ISRAEL - April 14 - Israel Warns EU Not To Impose Sanctions.

The President of the Manufacturers Association of Israel Oded Tira attacks the European Parliament's April 10 decision to impose political and trade sanctions against Israel (see last week's Recorder), saying: "If these sanctions will be put on Israel, we will have to react in a very strong way and put sanctions on any country that acts against Israel". He says Israel's military actions are a response to a wave of deadly suicide bombings, adding: "I don't think any other country would have allowed such events to happen without responding". (On April 10, the European parliament called for a suspension of the free-association agreement, which was signed in 1995 and came into force in 2000 granting Israel preferential trading terms). Israeli businessmen fear that suspension of the agreement will deal a big blow to the Israeli economy. The EU is Israel's biggest trading partner and accounted for 34% of trade during 2001, according to Israel's Central Bureau of Statistics. But the trade balance is in Europe's favour, with Israeli exports to Europe totalling $7.6 bn in 2001 and imports worth $13.9 bn. Economists say any suspension of the free-association agreement would not, as such, amount to a trade embargo. But if Israel lost its status as a preferred trading partner it would be subject to an average common customs tariff of 3.5%. But analysts say that even talk of sanctions is already dealing a blow to Israel's image in European markets. An Israeli official said: "There may be businessmen who say, if there is a problem I do not want to deal with [the Israelis]". Israeli officials warn that any sanctions by the EU would mark the end of the EU attempts to boost its involvement in seeking a diplomatic solution to the Middle East crisis.