Israel ready to pull investments from UK, says ex-minister

Israel could end investments in Britain because of Ed Miliband’s sanctions on West Bank settlements , a former senior Israeli foreign minister has said. Sharren Haskel, who was Israel’s deputy foreign minister until July, said Israel would be weighing up “additional measures” against Britain , including trading restrictions and the withdrawal of investments. Writing for The Telegraph, she accused Mr Miliband, the Foreign Secretary, and Andy Burnham, the Prime Minister, of “surrendering to radicals within their own party” and of “election interference” before Israel’s legislative elections on Oct 27. On Tuesday, Mr Miliband announced a trade ban on goods from Israeli settlements in the West Bank, accusing “ terrorist” settlers of “ethnic cleansing” Palestinians. The sanctions – the lowest point in diplomatic relations between the UK and Israel for decades – were met with retaliatory measures by Benjamin Netanyahu’s government. Israel closed Britain’s consulate in Jerusalem and imposed travel bans on 12 pro-Gaza MPs. Senior Whitehall sources confirmed to The Telegraph that Mr Miliband had been warned Israel’s response would be severe because of the elections next month, in which Mr Netanyahu could be deposed . Civil servants in the Foreign Office advised that imposing sanctions shortly before an election would damage relations with Israel far more than if Britain waited until November. Officials had also told Yvette Cooper, Mr Miliband’s predecessor, that sanctions might not be effective because British importers would struggle to distinguish between settlement goods and those produced within Israel’s pre-1967 borders. The Jerusalem consulate is used as Britain’s de facto mission to the Palestinian territories, and to evacuate diplomats from Tel Aviv when the embassy there is closed because of Iranian bombing. Ms Haskel said Britain and Israel were engaged in a “diplomatic tit-for-tat” that could escalate , with further sanctions from both sides possible. She said: “Make no mistake, the UK cannot expect things to be business as usual. This week’s announcement represents a crossing of the red line. The Israeli public regard this as a betrayal from a country we once considered one of our closest and most important allies.” Ms Haskel noted that Israel had backed Britain in the Chagos Islands dispute at the UN, and had provided military equipment to British forces operating in the Middle East. Mr Miliband, she said, had presided over a “betrayal that has wiped out decades of goodwill”. She added: “Faced with the extreme steps of the British Government, Israel has no alternative but to consider what our future relationship will look like and will be seriously weighing up additional measures, including withdrawal of investments in the UK and our own trading restrictions.” Official figures published by the Government in July showed Israel was the eighth largest source of foreign direct investment in the UK, with 16 separate projects. Total bilateral trade between the UK and Israel was worth almost £6bn last year. Ms Haskel was considered a key ally of Gideon Sa’ar, the Israeli foreign minister, and became his deputy when he signed an agreement to join Mr Netanyahu’s government in November 2024. She resigned in July over plans to stop arresting ultra-orthodox Jews who refused to serve in the Israel Defense Forces, arguing that it would harm “the security of the country during wartime”. Mr Miliband’s decision to impose sanctions came after the Israeli government announced plans for the E1 project , a development in the West Bank that will link Jerusalem with the Ma’ale Adumim settlement, almost cutting off Palestinian East Jerusalem from the rest of the territory. Mr Miliband said on Tuesday that the E1 project had crossed a “long-standing red line” in August, when Israeli ministers issued their tender for 1,200 new homes on Israeli-settled land. He added that the project was designed to create “a set of facts on the ground to make the two-state solution unviable” and accused Israeli settlers of “ethnic cleansing”. Mr Miliband also called Israeli occupation of Palestinian territory “unlawful” for the first time – a significant hardening of Britain’s diplomatic position – and accused Israel of trying to make the two-state solution unviable. A Foreign Office spokesman said: “We do not comment on internal advice, but we always carefully consider a range of options before major announcements – we have been clear that we had to act now in defence of the two-state solution. “As the Foreign Secretary has said, we knew that Israeli retaliation was a possibility and weighed up the costs and the benefits in advance as part of our planning.” Britain has crossed a red line By Sharren Haskel The British Government’s appalling attack on Israel this week is a betrayal that has wiped out decades of goodwill. Israel’s response was clear and immediate. Speculation is now rife that the UK will itself react with further punitive measures against Israel. A diplomatic tit-for-tat is now in play. Make no mistake, the UK cannot expect things to be business as usual. This week’s announcement represents a crossing of the red line. The Israeli public regard this as a betrayal from a country we once considered one of our closest and most important allies. Israel has been a steadfast ally to the UK in its toughest moments, often being among the first countries to offer help in the wake of deadly attacks. On the world stage, we have stood with the UK at the UN during disputes over the Chagos Islands. We have provided military equipment to the British Armed Forces, which have saved untold lives on the battlefields of Afghanistan, Iraq and Syria. Faced with the extreme steps of the British Government, Israel has no alternative but consider what our future relationship will look like and will be seriously weighing up additional measures, including withdrawal of investments in the UK and our own trading restrictions. Amidst this unedifying showdown, Israel must not end its crucial intelligence relationship with the UK. We understand that this has saved hundreds of British lives and, as difficult as this moment is, we will never turn our backs on British civilians. We have a shared commitment to freedom and democracy against Islamism. We must, and will, continue to co-operate to tackle those dark forces. It begs the question what Burnham and Miliband thought they would achieve. It is increasingly clear that they had been given specific warnings about the likely fallout. The assertion that this will advance peace is nonsensical. Israeli-operated businesses in Judea and Samaria/West Bank have been a blueprint for peaceful coexistence. It has created a reality of Arabs and Jews working together and creating friendships. Each day, they live and work side by side on everything from agricultural labour through to high-tech and medical research. By boycotting this, the UK Government is doing the exact opposite of what we want here in Israel – and that is peace. Given the incredibly small volume of exports into the UK from the West Bank, it clearly won’t harm Israel economically. Conversely, this regressive step will most harm the livelihoods and wellbeing of Palestinians. Shame on the British Government for not considering that these Palestinian workers benefit from job security and salaries often up to six times larger than they could get from working at Palestinian-owned businesses. You don’t need to look too far for a real-world example of how Palestinians become the victims of Lefty campaigners and their discriminatory crusade against Israel. Under relentless pressure from BDS [Boycott, Divestment and Sanctions] campaigners, Israel’s world-renowned Sodastream relocated a decade ago from the West Bank to southern Israel. 500 Palestinian workers lost their jobs overnight. The company ensured a number of these Palestinians could receive permits to work inside Israel, but because of Western progressives many more were left to rebuild their lives alone. I find it extraordinary that Burnham and Miliband have decided to unilaterally blow up our trade partnership. Israel has firmly established itself as one of the UK’s most important trading partners, creating tens of thousands of jobs across the UK, and saved the NHS millions. Israeli companies were behind 16 foreign direct investment projects in the UK during the 2025-26 financial year – ahead of every G7 economy on a per capita basis. Unlike the UK, Israel’s economy is expected to grow by 5 per cent in 2026 according to Moody’s. While the trade restrictions are supposed to be confined to Israeli businesses operating in the West Bank, it does jeopardise the UK’s trade with the whole of Israel. To avoid administrative complexities, British companies may increasingly conclude that the easiest option is simply not to trade with Israel full stop. You can expect the anti-Semitic zealots of the BDS movement to continue harassing British businesses to end any and all trade with Israel. The chilling effect will be unavoidable, and that is why so many Israelis see this as a boycott of Israel through the back door from a government unwilling to be up front about it. It could prove painfully costly to have ignored or overlooked the likelihood that British companies will now fall of anti-boycott legislation in 40 states across the U.S. British executives and boards should start speaking to their lawyers because punitive fines and loss of public contracts and investment will be crippling. The Prime Minister and his Foreign Secretary have surrendered to radicals within their own party. Israelis know a thing or two about elections, and it certainly isn’t lost on them that Labour is cynically trying to win back support from the Green Party after your former prime minister resigned from Parliament. Equally, we can spot election interference when we see it. London, in its wisdom, risks strengthening Netanyahu. President Isaac Herzog, hardly a spokesman for Netanyahu, has described the British move in unusually blunt terms – “gross interference in the democratic elections of a sovereign nation”. I myself resigned from Netanyahu’s government because I believe Israel’s political system needs change, but whatever change Israelis choose must be chosen by Israelis. The UK – a country I have a close connection to – has unequivocally sided with the Palestinians in what is one of the world’s most sensitive territorial disputes. In doing so, they have insulted all Israelis by asserting that we do not share the same values as Britons. Israelis are preparing to vote in a general election, a privilege not afforded to billions of people in countries around the world. It’s a shame Britain can’t find the energy to stand up for them. Sharren Haskel was Israel’s deputy foreign minister until she resigned in July