Sanctions announced by the British government on Tuesday targeting West Bank settlements have upended the UK’s decades-long balancing act and provoked furious condemnation from the Israeli government that has all but severed relations between the two. Coming a year on from recognizing Palestinian statehood, the Labour-led UK government confirmed it was tightening restrictions on arms exports to Israel and was placing bans on the import of all goods from settlements and on some services, including construction, financing, infrastructure, real estate, and settlement advertising. Addressing Parliament, Foreign Secretary Ed Miliband, who is of Jewish heritage and lost multiple members of his family during the Holocaust, labeled the settlers “terrorists” who had received tacit support for their practices by an Israeli government. “There is ethnic cleansing of Palestinians in areas of the West Bank perpetrated by settler terrorists, and all too often, the Israeli government has turned a blind eye to this, and worse, members of it have made statements and taken actions to support the forced displacement of Palestinians,” Miliband added. The move marks part of a broader international pushback on settlement activity, with Canada and France also announcing on Tuesday they would join Belgium, Denmark, Finland, Iceland, Ireland, Norway, Poland, Portugal, Spain, Sweden, and the UK in enacting bans. FASTFACTS Cumulative settlement contribution — Between 2000 and 2020, Israeli settlements in Area C and occupied East Jerusalem contributed an estimated $628 billion to Israel’s economy, about 2.7 times the annual Palestinian GDP over the same period. Annual structural impact — Settlements and their related restrictions drain an estimated 25.3% of the West Bank’s potential GDP annually. Bilateral Palestine-UK trade — Totaled £38 million ($51.4 million) in 2025, versus £6 billion with Israel, though Palestinian goods are likely undercounted because they are often recorded as Israeli trade. Source: UN Conference on Trade and Development, UK Department for Business and Trade Against a backdrop of looming Israeli elections, questions are now being asked: Does the news out of London mark a long-term structural shift in its relationship with Israel, or is it part of a coordinated effort to put pressure on the government of Prime Minister Benjamin Netanyahu ahead of elections in late October? In Israel, early political response was definitive, with National Security Minister Itamar Ben-Gvir leaning into a global call by right-wing governments as he urged the country to “publicly recognize that the Malvinas Islands (Falklands) are Argentine territory under occupation.” He added: “The British are not content with merely occupying the territory; they also carry out oil drilling there and steal money from the Argentine people.” Israel’s Finance Minister Bezalel Smotrich, meanwhile, claimed “we will not be a doormat trampled by an antisemitic government, in a country conquered by radical Islam, trying to save itself from economic and social decline.” Addressing the media shortly after Miliband’s announcement, Israeli Foreign Minister Gideon Saar stated plainly that the UK was engaging in election interference as he warned that the Israeli population “emphatically” rejected Palestinian statehood. Announcing countermeasures, Saar said Israel would close the British Consulate in Jerusalem; remove British representatives from the International Gaza Support Center in Kiryat Gat in southern Israel; terminate the UK’s role in training Palestinian Authority forces in the West Bank; and deny 12 elected officials entry to Israel. These include former Labour leader Jeremy Corbyn, Zarah Sultana, Fahad Ansari, director of Riverway to the Sea, Naz Shah, Diane Abbott MP, Hannah Spencer, Carla Denyer, Sian Berry, Ellie Chowns, John McDonnell, Richard Burgon, and Adrian Ramsay. Chris Doyle, director of the Council for Arab-British Understanding, said that Ben-Gvir and Smotrich’s history of offensive comments would likely mean these remarks were not “seen as serious” in and of themselves, but warned that they could not be wholly ignored. “They (Gvir and Smotrich) are viewed with the sort of contempt that is necessary. It’s one of the many reasons that they are sanctioned,” Doyle told Arab News. “But clearly, the concern will remain that somehow whatever they say could become official Israeli government policy, not least in an election cycle.” Burcu Ozcelik, senior research fellow at the Royal United Services Institute, told Arab News the real threat from Israel surrounded the potential that it could downgrade aspects of intelligence-sharing and defense cooperation with the UK. Doing so, Ozcelik said, would prove “significant” and was “exactly why” she expected to see the UK go to great pains in the days and weeks ahead to “telegraph that the settlement trade ban is legally and diplomatically defensible because it is consistent with its recognition policy, but that the UK seeks to preserve substantial security and economic ties with Israel.” However, according to observers who spoke to Arab News, the UK appears to have reached a point at which it is willing to take that gamble, with Doyle noting that after meeting with Miliband on Monday, he was convinced the ban was indicative of a broader structural shift. “I’m quite convinced that Ed Miliband is genuine when he says that this will be a reset in relations with Israel,” said Doyle. “It’s a phrase he’s used in public and repeated. So I think that imposing a ban on trade with settlements is certainly part of that. But I think that there needs to be other measures, and I expect that there will be.” Concurring, Husam Zomlot, the Palestinian ambassador to the UK, described the decision as “long overdue,” writing on X that the sanctions marked a “turning point in UK-Palestine relations,” with Britain moving “from condemnation to consequences, from words to action.” Stressing that the development marked neither a “wholesale rupture with Israel” nor a “blanket trade ban” with Israel, Ozcelik said the Labour government was adding consistency to last September’s recognition of Palestine and the country’s “continued commitment to a two-state solution.” “It is distinguishing between Israel’s legitimate security concerns, which the UK fully recognizes, and the settlement expansion in the West Bank, which the UK considers illegal under international law,” Ozcelik said. “The UK government’s calculation is that if it recognizes a Palestinian state while taking no action against settlements that undermine the territorial viability of a future state, there is an obvious credibility gap. These measures need to be read as an attempt to give practical meaning to the UK’s support for a two-state solution.” Public support for a ban has been steadily climbing since a recommendation for one last July from the Foreign Affairs Select Committee, with an August YouGov poll pointing to 50 percent support, with just 16 percent opposed, while Caabu research noted 246 MPs were in favor. Trustee of the Britain Palestine Project, which seeks equal rights for Israelis and Palestinians, and former UK Consul-General to Jerusalem Sir Vincent Fean said that with “no peace process” and a “genocide in Gaza and apartheid, state-controlled settler violence and ethnic cleansing in East Jerusalem and the rest of the West Bank,” action was necessary. “This is a necessary reset of UK government policy, wholly consistent with UK recognition of the State of Palestine on Sept. 21, 2025, and respect for international law, which the Labour government came into office committed to uphold,” Fean told Arab News. “It exerts UK leverage over Israeli illegal settlements for the first time. The UK has joined the international virtual consensus in condemning settlements as illegal, undermining prospects for peace. But nothing was done to stop them. “With this policy step change, the UK is giving a lead to like-minded partners. The UK is not powerless in this regard.” Noting that the UK move was “inevitable” amid a “deterioration of the security situation in the West Bank,” which followed the Israeli government overturning a 20-year settlement ban in Jenin, Yossi Mekelberg said he wanted to see words matched with action. “Taking measures against the trade with the settlements is one thing, but we also need to see a drive toward a two-state solution,” Mekelberg, a senior consulting fellow on the Middle East and North Africa program at Chatham House, told Arab News. “Do you support the two-state solution on both sides? Do you support the process? If so, you need to fill it with content, with substance.” Asked to provide a metric for measuring the ban’s success, Ozcelik said this would ultimately be measured in whether it deters implementation of the contentious E1 plan, which critics say will sever Palestinian territory in such a way that a contiguous state is no longer possible.