The Labour Party conference taking place this week was planned from the outset to be the place where the new UK government would "restart" its policy towards Israel. On Monday, the foreign secretary, Ed Miliband, stood before the party members and delivered the goods. In one of the most critical speeches concerning Israel in recent decades, Miliband made clear that the rules of the game between the UK and Israel in relation to the Israel-Palestinian dispute had changed fundamentally.
"I want to say to the millions of people in this country, and indeed elsewhere who have been moved and outraged by the plight of the Palestinian people, we hear you. You were right," he said, in what was presented as a U-turn in Labour Party policy, adding, "And when it comes to the attempt to destroy the two-state solution, this party, this movement, this government, says we will not let you succeed."
Miliband, who comes from a Jewish family and frequently invokes the personal history of his parents, who escaped from the Nazis, said, "We call out ethnic cleansing by the settler terrorists in the West Bank. We call out the evidence of war crimes In Gaza. We call out Israel’s illegal occupation of Palestine. And we match words with actions. We will ban the import of goods from illegal settlements. We will disrupt the supply lines of British finance, British construction and British services for illegal settlements."
The foreign secretary’s sharp words are the culmination of a prolonged but consistent deterioration in relations between the two countries in the past three years. As Miliband promised, the damage to relations threatens to spill over into the economic sphere and to harm bi-lateral trade in goods. At the same time, British newspaper "The Jewish Chronicle" reports that the UK has considerably extended its embargo on arms supplies to Israel, and in addition to thirty export licenses frozen in the past, it has forbidden the export to Israel of a further 50 systems and weapons.
After the attack by Hamas on October 7, 2023, the British establishment took a clear stance on Israel’s side. The Conservative prime minister at the time, Rishi Sunak, expressed full solidarity, as did Sir Keir Starmer, who then headed the Labour Party. It was Starmer who purged the Labour Party of antisemitic elements that had gained influence in it during Jeremy Corbyn’s period as party leader, and he promised to turn over a new leaf in relations with the British Jewish community, which included better relations with Israel.
The British public thought otherwise, however. Led by Corbyn and a coalition of pro-Palestinian organizations, hundreds of thousands of demonstrators took to the streets against Israel’s response to the massacre, sometimes weekly. Some expressed support for Hamas terrorism, and some called on the British government to break off security relations with Israel. Britain was always a European incubator for pro-Palestinian organizations, but the war made them a main subject of public discourse.
After Starmer led Labour to victory in the election of July 2024, he had to try to walk between the drops - to fulfil his commitment on relations with Israel while his party was far to the left of him on that issue.
Britain gradually reduced security cooperation with Israel. Royal Air Force planes took part in neutralizing UAVs from Iran in the major missile attack on Israel in 2024. In subsequent rounds, they no longer did so. An arms embargo was imposed on dozens of items that "could be used in the Gaza Strip." Support for the authority of the International Criminal Court and calls for investigation of alleged Israeli war crimes grew.
The local elections in May, in which the Labour Party suffered an unprecedented rout, caused many in the party to demand change in its policy on Israel. Local councilors saw how they were losing their seats to pro-Palestinian candidates from the Green Party or independent candidates who put the "fight against the genocide in Gaza" at the top of their campaigns. Starmer was deposed, Andy Burnham took over, and now Miliband is leading the new policy that he outlined.
From the Israeli side, declarations against the formation of a Palestinian state, alongside growing violence towards Palestinians on the West Bank, have aroused great public anger in recent months. The Israeli government’s announcement of construction in the E1 area next to Jerusalem in particular is perceived as a poke in the eye. According to "The New York Times", the UK government believed that there were tacit understandings that the matter would not be raised before the election in Israel.
Three weeks ago, the UK led a pan-European declaration of sanctions on Israeli settlements beyond the Green Line and expansion of the arms embargo. From Israel’s point of view, however, what is more worrying is Miliband’s declaration then and this week about hitting not just goods but also services. This is a business area that other countries such as Ireland, and even the Netherlands, have avoided touching because of the legal complications involved. Spain took a step in this direction when it informed tourism platforms such as Booking.com that it was forbidding them to advertise places of hospitality beyond the Green Line on websites accessible on its territory, but it did not go beyond that.
Now, the UK is threatening to go much further. In addition to his speech this week, Miliband threatened previously to impose sanctions on "companies and individuals that provide services such as construction , infrastructure, financing and real estate for expansion of settlements." The implications could be broad: a ban on contact with any Israeli bank that provides a mortgage to someone buying an apartments or house beyond the Green Line, for example, or that finances companies carrying out construction in the territories, or that provides services of any kind there.
Collision course
So far, Israel has managed to separate between the illegality of the settlements in European eyes and the situation on the ground. Israeli governments have swallowed the fact that Europe refuses to collaborate with research institutes located beyond the Green Line, for example, by setting up a special fund to indemnify them against the loss of budgets. The same applies to exports from the settlements: a fund was set up to compensate farmers. But if financial and infrastructure services are involved, such separation becomes impossible.
The UK is now working on formulating the sanctions. Miliband estimated in a recent interview that it would take between six and nine months for them to come into effect. Just as the Netherlands was the pioneer in extending sanctions to the purchase and sale of products from the settlements, and in threatening to search the baggage of travelers entering the country, Britain could be the pioneer in extending sanctions to services. Both countries, which in the not very distant past had friendly relations with Israel and cooperated with it closely on security matters, are now on a collision course with it.
Published by Globes, Israel business news - en.globes.co.il - on September 30, 2026.
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