JERUSALEM -- In a move that Israeli leaders quickly condemned as undermining U.S. Secretary of State John Kerry's push to revive peace talks, the European Union issued guidelines this week that for the first time ban the financing of and cooperation with Israeli institutions in territory seized during the 1967 war.
Prime Minister Benjamin Netanyahu said in a defiant statement Tuesday evening that he would "not accept external dictates" on his country's borders, and that the matter would be "solely resolved in direct negotiations between the sides." Other senior Israeli ministers denounced the European action as "discriminatory," "hypocritical" and "unhelpful."
A U.S. official, speaking on the condition of anonymity because of the delicacy of the diplomatic process, also called the move "unhelpful."
The guidelines, which are to be published Friday and take effect in 2014, reflect the increasing tension between Israel and Europe over Jewish settlements in the West Bank that world leaders have long considered illegal, as well as Europe's efforts to press Israel to resolve its conflict with the Palestinians.
EU officials played down the significance of the guidelines, which apply only to deals between Israel and the union itself, not its 28 member countries, saying they were simply an act of longstanding opposition to Israeli activities in the West Bank, Gaza Strip, Golan Heights and East Jerusalem. Approved June 28, the guidelines say that agreements providing research grants, scholarships and cultural exchanges must state explicitly that they apply to Israel's pre-1967 borders.
News of the rules, published Tuesday in an article in the left-leaning Israeli daily Haaretz, came as Mr. Kerry arrived in the Jordan for his sixth visit in four months to the region, where he is trying to revive the long-stalled peace talks. They threatened to complicate that mission by appearing at least to buttress the Palestinian insistence that Israel's 1967 borders be the starting point for negotiations, something Mr. Netanyahu has rejected.
Mr. Kerry was scheduled to have a private dinner Tuesday with Mahmoud Abbas, the president of the Palestinian Authority, and to meet today with King Abdullah II of Jordan and diplomats from the Arab League.
However, Mr. Kerry had no plans to go to Israel before returning to Washington on Thursday. That was seen here as a sign that Mr. Kerry has pushed the Israeli government about as far as it is prepared to go in making concessions and that he is now turning his attention to Mr. Abbas.
While the United States and Europe have long said that the 1967 borders, with minor adjustments, should be the basis of a two-state solution, since March the Obama administration has echoed Israel's rejection of preconditions.
Daniel Levy, a Middle East analyst at the European Council on Foreign Relations, said the guidelines indicated that Europe, after years of criticizing Israeli settlement activity, was putting "its policy where its mouth is."
"They have become convinced that they need to lean in a little," Mr. Levy said, "in demonstrating that they are not totally toothless in translating those concerns into action."
The EU is Israel's largest trading partner, with nearly $40 billion of imports and exports in 2011. The guidelines cover only projects financed directly out of the union's next long-term budget, which covers 2014 to 2020; officials said that it was impossible to estimate the projects' value, but noted that it was not a large sum.
"This is not about money," said Rosa Balfour, a senior analyst at the European Policy Center, based in Brussels. "It's about politics."
Israeli politicians reacted with alarm to the new guidelines. Zeev Elkin, the deputy foreign minister, said the move would "impede Israeli organizations as a whole, and not only in the territories."
Yair Lapid, the finance minister, called it "a miserable decision" that "sabotages" Mr. Kerry's initiative by making Palestinians "believe that Israel will be forced to bow to the diplomatic and economic pressure."
Uri Ariel, the pro-settlement housing minister, went further, saying the move was racist and "reminiscent of boycotts of the Jews in Europe over 66 years ago."
Hanan Ashrawi, a member of the Palestine Liberation Organization's executive committee, welcomed the decision, saying in a statement that Europe had "moved from the level of statements, declarations and denunciations to effective policy decisions and concrete steps, which constitute a qualitative shift that will have a positive impact on the chances of peace."The guidelines come as the EU continues to debate whether to label products made in West Bank settlements, which some member countries have already done, making it easier to boycott them.world