JERUSALEM — Israel's prime minister on Tuesday harshly criticized a European Union decision to ban funding for Israeli institutions that operate in the Palestinian territories.
The new guidelines will block EU cooperation grants for Israeli entities that operate in the West Bank and east Jerusalem, territories captured by Israel in the 1967 Mideast war and claimed by the Palestinians for their future state.
The EU decision amounts to a diplomatic condemnation of Israeli settlement construction in these territories and, in effect, endorses the Palestinian position that a future border should be based along the 1967 lines.
Prime Minister Benjamin Netanyahu spent the day meeting with senior Cabinet ministers to discuss the European funding cut.
"We will not accept any external edicts about our borders," Netanyahu said. He said that any decision about his nation's land could only be resolved through direct negotiations with the Palestinians.
Participants in the meeting included Justice Minister Tzipi Livni, the chief Israeli peace negotiator, and Economy Minister Naftali Bennett, a backer of the Jewish settlement movement.
Netanyahu said that the Europeans should deal with what he called "slightly more urgent" matters in the region, including the civil war in Syria and the Iranian nuclear program, before worrying about Jewish settlements.
The EU makes millions of euros in grants to Israeli entities, including universities, researchers and private companies.
In order to obtain EU funding from 2014 on, Israeli projects will be required to sign a clause stipulating they operate within the country's pre-1967 borders and not in east Jerusalem, the West Bank or Golan Heights. That reflects that the EU believes these areas, including the Israeli-annexed east Jerusalem and Golan Heights, are not part of Israel.
Israel's deputy foreign minister, Zeev Elkin, called the EU decision a "very significant and worrying move."
He said it would undermine U.S. efforts to restart talks with the Palestinians just as Secretary of State John Kerry is in the region.
"It certainly doesn't add to the atmosphere of peace talks. On the contrary, it fuels the Palestinian refusal to return to the negotiation table," Elkin said.
A senior Palestinian official welcomed the EU move.
"This is the beginning of new era," Hanan Ashrawi said. "Israel should listen carefully and should understand that this occupation cannot continue without any kind of accountability."