When the UK government announced asset freezes and trade restrictions against a handful of Israeli settlers in 2024, it marked something of a turning point. For decades, international condemnation of settlement expansion in the West Bank had come largely in the form of strongly worded statements. Now, with economic tools being deployed by Western governments — long seen as Israel’s closest allies — the question isn’t just whether sanctions are politically significant, but whether they actually work.
What Sanctions on Settlements Look Like in Practice
Economic sanctions are not a single blunt instrument. When governments target settlements, they typically deploy a toolkit that can include asset freezes, travel bans on individuals, restrictions on trade in goods produced in settlements, and prohibitions on financial institutions doing business with settlement-linked entities.
The UK, following its departure from the EU, developed its own sanctions framework and has used it to designate specific settlers and settlement-linked organisations accused of violence against Palestinian communities. Under these measures, any assets held in British jurisdictions are frozen, and UK citizens and businesses are prohibited from dealing with designated individuals.
The European Union has taken a broader trade-based approach. Under EU law, goods produced in Israeli settlements in the West Bank cannot be labelled as products of Israel — they must be identified separately, making them ineligible for preferential trade terms under the EU-Israel Association Agreement. This distinction matters economically. Settlement exports — including agricultural products, wine, and cosmetics — lose their duty-free access to European markets when correctly labelled, raising their price and reducing their competitiveness.
The United States under the Biden administration went further in early 2024, signing an executive order enabling sanctions specifically targeting settlers involved in violence, a notable step for Washington given its historically protective posture toward Israel at international forums.
The International Legal Foundation
The legal scaffolding underpinning these measures is substantial, even if contested. Under international humanitarian law — specifically the Fourth Geneva Convention — an occupying power is prohibited from transferring its civilian population into occupied territory. The International Court of Justice, in a landmark advisory opinion issued in July 2024, ruled that Israel’s continued presence in the occupied Palestinian territories, including its settlement policy, is unlawful under international law and called on states not to render aid or assistance that would maintain that situation.
That opinion, while non-binding, gave political cover to governments considering stronger measures. It reinforced arguments that trading with settlements or allowing settlement goods to flow freely into Western markets could constitute complicity under international law — a charge no democratic government wants levelled at it.
It’s worth noting that Israel rejects this legal framework, arguing that the West Bank’s status is disputed rather than occupied in the conventional legal sense, and that settlements are legal under Israeli domestic law. Many legal scholars and international bodies disagree.
Do the Sanctions Actually Bite?
Here is where the picture becomes more complicated. Critics of the current sanctions regime argue it is more symbolic than substantive. The number of individuals designated by the UK or US remains small — dozens, not hundreds — and the settlements themselves continue to expand. According to the UN, over 700,000 Israeli settlers now live in the West Bank and East Jerusalem, up from around 400,000 in the mid-2000s.
Targeted sanctions on violent individuals, while symbolically important, do little to address the structural economic incentives that drive settlement growth — cheap land, government subsidies, and tax incentives offered by the Israeli state to settlers.
More economically significant would be a comprehensive ban on settlement goods or a suspension of trade agreements, steps the EU has so far declined to take and which the UK government has resisted under diplomatic pressure. Some economists argue that meaningful trade restrictions — particularly if coordinated among the UK, EU, and US simultaneously — could impose real costs and alter the calculus of both settlers and the Israeli government.
For now, sanctions on settlements remain a policy in its early stages — legally grounded, politically meaningful, but not yet economically transformative. Whether Western governments are willing to escalate these tools, particularly as the conflict in Gaza continues to reshape diplomatic relationships, may define the trajectory of international pressure on Israeli settlement policy for years to come.