The EU's second action was the publication Tuesday of EU foreign policy commissioner Catherine Ashton's letter to her fellow commissioners informing them that by the end of the year, the EU will publish binding requirements for specially labeling Israeli goods produced by Jews beyond the 1949 Armistice Lines exported to EU member states.

This act is potentially more damaging for Israel than the ban on transferring EU monies to Israeli entities with "bad" addresses. Labeling Israeli products is a means of signaling Europeans consumers that they should view all Israeli exports as morally inferior to other goods and wage a consumer boycott of Israeli products. Indeed, Lithuanian Foreign Minister Linas Linkevicius described the proposed labeling as an alternative to a broader boycott of all Israeli goods.

The EU's third act was its decision to define Hezbollah's "military wing" as a terrorist organization, but leave all the other Hezbollah-related institutions untouched. While the move has been applauded by Israeli politicians desperate to deny Europe's animosity, Europe's partial designation of Hezbollah as a terrorist entity is another act of aggression against Israel.
By pretending that Hezbollah has a legitimate "political wing" - a transparent lie that even Hezbollah has denied - the EU ensures that Hezbollah personnel and Hezbollah institutions can continue to find safe haven in Europe so long as the avoid attacking non-Jewish Europeans.

Hezbollah agents can continue raising money, planning attacks, and recruiting terrorists in Europe, as long as Hezbollah labels the activities "political."

In other words, all Hezbollah operations directed against Israel and Jews will remain lawful in Europe.

Beyond exposing the EU's fundamental and obsessive hostility toward the Jewish state, these three actions put paid to the EU's protestations of allegiance to international law and commitment to bringing about peace between the Palestinians and Israel.

As ambassador Alan Baker, the former legal adviser to the Foreign Ministry, wrote in an article published by the Jerusalem Center for Public Affairs, the EU's actions against Israeli entities that operate beyond the 1949 Armistice Lines are unsupported by international law. The EU's claim that Israel's presence beyond the 1949 Armistice Lines is unlawful is not supported by any treaties or customs. Indeed, it is explicitly refuted by treaties and customs.

Israel's legal rights to sovereignty over Judea, Samaria and Jerusalem are recognized under the law of nations through the 1922 League of Nations Mandate for Palestine, which also called for "close Jewish settlement" of these areas. The Mandate's allocation of sovereign rights over all of these areas to the Jewish people, and its recognition of the Jews as the indigenous people of the areas, has not been abrogated by any subsequent treaty. To the contrary, they were reinforced by Article 80 of the UN Charter.

Moreover, as Baker noted, the EU wrongly claims that Jewish communities beyond the 1949 Armistice Lines are illegal under Article 49 of the Fourth Geneva Convention from 1949. But authoritative interpretations of Article 49 make clear that Article 49 does not apply to such communities.

The lines the EU points to as Israel's legal border were never borders and never legal. The 1949 Armistice Lines, which the EU falsely refers to as the 1967 borders, represent nothing more than the lines at which Israeli forces halted the invading armies of Arab states that illegally assaulted the nascent Jewish state at its birth on May 15, 1948.

The armistice agreements explicitly stated that the armistice lines lack all legal significance in terms of claims of parties to lands beyond the lines.

Finally, as Baker noted, the EU itself repeatedly supported UN resolutions and international agreements that recognize the legality of Israel's continued control and civilian presence in the areas. As a consequence, its own actions contradict its claim that Israel's presence and the presence of Israeli civilian communities beyond the 1949 Armistice Lines are illegal.

Beyond its unsubstantiated legal claims against Israel, both in its intention to label Israeli products and in its actions related to Hezbollah, the EU is acting in violation of international law. The EU's intention to label Israeli products involves the imposition of trade barriers in contravention of the World Trade Organization's legally binding rules.

By allowing Hezbollah to continue to operate in the EU, the EU is in violation of binding UN Security Council Resolution 1373 from 2001 that prohibits the use of member states' territory for the benefit of terrorist groups.

Justice Minister Tzipi Livni called the EU's imposition of economic sanctions a "resounding wake-up call," adding, "I hope that now all those who thought it is possible to continue with the freeze [in the peace talks with the PLO] will understand that we have to act to open negotiations, because this is the only way to protect Israel's general interests."

This view, which is the official view of the Left, is based on a complete denial of reality.

The EU announced its sanctions on the very same day US Secretary of State John Kerry announced he had convinced the PLO to return to peace talks with Israel. The confluence of these events could not demonstrate more clearly that the EU's diplomatic onslaught against Israel has nothing to do with the conduct of negotiations with the PLO. If the EU's chief interest was bringing Israel and the PLO to the negotiating table, Brussels would be sanctioning the Palestinians who have refused to negotiate with Israel since 2008.

By levying sanctions the EU does not seek to advance the cause of peace. It hopes to coerce Israel into abandoning its legitimate historic claims as the indigenous people of the Land of Israel to the lands allocated to the Jewish people under international law by the 1922 League of Nations Mandate for Palestine. It hopes to coerce Israel into surrendering its right to defensible borders and voluntarily transform itself into an indefensible strategic basket case wholly dependent on the goodwill of outside powers for its survival.

The question is what can Israel do about it? Were Israel to fight fire with fire and levy counter sanctions on European goods it would be entering an economic war that it would lose and therefore has every interest in avoiding. But Israel's inability to respond in kind to European aggression does not mean it is without options.

Europe is using economic sanctions to expand its political power over Israeli decision-makers. So Israel should act to diminish Europe's political power in Israel.

The EU itself told Israel how to go about doing this in Paragraph 15 of the sanctions directive. It reads, "The requirements [banning the transfer of EU funds to Israeli entities operating beyond the 1949 armistice lines]... do not apply to activities which, although carried out in the territories...

aim at benefiting protected persons under the terms of international humanitarian law who live in these territories [i.e., the Palestinians] and/or at promoting the Middle East peace process in line with EU policy."

In other words, Israeli NGOs that receive EU assistance are exempt from the financing ban if they commit to undermining Israel's rights in the area. As the EU sees it, NGOs who receive EU money are EU agents, advancing European goals in the domestic Israeli arena, and as such should be exempted from the EU's economic sanctions.

In a 2010 meeting with US diplomats leaked by WikiLeaks, Jessica Montell, the executive director of the Israeli-registered pro-Palestinian pressure group B'Tselem, effectively admitted that her organization would cease to exist without European funding.

According to the protocol of the meeting, Montell "estimated her NIS 9 million ($2.4 million) budget is 95 percent funded from abroad, mostly from European countries."

TO STEM THE momentum of Europe's new economic war, Israel's first response to the EU's sanctions must be swift passage in the Knesset of a law requiring all Israeli entities that agree to operate under the EU's funding guidelines to register as foreign agents and report all EU contributions.

Those contributions should be taxed at the highest corporate tax rate.

EU officials have stated repeatedly that they seek to undermine Israeli control over Area C. Area C is the area of Judea and Samaria where, in accordance with agreements signed between the PLO and Israel, Israel exercises most civil and military authorities. The EU is funding projects in Area C whose stated goal is to make it impossible over time for Israel to assert its authority over the area.

Israel's second response to the EU's announcement of economic sanctions on Israeli economic activity in Judea and Samaria should be to suspend all EU projects in Area C. Future EU projects should be subject to intense scrutiny by the civil administration. Israel's default position should be to reject, rather than approve, such requests, given their hostile intent.

Finally, EU peacekeeping forces from Gaza to Lebanon to Syria have repeatedly proven not only their cowardice, but their willingness to act in ways that endanger Israel in order to protect themselves.

In Gaza, EU border guards fled to Israel following Hamas's takeover of the area in 2007.

Along the border with Syria, Austrian peacekeepers fled at the first sign of trouble, leaving Israel to deal with Syrian breaches of the European-sanctioned 1974 disengagement agreement by itself.

European forces in UNIFIL in Lebanon have signed protection agreements with Hezbollah where in exchange for European forces' turning a blind eye to Hezbollah's illegal use of civilian infrastructures as military installations, Hezbollah has promised not to murder European forces.

Given this track record, Israel should bar European forces from further participation in armed forces in Israel. To this end, Israel should allow the mandate of the European-dominated Temporary International Presence in Hebron to expire when it next comes up for review. The TIPH, which has been deployed to the city since 1994, is composed of forces from Denmark, Italy, Norway, Sweden, Switzerland and Turkey.

Israel has for years been operating under the misguided belief that the EU would eventually come around and side with Israel against its enemies.

This belief has been informed by equal doses of innocence and wishful thinking. The EU's decision to initiate an economic war against the Jewish state forces Israel to abandon its long-held illusions.

Israel has options for responding forcefully to Europe's aggression. If judiciously and firmly employed, these responses can diminish the Europeans' interest in escalating this economic war, by denying them the political victory they seek.