MIDDLE EAST: The European Union has clashed with Israel over the export of goods made in Jewish settlements in Palestinian territory, threatening to send the dispute to arbitration.
The goods are subject to preferential tariffs because they are marked "Made in Israel" but the EU believes that, because the settlements are illegal, the goods should be subject to full duty.
As EU diplomats warned that their patience was running out, the External Affairs Commissioner, Mr Chris Patten, said that Israel should understand that the EU means business. "I hope they take us seriously," he said.
Israel's foreign minister, Mr Shimon Peres, who met EU foreign ministers in Luxembourg yesterday, attempted to play down the dispute.
"Let's keep a sense of proportion. The whole story is $7 million so let's not talk so highly about financial problems," he said.
The EU also agreed to start a dialogue with Iran that would include a human rights dimension but Denmark's foreign minister, Mr Per Stig Moeller, who chaired yesterday's meeting, said there would be no preconditions.
"The EU will have this critical dialogue. We want the reformers in Iranian society to be helped by the EU. They are the majority in the country," he said.
The EU voiced concern about violations of the right to freedom of expression and association in Iran and "systematic discrimination" against women, girls and minorities.
But the ministers were split on whether to push for a censure resolution at the United Nations, something demanded by a crowd of more than 1,000 flag-waving demonstrators outside their conference hall. An EU diplomat said the Netherlands, backed by Ireland and Britain, were in favour of a resolution but others argued that direct engagement with Tehran would be more effective.
The ministers were due to discuss Iraq over dinner last night but Mr Moeller said that there was already a consensus in favour of action through the United Nations security council.
"What we have been talking about is disarmament. The EU has not been talking about regime change," he said.
Additional reporting: Reuters
