This all started in November 2014 with a motion to Leicester City council not to buy goods from illegal settlements “insofar as legal considerations allow”. The motion was passed, but a pro-settler lobbying group filed for judicial review. Seven other councils have passed similar motions.
A few days later in December 2014 the Foreign Office and Business Department published their long-awaited guidance on trade with illegal settlements. This said that buying goods from illegal settlements carried risks, such as legal disputes over ownership of land or natural resources, over the abuse of human rights and they also carried “reputational implications” for companies, so the UK would not “encourage or support” trade with settlements.
The Israeli government, alarmed at the success of the campaign against firms like Veolia and G4S who were at risk of losing local authority contracts, started to put pressure on sympathetic politicians to make it illegal for councils to follow Leicester’s example.
In October 2015 the Conservative Party issued a press release on the day before their conference saying the government would introduce new policy guidance to public bodies and new regulations for local authority pension funds to stop boycotts against countries that were not already being boycotted by the UK government.
This was announced as a joint initiative by the Department of Communities and the Cabinet Office to stop ‘militant leftwing councils’ boycotting Israeli goods. The Leicester motion on settlement goods was cited as a target.
In November 2015 there was another setback for the Israelis when the EU unanimously agreed new labelling rules. Goods from illegal settlements would have to be labelled “Produce of West Bank (Israeli settlement)”. This extended voluntary labelling rules already in force in the UK since 2009.
The UKTI makes it clear that the government supports the right of individuals to boycott goods from settlements and that is why it supports the labelling requirement: “We understand the concerns of people who do not wish to purchase goods exported from Israeli settlements in the Occupied Palestinian Territories. It was in order to enable consumers to make a more fully informed decision concerning the products they buy that, in December 2009, the Department for Environment, Food and Rural Affairs (Defra) introduced voluntary guidelines to enable produce from Israeli settlements in the Occupied Territories to be specifically labelled as such.”
In February 2016 the Cabinet Office minister Matthew Hancock (above right) announced the new public procurement guidance – at a press conference in Israel with Benyamin Netanyahu – claiming it would prevent “divisive town hall boycotts”, though the wording appeared to fudge the issue of how the guidance related to existing EU and WTO procurement rules.
Clive Betts MP and Richard Burden MP both sought clarification from the Foreign Secretary on this. Clive Betts asked: “Do the Government give exactly the same advice to public bodies, including local councils, with regard to their procurement decisions?” and Phillip Hammond replied: “Yes, they are bound by and must follow procurement rules, but we are clear that we do not support boycott movements.”
[It is worth remembering that what Leicester and other councils want is not even a boycott, but a ban on settlement trade. A boycott is a refusal to buy until a certain condition is met, but a ban on settlement trade would be a legal ruling that trade with an illegal settlement is itself illegal and will always remain so.]
Lawyers says that the guidance does not remove the power of councils to refuse a contract to a company on the grounds of gross misconduct, which can include using stolen land or mineral resources from an illegal settlement.
But campaigners fear that the guidance will put one more layer of difficulty in the path of councils considering action against illegal settlements knowing it will be contested by well-funded lobbying groups in the courts.
The government’s main argument is that local councils have no responsibility for foreign affairs and should not have their own foreign policies. But councils have large budgets and councillors will sometimes take multi-million-pound decisions that impact other countries when they award contracts, procure services or invest pension funds. When they take these decisions, they are still answerable to their local communities.
In any case, as the Foreign Office implied in their business guidance, one may need to consider the “reputational implications” before decided what is the best financial decision.
The government itself is facing in two directions on this issue, with the Foreign Office and the Department of Business warning companies and of the risks of doing business with illegal settlements while the Department of Communities and the Cabinet Office try to make it illegal for public bodies to avoid these risks.