to  prevent  anti-competitive  practices.  In  November,  the 
government proposed to the Knesset an amendment to the anti-trust law allowing the 
Israel Anti-Trust Authority to impose fines in certain cases.  

Israel's OECD commitment to amend intellectual property rights legislation has yet 
to be implemented. The August 2011 extension of the data exclusivity period for new 
drugs from five to six years was a step in the right direction. 

During  the  Internal  Market  Sub-Committee  meeting  in  October,  the  European 
Commission expressed the view that Israel would have to set a deadline for ending its 
offset system in public procurement, especially following its entry to the OECD. In 
response,  Israel  submitted  its  first  offer  for  phasing-out  this  system  during  the 
Government Procurement Agreement negotiations in December. 

On  enterprise  policy,  in  October  the  European  Commission  and  Israel  signed  one 
joint  statement  on  satellite  navigation  (see  chapter  6)  and  a  joint  declaration  on 
cooperation  in  the  area  of  tourism,  including  actions  to  promote  travel  during  low 
seasons.  Israel  participated  in  implementing  the  2011-2012  industrial  cooperation 

9

 
 
work programme that Euro-Mediterranean industry ministers adopted on 11-12 May 
2011 in Malta. 

5. 

COOPERATION ON JUSTICE, FREEDOM AND SECURITY  

In  the  area  of  migration  and  asylum  Israel  in  2011  continued  to  receive  significant 
numbers  (on  average  approximately  1500  a  month)  of  asylum  seekers  and  irregular 
migrants mainly from Eritrea (51%) and Sudan (32%) reaching its borders via Egypt. 
In  the  end  of  2011  there  were  approximately  50,000  migrants  who  entered  Israel 
outside a border crossing and another estimated 10% unrecorded cases. 

In  this  context,  Israel  has  taken  a  number  of  steps  as  part  of  a  policy  of  deterrence 
against irregular migration, endorsed by the Cabinet in December 2011. These include 
the construction of a fence along the Egyptian border, expected to be finalized before 
the  end  of  2012  and  the  construction  of  a  new  detention  centre  with  a  capacity  of 
8000, still in its planning stages. As part of this policy an amendment of the 1954 Law 
on the Prevention of Infiltration was adopted on January 9, 2012.  The amendment has 
introduced  a  serious  prolongation  of  the  possible  detention  period  for  irregular 
migrants, from 60 days to three years, although with qualifications for humanitarian 
cases  and  unaccompanied  minors.  This  is  likely to further restrict  the possibility for 
asylum  seeker  or  migrants  coming  from  Sinai  to  receive  international  protection  or 
humanitarian assistance in Israel. 

There  has  been  no  significant  progress  in  improving  the  faulty  Refugee  Status 
Determination mechanism, under the responsibility of the Ministry of Interior. It is a 
reflection  of  the  shortcomings  of  the  current  Refugee  Status  Determination  process 
that  out  of  the  thousands  of  applicants  assessed  by  the  unit,  very  few  are  granted 
refugee status (13 since 2009). It should be noted that Eritrean and Sudanese nationals 
are  not  able  to  undergo  the  Refugee  Status  Determination  process  and  therefore  not 
assessed  for  eligibility  to  become  refugees.  These  nationals  are  granted  'group 
protection'  under  the  principle  of  non-refoulement  in  the  form  of  a  temporary  visa, 
renewable every three months. This visa does not allow access to health and welfare 
services,  nor  does  it  allow  employment.  However,  NGOs  are  making  efforts  to 
provide some of the humanitarian assistance which the public sector is rather failing 
to  offer,  while  de  facto  employment  is  made  possible,  following  a  Supreme  Court 
ruling.  

As of October 2011 no more incidents of 'hot returns' were reported, possibly in light 
of the unstable situation in Egypt. 

Regarding trafficking of human beings, Israel continues to be a destination country 
for  labour  and  sex  trafficking.    An  amendment  to  the  Penal  Code  was  presented  to 
Parliament  in  February  2011,  with  the  aim  of  prohibiting  advertisements  promoting 
prostitution  for  adults  and  minors.  Responsibilities  for  trafficking  cases  within  the 
police services were decentralised and partly transferred to individual police stations, 
with the aim of improving investigation and enforcement capabilities. Overall, Israel 
did  step  up  efforts  to  combat  criminal  organisations  dealing  with  trafficking  and 
provide assistance to their victims. However, assistance is rarely offered to migrants 
arriving  from  the  Sinai  region  who  often  were  inflicted  tortures  and  inhuman 
treatments during their journeys before arriving to Israel. 

10

 
 
In  the  area  of  data  protection,  the  Twinning  project  on  “Strengthening  Data 
Protection  in  Israel”  assisted  in  developing  the  operational  capability  of  the  Law, 
Information and Technology authority as a data protection authority. It also supported 
the  effective  implementation  of  legislation  on  privacy,  in  approximation  with 
international  and  EU  standards.    A  Decision,  adopted  by  the  European  Commission 
on  31  January  2011  for  the  purposes  of  Article  25(2)  of  Directive  95/46/EC, 
recognised  that  Israel  is  providing  an  adequate  level  of  protection  for  personal  data 
transferred  from  the  European  Union  in  relation  to  automated  international  transfers 
of personal data.   

Concerning  police  and  judicial  cooperation,  negotiations  between  Israel  and 
Europol continued with a view  to concluding an operational cooperation  agreement. 
Contacts  were  established  with  EUROJUST  with  a  view  to  signing  a  cooperation 
agreement.    Israel  is  not  yet  a  party  to  the  1996  Hague  Convention  on  Child 
Protection to which all EU Member States will soon accede. 

6. 

TRANSPORT,  ENERGY,  ENVIRONMENT,  THE 
RESEARCH AND INNOVATION  

INFORMATION  SOCIETY, 

The emphasis of the Israeli transport policy objectives remained on the development 
of  integrated  transport  systems,  promoting  public  transport  in  particular.  In  August 
2011 a light rail tram opened in Jerusalem. In December, Israel and the EU agreed to 
aim at finalising the negotiations and initialling the comprehensive aviation agreement 
in 2012. In October, Israel and the European Commission signed a joint statement on 
cooperation in the area of Global Navigation Satellite Systems (GNSS). This endorses 
18 activities strengthening the links between European and Israeli industries as well as 
enhancing the exchange of information on GNSS. 

Israel  launched,  in  October  2011,  work  towards  an  energy  master  plan–2050.  The 
plan will take full account of the recently discovered substantial off-shore natural gas 
resources. Security of supply was affected by a considerable decrease in Egyptian gas 
imports in 2011 after several explosions of the import pipeline. In this context, Israel 
decided to construct a maritime buoy to receive liquefied natural gas.  It is scheduled 
to become operational in 2012. Israel also decided to speed up the development of its 
gas  fields.  It  further  constructed  its  domestic  gas  pipe  networks.  Israel  set  a  goal  to 
produce 10% of electricity from renewable sources by 2020, initiated a survey on the 
potential of wind energy and prepared solar projects.  The EU remains committed re-
launching trilateral energy cooperation with Israel and the Palestinian Authority.  

Sub-regional  co-operation  (Israel,  Jordan,  Palestine)  was  launched  on  the  impact  of 
climate  change  on  water  availability.  Three  new  Clean  Development  Mechanism 
projects were registered at the UN level, bringing the number of registered projects to 
22.  Israel  is  encouraged  to  build  capacity  and engage  in  the  new  carbon  market 
mechanism  to  be  developed  following  the  17th  Conference  of  Parties  to  the  United 
Nations  Framework  Convention  on  Climate  Change  (UNFCCC  COP  17).  Israel  is 
also  encouraged  fully  to  implement  the  Cancun  and  Durban  agreements  and  in 
particular devise a low carbon development strategy including update information on 
target or actions that it will implement. 

11

 
 
 
Israel  adopted  new  legislation  on  the  prevention  of  hazards  from  asbestos  and  on 
environmental  enforcement.  Israel  adopted  regulations  on  noise  prevention,  on  the 
prevention of sea pollution from land-based sources and green building standards. The 
Government  launched  a  "Let’s  think  Green”  campaign  on  sustainable  consumption 
and consultations on a green growth strategy (2012-2020). A system of environmental 
rankings  of  publically  traded  companies  was  established.  A  project  to  clean  up 
asbestos  waste  in  the  Western  Galilee  was  launched.  Israel  ratified  the  Gaborone 
Amendment to the Convention on International Trade in Endangered Species of Wild 
Fauna and Flora (CITES).  

In the field of civil protection, Israel intensified cooperation with the countries from 
the  region  and  the  exchange  of  best  practices  with  the  EU  in  the  field  of  disaster 
prevention, preparedness and response through its participation in the EU Programme 
for Prevention of, Preparedness for, and Response to natural and man-made disasters 
(PPRD South). 

On  information  society,  Israel  has  not  yet  established  a  regulatory  authority  for 
electronic  communications.  Some  progress  towards  further  liberalisation  was  made, 
when new mobile licenses were introduced during 2011 and Mobile Virtual Network 
Operator licenses were made available. The concept of separate wholesale and retail 
markets has not yet been adopted in Israel, where regulation has instead focussed on 
the structural separation of the two fixed operators into vertical markets. However the 
Ministry  for  Communications  made  very  strict  rulings  on  mobile  termination  rates 
based on Bottom-Up Long-Run Incremental Costs (BULRIC) methodology in 2011. 

In  the  area  of  research  and  innovation,  cooperation  between  Israel  and  the  EU 
remained impressive. Israel has been associated to the 7th Framework Programme for 
Research and Technological Development (FP7) since its beginning in January 2007. 
Currently,  more  than  1040  Israeli  research  entities  are  involved  in  almost  900  FP7 
projects, receiving over EUR435 million of FP7 funding. Participation is particularly 
strong in ICT and health research, but also in the areas of nanotechnology and security 
research.  Israel  is  doing  particularly  well  in  the  research  actions  run  under  the 
European  Research  Council,  with  currently  some  120  grants  awarded,  with  a  good 
success  rate  of  18%.  Israeli  researchers  and  enterprises  are  also  successfully 
participating  in  research  actions  run  by  the  Joint  Technology  Initiatives,  securing 
funding of around EUR 500,000. 

7. 

PEOPLE-TO-PEOPLE CONTACTS, EDUCATION AND HEALTH 

In  2011,  EU-Israel  higher  education  cooperation  continued,  with  one  Erasmus 
Mundus  consortium  providing  a  Joint  Doctorate  involving  higher  education 
institutions  from  Israel  being  selected.  An  Erasmus  Mundus  project  on  the 
internationalisation  and  enhancement  of  the  quality  of  higher  education  in  food 
studies  progressed  well,  while  no  other  new  projects  were  approved.  At  the  end  of 
2011, Israel was also involved in 6 university cooperation projects under the Tempus 
IV  programme.  This  still  limited  figure  may  rise  in  the  future  thanks  to  recent 
awareness raising efforts.   

Israel made good use of Marie Curie actions (FP7) aimed at fostering international 
research  cooperation  and,  until  the  end  of  2011,  260  researchers  had  been  funded 

12

 
 
through  five  different  actions,  as  well  as  267  Israeli  research  organisations.    In  this 
context,  the  setting  up  of  two  National  Contact  Points  for  the  programme  was  an 
important step taken towards increasing the awareness of “Marie Curie” activities in 
Israel. In the area of EU integration studies, one Jean Monnet project from the Bar 
Ilan University was selected in 2011. 

The European Training Foundation, in cooperation with the relevant Israeli ministries, 
organised in 2011 various activities to share knowledge and expertise on vocational 
education  and  training  quality  assurance  as  well  as  on  qualifications  and 
qualifications frameworks.  

In  the  area  of  culture,  Israel  has  not  yet  ratified  the  2005  UNESCO  Convention  on 
the Protection and Promotion of the Diversity of Cultural Expressions. Two projects 
were  selected  under  Euromed  Heritage  IV  in  2011,  to  be  implemented  by  Arab 
organisations  from  Israel,  in  partnership  with  organisations  from  the  occupied 
Palestinian territory and Europe.  

Young Israelis and Israeli youth organisations continued to benefit from the exchange 
opportunities  under  the  Youth  in  Action  programme.  The  51  projects  selected  in 
2011 involved more than 180 young people.   

The  Government  adopted  a  comprehensive  health  policy,  covering  the  period  until 
2020  as  well  as  a  national  plan  promoting  an  active,  healthy  lifestyle.  Israel 
participated  in  the  EU-supported  ‘Episouth  Plus'  project  aimed  at  increasing  health 
security in the Mediterranean region and South East Europe.   

8. 

ISRAEL IN THE OCCUPIED TERRITORIES 

The exercise of media freedom, freedom of expression and freedom of assembly 
remained  problematic  in  the  occupied  Palestinian  territory  in  2011.  The  “All  for 
Peace”  radio  station  in  East  Jerusalem,  which  had  previously  benefited  from  EU 
support, was shut down. Israeli detentions of Palestinian journalists in the West Bank 
and  the  mistreatment  of  protestors  against  the  Separation  Barrier  continued.  The 
situation of Palestinian human rights defenders remained critical. The  Israeli  trial of 
human rights defender Bassem Tamimi continued. His nephew, Mustafa Tamimi, was 
killed  on  9  December  2011  by  a  tear  gas-canister  while  taking  part  in  a  weekly 
demonstration in the West Bank village of Nabi Saleh.  

Palestinian  freedom  of  association  was  curtailed  in  East  Jerusalem,  with  five 
Palestinian organizations being closed by the Israeli authorities.  

During the year, 11 Palestinians, including five civilians, and eight Israelis were killed 
in Israeli-Palestinian conflict-related incidents in the West Bank and Gaza Strip, and 
265 Palestinians (250 civilians, of which 218 in the West Bank) and 30 Israelis were 
injured.  Recurrent cycles of hostilities in the Gaza Strip continued to put civilians at 
risk; in an escalation between 8 and 11 December, civilians made up over 90 percent 
of casualties in the Gaza Strip. 

Although the Israeli Army recently stepped up interventions against settler violence, 
90%  of  cases  filed  with  the  Israeli  police  concerning  settler  violence  are  closed 

13

 
 
without  indictment.  The  UN  Office  of  the  Co-ordinator  for  Humanitarian  Affairs 
(OCHA)  registered  377  cases  of  settler  violence  in  2011.  The  weekly  average  of 
settler  attacks  across  the  West  Bank  resulting  in  Palestinian  casualties  and  property 
damage increased by 40% in 2011 compared with 2010. In addition, one Palestinian 
was  killed  and  101  injured  by  Israeli  soldiers  during  clashes  with  Israeli  settlers. 
Nearly 10,000 Palestinian-owned trees were damaged by Israeli settlers in 2011.  

A  number  of  mosques  were  burned  in  the  West  Bank.  Freedom  of  religion  was 
infringed since a number of Christian communities across the West Bank (in addition 
to  all  Christians  in  Gaza)  were  unable  to  exercise  their  right  to  freedom  of  worship 
during Christian festivities, due to the Israeli restrictions on access to East Jerusalem 
and Bethlehem. 

Israel has continued its widespread use of administrative detention of Palestinians, 
and there was a sharp increase in the number of administrative detainees, from 219 in 
January  2011  to  307  in  December.  A  quarter  of  these  have  now  been  held  in 
administrative  detention  for  one  to  two  years,  with  18  detainees  held  for  longer 
periods. There was one minor in administrative detention at the end of 2011. The EU 
has repeatedly conveyed its concerns about this practice to the Israeli authorities in the 
framework of regular political and human rights dialogue. 

By the end of 2011 there were 4,281 Palestinian prisoners in Israeli jails, of which 
135 were children. There was a significant decline on the year, mostly as a result of 
the release of Palestinian prisoners in exchange for the release of Israeli soldier Gilad 
Shalit, who had been held captive by Hamas in Gaza for five years. 

In  the  field  of  children’s  rights,  in  September,  the  military  authorities  raised  the 
majority age from 16 to 18 in the military law applicable to the occupied Palestinian 
territory.  However,  concerns  remain  about  insufficient  protection  of  children  during 
arrest and detention, in particular the failure to permit children to be accompanied by 
a  lawyer  and  parent  during  questioning.  Cases  of  solitary  confinement  of  children 
continue. 

Palestinian economic and social rights remain hampered by Israeli restrictions on the 
freedom  of  movement.    The  economic  and  physical  isolation  of  the  Gaza  Strip 
remains  highly  worrying  with  Israeli  prohibitions  on  fishing  beyond  three  nautical 
miles  from  the  shore  having  a  serious  effect  on  the  livelihood  of  the  fishermen  of 
Gaza.    Freedom  of  movement  for  West  Bankers  also  suffered  following  the  revived 
Hamas/Fatah reconciliation process and the subsequent tightening of permit policies 
by Israel.  Settler activity across the West Bank placed further localised restrictions on 
a  number  of  cities  and  villages:  the  number  of  physical  obstacles  restricting 
movement  and  access  in  the  West  Bank  remains  at  521.  The  occupation  and  the 
separation  of  the  Gaza  Strip  from  the  West  Bank  have  a  negative  impact  on  health 
care services in the occupied Palestinian territory. 

Restrictions  on  movement  and  access  have  a  negative  impact  on  the  ability  of 
Palestinians  to  obtain  Schengen  visas.  As  several  consulates  of  the  Schengen 
countries are located in Jerusalem and access to the city is impossible or very limited 
for  the  majority  of  Palestinians,  obtaining  a  Schengen  visa  presents  serious 
difficulties,  given  the  general  requirement  to  appear  in  person  when  lodging  a  visa 
application. 

14

 
 
Property rights came under particular strain. According to OCHA, more than twice 
as many people were displaced in 2011 as in 2010 in Area C of the West Bank, due to 
the  demolition  of  their  homes  by  Israel.  Some  142  Palestinian  residential  and  non-
residential structures were demolished in East Jerusalem and Area C, displacing 203 
people, including 118 children.  A total of 1,233 persons were affected by demolitions 
and eviction orders. 

The risk of forced displacement of Bedouin communities increased.  The Israeli Civil 
Administration  informed  20  Bedouin  communities  living  in  the  periphery  of  East 
Jerusalem that they had to leave, thus placing 2,300 people, primarily refugees, at risk 
of  forced  displacement.  This  relocation,  if  implemented,  would  accommodate  the 
expansion of the Ma’ale Adummim bloc of settlements (E-1 Zone). More than 90% of 
the 40 demolitions that took place in November alone, primarily in the Jordan Valley 
and  in  the  East  Jerusalem  periphery  directly  affect  socially  vulnerable  Bedouin 
communities. 

15