Countries seeking two-state solution must stop funding Israel's settlements

Global support for a free Palestine appears to be mounting. This week, the United Nations General Assembly passed a non-binding resolution calling for an end to Israel's illegal occupation of Palestine.

Some 124 member states voted in favour. Among the 14 against were Israel, its key ally the United States and several Pacific Island nations.

But overall, almost all member countries in Africa, Europe, Asia and Latin America voted in support of the resolution. The effort is unlikely to result in any immediate relief for Palestinians being killed by Israel in Gaza and the occupied West Bank.

But the vote came days after foreign ministers of European and Muslim states met in Madrid to discuss the tangible implementation of a two-state solution.

Attendees included members of the Arab-Islamic Contact Group for Gaza, including the foreign ministers of Egypt, Qatar, Saudi Arabia, Jordan, Indonesia and Nigeria and the Secretary General of the Arab League. From the European side, Foreign Ministers of Norway, Slovenia, Ireland and the EU foreign policy chief, Josep Borrell attended.

Speaking during the meeting, host Spanish Foreign Minister Jose Manuel Alvares emphasised that there is a clear willingness among participants to move from "words to actions" and make strides towards a clear schedule to implement a two-state solution.

But to make good on this aim, Spain and countries need to address existing practices and policies that are giving Israel the licence to consolidate its occupation and prevent a two-state solution from materialising.

Upending the settlement enterprise

Principally, talk about a two-state solution is incomplete without a comprehensive, blanket and universal upending of Israel's settlement enterprise, which has flourished since its 1967 occupation of Palestinian territories.

In recent months, Israeli Prime Minister Benjamin Netanyahu's regime has laid out plans to further expand its illegal settlements. UN Secretary General Antonio Guterres has warned this would doom any prospect of a two-state solution because it would further alter Palestine's geography and violate Article 49 of the Geneva Convention.

If EU member states are serious about keeping hopes of a two-state solution alive, they must stop Europe-based financial institutions from investing billions of dollars into companies involved in Israeli settlements.

Take summit host Spain for example. Despite championing the cause of Palestinian statehood in Europe, domestic companies such as the Construcciones y Auxiliar de Ferrocarriles (CAF), a publicly listed company manufacturing railway vehicles and equipment, and the GMV private business group are funding and building infrastructure projects such as light railway lines connecting Israeli settlements to parts of the occupied West Bank.

Palestinian Minister of National Economy Khaled Osaily has urged Spain's industry and trade minister Jose Hernandez to take urgent measures against companies violating international law. Yet no action has been taken in 2024 against CAF or GMV by Pedro Sanchez's government.

Spain is not in a club of one. Even outstanding champions of Palestinian statehood in Europe such as Ireland have also largely failed to prevent companies from conducting "business as usual" with Israeli settlements. This includes American firms operating as overseas Irish subsidiaries such as Etsy and Airbnb, which list properties and sell goods to settlers under the Irish government's watch.

To its credit however, Ireland's state investment fund pulled out of Israeli companies operating in settlements. However, Airbnb reversed its decision to remove rental listings in illegal Jewish settlements in 2019 and continues to operate in 2024.

And in May, Spain, Ireland, and Norway announced that they would recognise Palestine as a state, despite blowback from Israel, which pulled its ambassadors in protest.

Germany meanwhile has condemned Israel's settlement expansion but continued to greenlight arms exports licences to Israel, further emboldening the genocidal regime and compromising a two-state solution.

Arab League introspection

The Arab League which was represented at Madrid also needs to reflect on the actions of its member states.

Both Bahrain and the United Arab Emirates signed the Abraham Accords with Israel in 2020. Critics said this allowed Tel Aviv to proceed with proliferating settlements in the absence of pressure from new allies while enhancing trade.

No intent to revoke the accords has resulted in higher trade volumes for Israel, which increased exponentially in 2024 and generates the requisite revenue the Netanyahu government needs to sustain its war economy and attack Palestinians.

Beyond the Abraham Accords, neighbouring countries such as Jordan have witnessed their monthly exports and trade volumes increase in 2024 despite Israel's expansion of settlements.

These facts appear to sabotage the Arab League's goal of implementing a two-state solution.

Work to be done

There are encouraging signs, however. Norway's largest pension fund has divested from companies such as Caterpillar in 2024, which are tied to Israeli settlements. Meanwhile Saudi Arabia reiterated this week that normalisation with Israel is out of question (despite initially pursuing it) until a two-state solution is met.

Belgium, another EU member state, called out the Israeli settlement enterprise as illegal and stated in March that it would impose sanctions on settlers in the West Bank.

However, Israel will likely continue to expand illegal settlements unless participant states suspend trade relations, criminalise private companies engaging in businesses with the settlement enterprise and revoke diplomatic efforts such as the Abraham Accords.

Simply stating that working towards a two-state solution is a common goal is not enough.

After Madrid, introspection, reflection and tangible changes are needed. Otherwise calls for a two-state solution will be viewed as merely cosmetic by proponents and Palestinians alike.