Arab News | UK lawmakers warn banks against financing E1 Israeli settlement project

LONDON: British banks and financial institutions have been urged by MPs not to invest in a planned Israeli settlement in the occupied West Bank, ahead of a proposed UK ban on trade with illegal settlements.

The all-party Britain-Palestine group sent letters to financial institutions on Tuesday, calling on their boards to review the legal, sanctions and reputational risks of involvement in the E1 settlement project before new restrictions come into force, The Guardian reported.

The UK government announced plans earlier this month for a comprehensive ban on trade with illegal Israeli settlements, alongside sanctions targeting those involved in their construction. However, the secondary legislation required to implement the measures could take six to nine months to pass through Parliament.

The intervention comes as Israel seeks bids for two construction tenders covering up to 3,400 homes in the E1 area. The tender for more than 1,300 homes is due to close on Oct. 25, two days before Israel’s elections.

The proposed development has long been opposed by Palestinians and international critics, who say it would divide the occupied West Bank and undermine the prospects for a future Palestinian state. Israeli Finance Minister Bezalel Smotrich said in 2025 that the plan would “practically erase the two-state delusion.”

The project would require financing, insurance and guarantees before construction could proceed. The MPs said financial institutions should consider whether making commitments now could expose them to risks once the UK’s planned restrictions take effect.

“The immediate question is what commitments institutions were willing to make while the detailed rules are being developed, and how they would respond when restrictions take effect,” the group said.

In their letter, Labour MPs Debbie Abrahams and Andy McDonald urged boards to put potential exposure to E1 and other settlement-related activity on their agendas and risk registers, and to assess whether the associated risks fell within their institutions’ stated risk appetite.

“Commitments made now may be difficult to unwind when restrictions commence; the allocation of costs will depend on the contracts and applicable law,” the letter said. “We ask boards to consider this interim risk before agreeing new or increased commitments.”

Abrahams said the MPs were not seeking to anticipate the law, but wanted institutions to assess their exposure before the new regime was in place.

“We are asking boards a question they should be able to answer today: What exposure are you prepared to carry while the sanctions regime is written and on what evidence?” she said.

The group said it intended to publish responses to its letters by Oct. 10.

The proposed restrictions are intended to target trade linked to settlements, rather than trade with Israel generally. The article’s source reports that postcodes could be used to identify the origin of products.