The European Union has come up with a new policy on giving “funding, co-operation, and the granting of scholarships, research grants and prizes” to groups and individuals in the West Bank or East Jerusalem.

The guidelines, which were released on June 30 and take effect this Friday, say that any such agreements between EU countries and Israel must exclude the settlements.

An Israeli official commented: "We are not ready to sign on this clause in our agreements with the European Union. We can say this to the Europeans, but the result could be a halt to all co-operation in economics, science, culture, sports and academia. This would cause severe damage to Israel."

European Jewish Congress president Moshe Kantor has criticised the EU guidelines as being "a severe detachment from reality."

He said: “On the eve of another visit to the region by US Secretary of State John Kerry in the hope of restarting negotiations, some in the EU have decided that now is a good time to throw a spanner in the works and inflame tensions between the parties... Additionally, while there is massive political and social instability and thousands being murdered all across the Middle East, the fact that this is where the EU chooses to display a show of strength indicates that there is a severe detachment from reality.”