Ireland has not — yet — criminalised trade with the Occupied Territories.

The words “Israel”, “Palestine” or even “West Bank” do not once appear in the text of the Control of Economic Activity (Occupied Territories) Bill 2018, which passed its second reading in the lower house of Ireland’s parliament last week.

But the debate in the Dáil makes perfectly clear which part of the world it is aimed at.

“We must make the settlement project a less desirable policy for Israel,” said Niall Collins, from the opposition Fianna Fáil party.

“This bill is an example of a different but moderate approach and one that I hope can be a vehicle for some change in some small way.

“It is evident, given the expansion of the settlements, that unless action is taken, the two-state solution and the sovereign state of Palestine, independent of and co-existing with Israel, will very soon not be feasible.”

The Private Member’s bill, already passed by the upper house or Seanad last month, certainly proposes some significant penalties.

It envisages a €250,000 (£218,000) fine and five-year prison term for Irish citizens or companies convicted of importing from a settlement or selling goods to one. Providing services within settlements or extracting resources would come at a similar price.

But the bill is still some way from becoming law and Ireland’s government opposes it. Last week Foreign Minister Simon Coveney called on TDs not to support the bill, saying it could lead to Israel closing its embassy in Dublin.

There are implications too for Ireland’s relations with the United States, given the calls in Washington for new laws to forbid companies from cooperating with Israeli trade bans. That would make life difficult for the vast number of US firms that use Ireland as a European base — Apple, Google and Mastercard among them.

Then there is the view of the Irish attorney-general, who says a law that unilaterally criminalises trade with a specific part of the world would contravene European Union law.

That could lead to Ireland being taken to the European Court of Jusice and being fined heavily.

Last week’s second reading of the bill was hailed by Saeb Erekat, the Palestinian chief negotiator, as “a courageous step”. Israel responded by summoning the Irish ambassador to Tel Aviv for a diplomatic dressing-down.

The bill has made it this far partly because Prime Minister Leo Varadkar’s Fine Gael party has no parliamentary majority and cannot automatically block it.

Under Irish parliamentary procedure, it still needs to pass a committee stage and two further votes of all TDs in the Dáil before President Michael D. Higgins has to think about signing it.

The odds are still that the bill will stumble at one of those stages, but the possibility for even larger row still remains.