Francesca Albanese has welcomed London’s proposed restrictions on trade linked to Israeli settlements, but says the measures will matter only if Britain extends them beyond goods and aligns its wider policy with international law.

Britain’s attempt to reset its relationship with Israel is facing an immediate test from one of the United Nations’ most outspoken experts on the occupied Palestinian territories, who has warned that restrictions on settlement-linked trade will be little more than symbolic unless they form part of a much broader change in policy.

Francesca Albanese, the UN special rapporteur on the situation of human rights in the Palestinian territories occupied since 1967, has described the British government’s emerging stance as potentially important but insufficient on its own.

Her intervention comes after Foreign Secretary Ed Miliband promised what has been described as a comprehensive reset of British policy toward Israel, with particular focus on Israeli settlement expansion in the occupied West Bank.

The proposed measures include preventing British involvement in unlawful settlement projects and examining restrictions on trade connected with settlements. Albanese welcomed the direction of travel but argued that London must go substantially further if the policy is to amount to more than what she characterised as a political “press release.”

A significant change in British language

The shift has become particularly visible over Israel’s controversial E1 settlement project, east of Jerusalem.

On August 19, Miliband formally condemned Israel’s launch of a tender for the project, calling it an “unacceptable and destructive act.” He said E1 could cut through the heart of a future Palestinian state, separate parts of the West Bank from East Jerusalem and undermine the viability of a two-state solution.

The Foreign Office also summoned Israel’s chargé d’affaires over the decision. The British government maintains that Israeli settlements in the occupied territories are a breach of international law.

Miliband subsequently indicated that Britain intended to go beyond diplomatic criticism.

The emerging policy would seek to stop British businesses from financing, constructing or promoting settlement projects and could include tighter controls on commercial activity linked to settlements.

For Albanese, however, the key question is whether those measures will affect the wider economic and security relationship surrounding the occupation.

Albanese calls for a broader break

Albanese argues that restricting the import of physical goods produced in Israeli settlements would represent only one part of what international law requires.

She has urged Britain to examine services, financial relationships, arms licensing and intelligence cooperation, as well as trade and investment that could contribute to sustaining Israel’s presence in the occupied territories.

Her argument rests heavily on the International Court of Justice’s landmark advisory opinion of July 2024.

The ICJ found that Israel’s continued presence in the occupied Palestinian territory was unlawful and said Israel should end that presence as rapidly as possible. It also concluded that Israel must immediately cease new settlement activity.

Crucially for countries such as Britain, the court also said states have obligations of their own.

According to the ICJ, governments must distinguish in their dealings between Israel’s sovereign territory and territory occupied since 1967. States should also avoid economic or trade relationships concerning the occupied territory when those relationships could help entrench the unlawful situation, and should take steps to prevent trade or investment that assists in maintaining it.

That is the legal framework Albanese wants London to apply much more comprehensively.

From settlement products to financial networks

The practical difficulty lies in defining exactly where settlement-related economic activity begins and ends.

A simple prohibition on agricultural produce or manufactured goods originating directly from settlements is comparatively easy to understand.

Modern supply chains are considerably more complicated.

A company headquartered inside Israel may operate subsidiaries in settlements. A financial institution may provide loans for settlement construction. A property company may advertise homes there. A technology provider may supply surveillance or communications systems. A British investor may hold shares in a multinational company whose operations extend into occupied territory.

Albanese’s position is that governments must address those wider relationships rather than focusing exclusively on goods physically manufactured within settlements.

That would represent a much more significant policy shift for Britain.

It could require companies and financial institutions to conduct substantially more detailed due diligence on where their business partners operate and whether investments contribute directly or indirectly to settlement expansion.

Arms and intelligence are the harder questions

The most politically difficult part of Albanese’s argument concerns Britain’s broader security relationship with Israel.

She has called for scrutiny of arms licensing and intelligence cooperation, arguing that a genuine policy change cannot separate settlement activity from the wider military structure of occupation.

For the British government, that raises considerably more sensitive questions than banning settlement-produced goods.

The UK maintains a longstanding defence and intelligence relationship with Israel, shaped by counterterrorism cooperation, regional security concerns and the wider strategic relationship between Israel, Europe and the United States.

Any significant restriction in those areas would therefore represent a major foreign-policy decision rather than a narrowly targeted trade measure.

It would also trigger fierce disagreement domestically.

Supporters of tougher restrictions argue that Britain cannot claim to respect international law while continuing economic or military relationships that may contribute to policies it regards as unlawful.

Critics contend that broad sanctions or security restrictions could weaken Israel’s ability to defend itself, damage bilateral relations and reduce Britain’s diplomatic influence.

Israel rejects the international legal framing

Israel has consistently rejected the assertion that its policies should be understood through the legal framework advanced by Albanese and many international institutions.

The Israeli government disputes significant elements of international criticism surrounding the occupation and settlements and argues that the status of the territories should ultimately be resolved through direct negotiations with the Palestinians.

Israeli officials also maintain that security requirements must be taken into account, particularly following the Hamas attacks of October 7, 2023 and the wars and regional instability that followed.

Israel has strongly criticised international officials and institutions it considers politically biased.

Albanese herself has become one of the most controversial figures in the international debate over Gaza and the occupied territories. Her statements and reports have been praised by human-rights organisations and Palestinian advocates but sharply attacked by Israel, the United States and other critics who accuse her of bias.

Her recommendations therefore represent the position of an independent UN-appointed special rapporteur, not a binding directive from the United Nations as an institution.

That distinction is important.

But the legal arguments she cites are increasingly influencing national governments.

The ICJ opinion changed the debate

The 2024 ICJ advisory opinion marked an important turning point because it moved international discussion beyond whether individual settlements were illegal.

The court concluded that Israel’s continued presence in the occupied Palestinian territory was itself unlawful and said states must neither recognise the resulting situation as legal nor provide assistance that helps maintain it.

That finding has encouraged governments, courts, activists and businesses to reassess whether conventional distinctions between Israel and settlement activity are sufficient.

The opinion was advisory rather than a judgment arising from a dispute between two states, but its interpretation of international law carries considerable authority.

For London, this creates an increasingly difficult policy environment.

Britain supports a two-state solution, regards settlements as illegal and has condemned further expansion.

Yet translating those positions into economic consequences has historically been far more limited.

Miliband’s new approach suggests that gap may be narrowing.

E1 has accelerated the pressure

The immediate catalyst is Israel’s renewed push to advance the E1 project.

The development has long been controversial because of its geographical location between East Jerusalem and the major settlement of Ma’ale Adumim.

Critics argue that construction there would severely disrupt territorial continuity between Palestinian communities in the West Bank and make the creation of a viable contiguous Palestinian state considerably more difficult.

Miliband has described the project as threatening the two-state solution and has made it a focal point of Britain’s tougher stance.

London is not alone in its opposition.

European governments and other international partners have repeatedly criticised E1 and wider settlement expansion.

What is changing is the growing willingness to attach economic consequences to those objections.

The dilemma facing Miliband

The foreign secretary now faces competing political pressures.

One side wants Britain to move rapidly from condemnation to sanctions, arguing that decades of diplomatic criticism have failed to halt settlement growth.

Another warns that punitive measures could damage relations with Israel and reduce Britain’s ability to influence developments through diplomacy.

There is also pressure from Washington.

According to the latest reporting, senior US and Israeli figures have reacted sharply to the British shift, illustrating how quickly a settlement-focused trade measure can become part of a much wider dispute over Western policy toward Israel.

Miliband therefore has to determine whether the promised reset is principally about drawing a clearer legal distinction between Israel and the settlements, or whether it represents something much larger: a willingness to impose costs on Israeli policies that Britain believes violate international law.

Albanese is effectively challenging him to choose the second option.

More than a trade dispute

The controversy ultimately extends beyond the volume of goods imported from settlements.

The economic value of that trade is relatively small compared with Britain’s overall commercial relationship with Israel.

Its political significance is far greater.

A formal prohibition would establish the principle that participation in the settlement economy carries legal and commercial consequences.

If Britain then extended that principle to banking, investment, procurement, arms licensing or corporate services, the impact could become substantially larger.

Such measures could also encourage other European governments to follow.

That possibility is precisely why Albanese is arguing for what she calls a “true paradigm shift.”

From her perspective, the issue is not whether Britain opposes settlements rhetorically. Successive governments have already done so.

The question is whether British economic and security policy will now be reorganised around that position.

From condemnation to consequences

Miliband’s reset marks a noticeable change in tone.

Britain is moving closer to the argument that condemning settlement expansion while allowing British companies to participate in the settlement economy is increasingly difficult to reconcile.

But the policy remains unfinished.

A ban focused solely on goods would create a clearer distinction between Israel and settlements and could establish an important legal precedent.

It would not, however, satisfy campaigners who believe states must examine the entire network of financial, commercial and military relationships connected to the occupation.

That is why Albanese’s intervention matters.

She is not simply asking Britain to adopt another sanction.

She is asking the government to redefine the underlying principle governing its relationship with Israel: from expressing opposition to illegal settlements to ensuring that British institutions do not materially contribute to sustaining them.

Whether Miliband is prepared to go that far will determine whether Britain’s reset becomes a narrow trade reform or one of the most consequential changes in British policy toward Israel in years.