Source: EURLEX
Language: en
Format: md

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# 52012SC0115

**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 /\* SWD/2012/0115 final \*/**

  

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.
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 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 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 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 to
deal with the protestors' concerns (see below). One of the recommendations of
the Committee to avoid overshooting the 2012 deficit target was to reduce spending
in the politically sensitive area of defence.

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 (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
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 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.

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 information
society, research and Innovation

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.

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 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 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.

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.

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