Britain is preparing a package of measures targeting Israeli settlements in the occupied West Bank, and Israel has said publicly that it will respond in kind. The dispute is a useful case study in what economic pressure between allies actually looks like, and in how narrow such measures usually are.

Foreign Secretary Ed Miliband, appointed under the new prime minister Andy Burnham, told the House of Commons he would set out measures to prevent British involvement in settlement projects, and said the package would be comprehensive. He framed it in a single sentence: the government will not acquiesce in the destruction of the two-state solution.

What E1 is, and why it is the trigger

The specific project at issue is the E1 corridor, an area east of Jerusalem that Israel plans to develop. Its significance is geographic rather than symbolic: building there would create a built-up corridor separating the northern and southern West Bank and cutting the transit routes between Bethlehem, Ramallah and East Jerusalem.

That is why E1 has been treated for years by European governments as a threshold rather than an incremental step. A two-state outcome requires a contiguous Palestinian territory. Critics of the project argue that E1 would make contiguity physically impossible, and that once built it cannot realistically be undone. Israeli governments have argued that the land is within areas Israel expects to retain under any agreement and that development there is a domestic planning matter.

The International Court of Justice found in July 2024, in an advisory opinion, that Israel’s continued presence in the occupied Palestinian territories is unlawful. That opinion is advisory rather than binding, but it is the legal basis a large number of British parliamentarians have cited in urging their own government to act.

What is likely to be in the package, and what is not

Reporting indicates the measures under consideration include a ban on goods produced in settlements, further sanctions on individuals and entities, and possible restrictions on arms exports. No final decisions have been confirmed.

The precedents suggest the shape. In September 2024 the British government suspended around thirty export licences after finding a clear risk that certain British-made military items could be used in serious violations of international humanitarian law in Gaza. Components supplied through the international F-35 programme were exempted, and remain so. In June, Britain, France and Canada sanctioned six entities and one individual over financing and carrying out settler violence in the West Bank, with Australia and New Zealand acting in coordination.

The pattern is measures aimed at settlements and settler violence specifically, rather than at Israel as a whole. Supporters of that approach argue it is legally cleaner — settlements are the subject of the international legal finding — and politically sustainable. Critics, including more than eighty British MPs and peers who wrote to the government earlier this year, argue that targeting a subset of actors while continuing broader defence cooperation amounts to a distinction without much practical effect.

Israel’s response

Israel’s foreign minister, Gideon Sa’ar, warned London directly against sanctions over E1. If Britain acts against Israel, he said in a podcast interview, Israel will act against Britain. Pressed on what that would involve, he said there were tools available, that acting would be a major mistake, and that it would work the opposite way from how Britain might expect.

He did not specify the measures. Reporting has suggested he conveyed a similar warning to Miliband privately.

Threats of unspecified retaliation are a standard instrument of diplomacy and are worth reading carefully. Their function is deterrence before the fact rather than description of what is planned, and vagueness is deliberate: a named measure can be discounted and prepared for, while an unnamed one cannot. That does not mean the tools do not exist. It means the statement is not evidence of what they are.

The wider context

Britain recognised Palestinian statehood under the previous government, alongside France, making them the first G7 states to do so. Analysts quoted in regional coverage suggest a British sanctions package could influence how other European governments approach the question, since Britain has been among Israel’s strongest Western partners and a shift there is read as a broader signal.

The measures arrive against a deteriorating humanitarian position in the West Bank itself. The World Food Programme has announced it must halve the number of people it assists there, which we report separately today.

The package has not been published. Until it is, the honest summary is that Britain has announced an intention, Israel has announced an objection, and the substance of both remains to be seen.

Sources

• Haaretz, UK to unveil comprehensive measures against Israeli settlements in coming weeks, Miliband says, 1 September 2026
• Al Jazeera, How the UK’s relationship with Israel took a downturn, 7 September 2026
• Press TV, reporting Israeli Foreign Minister Gideon Sa’ar’s warning to London
• Middle East Monitor, UK weighs raft of measures against Israel, 13 August 2026
• The National, commentary on the sanctions package and European policy, 7 September 2026
• International Court of Justice advisory opinion on the occupied Palestinian territories, July 2024