Britain and Israel are locked in one of the most serious diplomatic crises between the two countries in years, after London imposed sanctions on Israel’s West Bank settlement expansion plans and, for the first time, formally declared the occupation itself unlawful. The UK government has gone so far as to describe what is happening to Palestinians in parts of the territory at the hands of extremist settlers as “ethnic cleansing,” according to the Independent.

Israel’s response was immediate. Israeli Foreign Minister Gideon Sa’ar announced that Israel would close the British Consulate General in Jerusalem, the diplomatic post that has long handled relations with the Palestinian Authority, among a wider set of retaliatory measures, opening a fresh front in the already strained relationship between the two countries.

Announcing the sanctions in the House of Commons, Foreign Secretary Ed Miliband said the British government now considers the occupation of the West Bank to be unlawful, a step beyond its previous position that only the settlements themselves were illegal.

He said Britain accepts the International Court of Justice’s advisory opinion on the matter, and that this should be reflected in Britain’s economic relationship with the occupied territories. The measures include a ban on imports of goods produced in the settlements, restrictions on companies and individuals providing services, such as construction, financing and real estate, for settlement expansion, and a refusal of licences for arms and other exports that materially contribute to the occupation, building on more than 30 arms licences already suspended over weapons used in Gaza.

The move follows Israel’s decision to advance construction in the E1 area near Jerusalem, which Britain says would cut the West Bank off from East Jerusalem and undermine the viability of a future Palestinian state.

Miliband told MPs that the government now agreed there was “ethnic cleansing of Palestinians in areas of the West Bank, perpetrated by settler terrorists.” He said the Israeli government had too often “turned a blind eye” to this, and that some of its members had made statements and taken actions supporting the forced removal of Palestinians from their homes.

The terms “ethnic cleansing” and “forced displacement” carry particular weight in international law, given their historical association with crimes against entire populations.

Britain’s decision concerns the Israeli settlements built on West Bank territory captured by Israel in 1967, considered illegal by much of the international community.

🚨 BREAKING: Ed Miliband has officially announced a UK trade ban on Israeli settlements in the West Bank

"I do not believe the British people want us supporting the occupation" pic.twitter.com/G0TorQ1pyO

— Politics UK (@PolitlcsUK) September 8, 2026

Britain’s historical weight in the region

British involvement in the modern history of Israel and the Palestinians dates back to 1917, when the government in London issued the Balfour Declaration.

In a letter from the then Foreign Secretary, Arthur Balfour, to Lord Rothschild, Britain expressed support for the creation of a “national home for the Jewish people” in Palestine, on condition that the rights of the non-Jewish communities already living there would not be prejudiced.

For many in the Arab world, the Balfour Declaration marked the start of a historic injustice and a colonial project that led to decades of conflict. For much of the Jewish diaspora, by contrast, it marked the moment a great power recognised the right to establish a Jewish state.

The sanctions and fears of a wider boycott

Although the new British sanctions target the settlements rather than Israel as a whole, their application may carry broader consequences. Miliband stressed that the measures target “illegal settlement and settlement expansion, not Israel,” and that Britain would continue to support trade with Israel within the Green Line, its pre-1967 boundary.

Many products manufactured in West Bank settlements are labelled as originating from Israel, making it difficult to distinguish settlement goods from those produced within the country’s internationally recognised borders. This creates a risk that companies and consumers seeking to comply with the sanctions could end up avoiding Israeli products more broadly. It is precisely this “knock-on pressure” that Israel fears, believing it could trigger a wider international campaign of economic isolation.

Clash with Netanyahu and Washington

Britain’s stance puts London on a collision course with both Israeli Prime Minister Benjamin Netanyahu’s government and Washington. The sanctions were unveiled a day after British Prime Minister Andy Burnham, who succeeded Keir Starmer in July and has taken a notably tougher line on Israel, discussed the Middle East by phone with US President Donald Trump; a Downing Street readout said the two leaders had stressed the importance of a two-state solution, with no mention of the sanctions to come.

According to reports, the United States has already adopted a tough stance towards the International Criminal Court after it issued arrest warrants against Israeli leaders over alleged war crimes and crimes against humanity.

The clash centres mainly on developments in Gaza following Hamas’s October 7 attack, as well as the situation in the West Bank, where international organisations report rising violence by extremist settlers. Miliband, after being briefed on the situation in Gaza, said Britain “must act, and act more decisively,” shortly before the sanctions were announced.

Israel’s response, and reaction from its allies

The reaction from the Israeli side was fierce. Sa’ar, who announced the retaliation with Netanyahu’s backing, dismissed Miliband’s accusations as “outrageous lies” and described the British move as “morally distorted,” accusing London of “blatant interference in the affairs of a sovereign state and its electoral process,” a reference to Israel’s general election scheduled for 27 October. He suggested the timing was linked to domestic politics ahead of the Labour Party’s conference later this month.

Beyond the consulate closure, Israel’s countermeasures include removing British representatives from the US-led coordination mechanism for Gaza, ending a British programme training Palestinian Authority security forces in the West Bank, and barring 12 British nationals from entering the country, among them former Labour leader Jeremy Corbyn and the MP Zarah Sultana. Israeli National Security Minister Itamar Ben-Gvir went further, calling on his own government to recognise Argentine sovereignty over the Falkland Islands and impose sanctions on Britain in return.

The response from the American side was also robust. US Ambassador to Israel Mike Huckabee, who had already accused the British government of “Jew hate” days earlier over Miliband’s remarks on the humanitarian situation in Gaza, went on to call the settlement sanctions “irrational” and a form of “discrimination” against Israel and the Jewish people.

The comments provoked controversy, not least because Miliband is himself Jewish, the son of refugees who fled Nazi-occupied Europe. He has rejected the criticism, arguing that blaming British Jews for the actions of the Israeli government amounts to “antisemitism, plain and simple.” Britain’s Chief Rabbi, Sir Ephraim Mirvis, had separately urged Miliband to reconsider the sanctions after meeting him in late August, reflecting divisions within Britain’s own Jewish community over the move.

Back to the dilemma of 1917

The British government argues that its actions represent an attempt to honour the original commitment of the Balfour Declaration: a national home for the Jewish people without violating the rights of other communities.

Critics of Israel argue that the settlement policy, land seizures and treatment of Palestinians are entrenching a permanent state of inequality.

Israel rejects accusations of “apartheid” and says its security policies are a response to terrorist threats.

Either way, with Israel’s election weeks away and Britain’s governing party gathering for its conference this month, the British sanctions mark a significant shift in stance from a country historically deeply tied to the creation of the state of Israel, and bring back into focus the difficult question of the future of the Israeli-Palestinian conflict.