Israeli outpost-linked firms exploit loophole to buy up European property even as the EU curbs trade with illegal settlements

After years of European governments condemning Israel’s illegal occupation but maintaining extensive economic relations, some economic consequences are reportedly now forthcoming .

This comes amid wider scrutiny of Israel’s treatment of Palestinians, including systemic discrimination, unlawful occupation and genocide in Gaza .

On 8 September, twelve governments announced moves towards restricting trade with illegal Israeli settlements. This is a limited but welcome response to grassroots pressure.

It also raises a question: where does the economy of an illegal Israeli settlement end?

Most emerging measures follow economic relationships towards illegal Israeli settlements: do not buy goods produced there, invest there or provide services that enable their construction.

Norway’s proposed legislation is seemingly comprehensive, covering property purchases and services connected to construction and property transactions.

But this all still largely considers illegal Israeli settlements within their territorial bounds.

The problem is treating a spatial category as though the economic relationships producing it share the same boundary. We all know the world does not work like that.

Kinnula, a municipality in central Finland, is now facing this reality: when money from the illegal settlement economy moves into public land in Europe. It is a small case, but it makes the problem unusually visible.

In August, Kinnula council voted 10-3 in favour of a €4m resort development by Israeli property company Dror Bonim Atid, before councillors had been informed of the company’s promotion of projects in illegal Israeli settlements.

The municipality paused the process while requesting a background report on the company from Israel . Its municipal manager told Finnish news media that nothing had yet emerged that required closer examination.

However, illegal Israeli settlements are not illicit enterprises from the perspective of Israel. Their expansion is enabled through Israeli state institutions.

A background check sought from Israel is therefore absurd. A more obvious background check reveals something else.

On its own website , Dror Bonim Atid presents its Finnish development alongside a development in Efrat, an illegal Israeli settlement in the occupied West Bank, as well as a development in Dror-Hiran in the Negev. The latter is being built on land where Umm al-Hiran stood until November 2024, when the Bedouin village was completely demolished and its community forcibly displaced .

One company website therefore takes us from an illegal Israeli settlement, through the site of a demolished Bedouin village, to holiday accommodation beside a Finnish lake.

Finland’s ministry of defence must still approve the acquisition because the purchaser comes from outside the EU and EEA. But that system principally examines questions such as national security and defence .

Involvement in illegal Israeli settlements does not fit neatly into the categories through which the transaction is being examined.

Kinnula exposes a gap in the emerging European restrictions on trade with illegal Israeli settlements. Those restrictions follow economic relationships from Europe towards the settlements.

Here the relationship points the other way. What happens when the economies of illegal Israeli settlements come to Europe to acquire public assets, invest and make money here?

This may be a relatively new question for European policymakers. For Palestinian civil society, it is not. Their call for Boycott, Divestment and Sanctions (BDS ) was issued in 2005, drawing in turn on a much longer history of Palestinian boycott and economic resistance.

The movement has spent years developing corporate-complicity criteria and strategies for divestment and exclusion from contracts , moving beyond asking where a product came from to examining the companies with which institutions maintain economic relationships.

You could be forgiven for rolling your eyes as European policy discovers these questions inch by inch.

Palestinians have spent generations analysing the economic relationships through which occupation is sustained. BDS has spent more than twenty years turning that knowledge into practical strategies for institutions elsewhere.

So, when a Finnish municipality is deciding whether to sell public land to a company openly involved in illegal occupation, there is clear guidance from Palestinian civil society on how to respond.

There is also now the fact that Europe accepts that it should not economically support illegal Israeli settlements, meaning it should also accept that companies involved in illegal settlements should not be able to come to Europe for public land, contracts and investment.

Khalil Avi Betz-Heinemann is a social anthropologist at the University of Helsinki. He is also a member of Researchers for Palestine at the University of Helsinki and Nahlieli, Jews for Justice in Palestine.