Britain threatens to sanction companies working on Israel’s E1 housing project

Britain’s foreign secretary says companies which are involved in the E1 project east of Jerusalem could face sanctions and legal repercussions.

By World Israel News Staff

British Foreign Secretary Ed Miliband warned Monday that companies participating in an Israeli construction project in Judea and Samaria could face sanctions and legal consequences, as the deadline for submitting bids to build more than 1,200 housing units in the E1 area near Jerusalem expired.

The warning comes just days after Britain expanded its sanctions powers to target individuals and businesses involved in Israeli construction beyond the Green Line, marking another escalation in diplomatic tensions between London and Jerusalem.

“We urge businesses and individuals not to proceed with bids for E1 construction tenders,” Miliband declared in an official statement.

He warned that participation could expose businesses to serious legal and reputational consequences, citing possible violations of international law and announcing that Britain now possesses additional authority to sanction companies involved in such projects.

The E1 development, situated between Jerusalem and Ma’ale Adumim, has been the subject of a longstanding international dispute. Israeli authorities approved plans for approximately 3,400 housing units in the area, with the current tender covering the first 1,234 homes across seven residential compounds.

Britain and other Western governments oppose the project, arguing that construction would undermine the territorial continuity of a future Palestinian state by separating Arab population centers north and south of Jerusalem.

Miliband described the development as a direct threat to the two-state solution and said his government would not tolerate further steps to prevent the establishment of a contiguous Palestinian state.

“We will not be bystanders in the destruction of the two-state solution,” he declared.

The latest warning follows a series of measures introduced by the British government under Prime Minister Andy Burnham, including plans to prohibit imports from Israeli communities in Judea and Samaria and restrict financial services supporting construction in those areas.

On October 15, London introduced expanded sanctions powers allowing authorities to target individuals and entities suspected of facilitating serious violations of international humanitarian law.

The measures potentially permit asset freezes, travel restrictions and corporate director disqualifications, while extending the government’s reach beyond direct perpetrators to organizations that finance, support or benefit from prohibited activities.

The new authority does not automatically impose penalties on every company submitting a bid, but provides a mechanism for the British government to designate businesses and individuals involved in activities it considers sanctionable.

The E1 tender has also become entangled in Israel’s domestic election campaign.

Although bids closed Monday, the Israel Land Authority has confirmed that they will not be reviewed before November 19, following concerns raised by Attorney General Gali Baharav-Miara that advancing the politically sensitive project could influence the October 27 parliamentary election.

The postponement has drawn opposition from local Israeli officials, including Ma’ale Adumim Mayor Guy Yifrach, who challenged the delay in court.

“We have waited more than 30 years for E1,” Yifrach said.

Israeli officials have also rejected the British government’s objections to the project.

Foreign Minister Gideon Sa’ar previously disputed claims that construction in E1 would prevent territorial continuity for Palestinians, pointing to planned roads intended to preserve transportation links between Palestinian communities.

“The claims regarding the severing of potential Palestinian territorial contiguity are also baseless,” Sa’ar said in September.

Israeli Finance Minister Bezalel Smotrich, a leading supporter of construction in Judea and Samaria, has openly opposed the creation of a Palestinian state. When the E1 plan received approval in 2025, he described the decision as a move that “buries the idea of a Palestinian state.”

The latest British warning follows a diplomatic dispute over the UK’s consulate in eastern Jerusalem.

Earlier this month, Israel ordered the consulate closed in response to British measures targeting Israeli communities in Judea and Samaria. Subsequent negotiations produced an agreement allowing a reduced British diplomatic presence to remain in the building, operating under the designation of the UK Mission in Jerusalem.

Under the arrangement, 20 British diplomats were required to leave, while seven were permitted to remain. Both governments also agreed to continue discussions aimed at preventing further deterioration in relations.