“What we now witness is not an eruption of emotions or a political eruption, it is a result of years of an evolution that has been taking place … in which Israel loses gradually but steadily the sympathy of public opinion in Europe,” says Avi Primor, former Israeli ambassador to both Germany and the European Union.

While he and others see a potential for a serious deterioration of relations, Israeli Prime Minister Benjamin Netanyahu’s government appears undeterred by Europe’s response so far to plans to expand West Bank and East Jerusalem settlements. Despite Europe being Israel’s largest trading partner – or perhaps because of it – Israel is largely unconcerned about the diplomatic flap inflicting any permanent damage.

“We have very strong relations with European countries and I’m sure we’ll overcome this in the near future,” says Danny Danon, deputy speaker of the Knesset and a member of Mr. Netanyahu’s Likud party. “I think we will have to deal with that [Europe’s] response, but we will continue to build in our capital in Jerusalem, and in settlement blocs in Judea and Samaria,” he says, using the biblical names for the West Bank.

Is Europe’s criticism registering?

Mr. Danon, who is also a member of the Knesset’s Foreign Affairs and Defense Committee, says he was surprised by the diplomatic backlash from Europe because it showed a double standard after last week’s successful Palestinian bid to be recognized as a state at the United Nations.

“The message is very clear: if the Palestinians will take unilateral steps, Israel will do the same,” he says. “I haven’t seen any similar [European] response to recent Palestinian steps.”

But a fellow member of the Foreign Affairs and Defense Committee, Nachmann Shai, says Israel’s retaliatory settlement moves are detrimental to its global standing and reflect an about-face, after Netanyahu so carefully worked to get international opinion on Israel’s side during the eight-day Gaza campaign that ended Nov. 21.

“We lost this credit overnight because we didn’t know how to react to the Palestinian request at the UN,” says Mr. Shai, who has represented Israel’s interests to the world in many different positions over the course of his career, including as spokesman for the Israel Defense Forces. “The fact that we reacted by challenging the world community by doing something that we know for sure will make them angry … it’s like shooting ourselves in the leg, it’s against our interests.”

The Foreign Ministry could not be reached for comment. 

Hurt feelings

Some have characterized the dispute as the result of hurt feelings on both sides. European officials, who have shown more sympathy to Israel’s concerns than those of their own constituents – most recently sticking their necks out to support Israel’s recent military operation in Gaza – can’t help but feel that Israel has proven ungrateful.

“As much as we try to put a sophisticated analytical veneer on all this ... I don’t think you can completely dismiss the human reaction,” says Mark Heller, a fellow at the Institute for National Security Studies in Tel Aviv. “It may not have been intended as slap in the face, but it looks like a slap in the face.”

On the Israeli side, meanwhile, years of harsh statements from Europe and the United Nations have left many calloused.

“There are undercurrents in the psyche, deeply held feelings that, ultimately, nobody likes us anyway, no matter what we do, and we’re really on our own,” says Dr. Heller. “Nobody else cares what we think, so why should we care what they think?”

Lowest point in decades

Sharon Pardo, director of the Center for the Study of European Politics and Society at Ben Gurion University, calls the current flap “one of the lowest points in the history of more than 50 years of EU-Israeli relations.” The only other incident he sees as comparable is the 1980 Venice Declaration, which recognized the Palestine Liberation Organization and affirmed the Palestinian right to self-government.

He says there were clear signals of growing European frustration leading up to this week’s rebuke.

When Britain, France, and Germany said after a UN Security Council meeting a year ago that they were “dismayed” by Israeli settlement building, Israel’s Foreign Ministry dismissed their “inappropriate bickering” with Israel and warned that they were “bound to lose their credibility and make themselves irrelevant” – suggesting that they direct their energies instead to bigger problems, like Syria.

Blacklists, ban under consideration

More recently, the EU has reportedly been mulling a plan to blacklist violent Israeli settlers from entering its member countries. And there has been a move to ban or at least label products made in Israeli settlements.

Prof. Pardo says the kind of “megaphone diplomacy” seen this week signals that Europe, which prefers dialogue over punitive measures like sanctions, feels it cannot get through to the Israeli administration and is trying to send a message not only to the government but also Israel’s voters ahead of Jan. 22 elections.

“We see a much more assertive EU … that is sending a message to the Israeli government that we are not willing to play the games by your rules,” he says. “We have a completely different set of rules. It’s either you follow us, or for the first time we will react in a different way than you’re used to.”

The best, and perhaps only, way to get EU-Israel relations back on track and avoid further deterioration, such as the EU refusing to upgrade trade and technological agreements with Israel that would otherwise become quickly outdated, is to engage in meaningful negotiations with Palestinians, says Prof. Primor.

Whether those negotiations lead to real peace isn’t as important, he says, pointing to the effect of signing the 1993 Oslo Accords.

“Immediately we became the blue-eyed boy of the EU and we could get all the advantages that we wanted, all the modifications of the agreements that we wanted,” he says. “This could happen again.”