A new "anti-boycott bill", the third in a series of proposed laws that aim to curtail the ability of civil society to criticise Israeli government policy, will punish Israelis or foreign nationals who initiate or promote a boycott of Israel.

The bill not only prohibits boycotts of legal Israeli institutions, but also of settlement activities and products. It seeks to impose fines on Israelis who "promote boycotts" and transfer the fines to boycotted organisations.

It will impose a 10-year entry ban on foreign residents engaging in boycotts, and forbid them to carry out any economic activities in Israel.

Heavy sanctions will also be imposed on "foreign political entities" engaging in boycotts. Any government promoting a boycott will be "prohibited from carrying out any action in Israeli bank accounts, in shares traded in Israel, in land or in any other property requiring registration of transfer", and no money or property will be transferred from Israel to that government.

Since the Palestinian Authority is defined by Israel as a "foreign political entity", its recent decision to end its economic dependence on settlements for products, jobs and services will lead to punitive measures.

According to the bill, even money or property due to Palestinians and to the PA by virtue of previous "laws, agreements or governmental decisions" will not be transferred to them.

The geographical application of the anti-boycott bill to the West Bank ("Judea and Samaria") and the potential annulment of prior agreements will signal a de jure annexation of the West Bank to Israel and a final demise of the Oslo accords signed by the PA and Israel in the mid-1990s.

This bill, like others recently tabled, comes against the backdrop of recent analysis by the current Israeli government and its advocates, who have sought to draw a distinction between "legitimate criticism of Israel" and criticism or campaigning that "delegitimises Israel" and is therefore beyond the pale.

Alan Dershowitz has called this approach "the 80% case for Israel" – that is, the possibility of criticising specific Israeli policies, such as the settlement project, while emphatically supporting Israel as a Jewish state.

Examples of "illegitimate" activities include universal jurisdiction (the prosecution of officials suspected of war crimes overseas), BDS (boycott, divestment and sanctions), and questioning the definition of Israel as a Jewish and democratic state. The recent series of proposed bills in Israel echoes each of these categories by seeking to prohibit them through law and to criminalise human rights activists who engage in such activities.

This approach is deeply flawed. There is a difference between disagreeing with criticism and seeking to silence it through law. If Israel is a democracy, its activists must be allowed to voice criticism and engage in protest, however unpopular.

By failing to distinguish between a boycott of settlements and that of Israel itself, the initiators of the bill are demonstrating that they are not "protectors of Israel" but promoters of a "Greater Israel".

For them, a boycott of all Israeli products, as such, is no longer distinguishable from alternative, more limited options: the decision of Israeli or international activists to boycott settlement products in order to end the occupation, or the decision of the Palestinians themselves to stop supporting the very settlements that are denying them their sustenance.

The settlers and their supporters thus expect Palestinians not only to accept the divestment of their land and resources, but also to support those who have robbed them by buying their produce and working (for sub-minimum wages) on the very building sites that are encroaching on their lands.

The EU, also a "foreign political entity" under the Israeli definition, is likely to disagree strongly with this bill. The EU association agreements with Israel (1995) and with the PLO (1997) have a mutually exclusive territorial scope: the EC-Israel agreement applies to the territory of the state of Israel, whereas the EC-PLO agreement applies to the territory of the West Bank and Gaza.

When challenged on the issue of settlement products from the West Bank, the European court of justice recently ruled that only the Palestinian Authority can issue origin certificates for goods originating in the West Bank.

In court, the EU advocate-general was even clearer. He said that as a matter of international law, the borders of Israel are defined by the 1947 partition plan for Palestine, and any territories outside the 1947 borders do not form part of the territory of Israel for purposes of the association agreement.

If the bill passes into law, the EU would qualify as a "promoter of boycott", whereas Israel could be seen to be breaking the terms of the association agreement. The implications of this could be explosive.