(Reuters) - The European Union, over Israeli protests, said on Friday it was pushing ahead with plans to bar EU financial aid to Israeli organizations operating in the occupied territories, but insisted the decision would not affect peace efforts.
New European Commission guidelines on EU financial support were published in the EU's Official Journal as planned, despite intense lobbying by Israeli Prime Minister Benjamin Netanyahu, who has denounced them as meddling in Israel's relations with the Palestinians.
Under the guidelines, Israeli "entities" operating in the occupied territories will not be eligible for EU grants, prizes or loans starting next year.
The Israeli government discussed its concerns over the EU rules with the British and French ambassadors and the German deputy ambassador on Thursday, an Israeli official said.
"This was an invitation, not a summons, to exchange views on the EU directive. We expressed our censure of the move - not least because it was a violation of the express assurance we had from the EU that Israel would first be consulted about it," the official told Reuters.
The Israeli government kept up its criticism of the EU move, with Finance Minister Yair Lapid saying it would bolster Palestinians who balk at direct peacemaking with Israel.
"This isn't just hypocrisy, it's also stupidity ... They (the EU) came along and did a service for the most extremist forces in Palestinian society," he told Israel's Channel Two TV.
The EU guidelines will apply to Israeli companies, universities or other bodies operating in areas occupied by Israel since the 1967 Middle East War, including the Golan Heights, the West Bank and East Jerusalem.
The move was intended to underline EU opposition to Israeli settlement-building and its stance that it will not recognize any changes to Israel's pre-1967 borders, except those agreed to by both Israelis and Palestinians in peace talks.
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