European allies choose between arms and settlement sanctions

The new British government's preparing to ban trade with the settlements. And the argument here is over what the policy actually is. One side reads it as a necessary legal step against systematic settler violence.

The other side reads it as performative politics. A new Prime Minister throwing a bone to his base, while ignoring the history of every peace proposal made in the last twenty years.

I'm Daniel.

And I'm Shira. This is another episode of Crosswinds, a Daily Lion production, where we trace the relationships that decide what happens to Israel next.

This week, we've got a lot of ground to cover. We're looking at Britain preparing those settlement trade bans, the push to sanction a NATO-allied bank, pre-empting Turkish radar in Syria, and Europe buying the Israeli shield. And then, for our members, we go deep on the International Criminal Court warrant enforcement and US sanctions, and who actually complies when Washington threatens their economy.

Foreign Secretary Ed Miliband told the House of Commons that the UK requires a comprehensive policy reset when it comes to the West Bank. The trigger's Israel opening bids for over a thousand new homes in the E-one corridor. Miliband says the E-one development is a red line because the project cuts through the West Bank and threatens the viability of a Palestinian state.

And this is a flashpoint that goes back to the nineteen nineties, because building in E-one complicates contiguous Palestinian travel between the northern and the southern West Bank.

The upcoming measures will include a ban on goods produced in the settlements and targeted sanctions on British organizations and individuals.

The Israeli answer arrived immediately. Foreign Minister Gideon Sa'ar warned in a podcast interview that if Britain implements these measures, there'll be a reaction.

But the pushback isn't just coming from Jerusalem. Jewish communal leaders held a seventy-five-minute meeting with Prime Minister Andy Burnham to warn him about the unintended consequences of policies the government's considering in relation to settlements. They cautioned that broad measures against the West Bank could give legitimacy to a wider boycott movement that marginalises and stigmatises British Jews. Burnham rejected the notion that West Bank sanctions were being pursued because of internal Labour pressure.

The argument in the UK press is over whether that internal pressure is exactly what's driving this. Ben Jamal, writing in Middle East Eye, argues the UK government has to ignore the lobbying and push the ban through. He reads this as fulfilling a core responsibility under the International Court of Justice's July twenty twenty-four advisory opinion, which affirmed the illegality of Israel's control of the West Bank.

But he also points to the reality on the ground. Jamal cites the United Nations reporting in June on a campaign of systematic abuse of Palestinians by Israeli settlers. He notes that Finance Minister Bezalel Smotrich notoriously praised a settler pogrom in Huwara last year. For Jamal, banning settlement trade is the necessary first step toward a broader boycott campaign.

The reading from BICOM takes the opposite view of the motivation. As we said last week, the Labour government's navigating intense internal politics. The policy analysis here argues the new Burnham government is keen for a performative act to demonstrate its bona fides to domestic constituencies.

And they argue it ignores the actual history of E-one. Contrary to Miliband's claim that the corridor cuts the West Bank in two, that reading points out that major peace proposals since the year two thousand all assumed E-one was in the territory that was to be included in Israel. They also note that of some seven hundred and seventy thousand Israelis living beyond the Green Line, two hundred and forty-five thousand are in East Jerusalem. Announcing sanctions now, they warn, will only serve to shore up support for the pro-settlement parties in Israel ahead of the October elections.

A column in The Algemeiner argues that because products aren't explicitly labeled as to whether they're sourced from the West Bank, a blanket restriction is nearly impossible to execute. It also points to who actually pays the price. Before October seventh, roughly one hundred and sixty-five thousand Palestinians worked in Israel and the West Bank. When outside pressure forced SodaStream to move its plant to the Negev desert ten years ago, five hundred Palestinian workers lost their jobs.

Enforcing this ban risks subjecting the entirety of Israel to UK trade restrictions. It's meant to be a targeted penalty, but without clear labels, it could just hit everything.

And that's the trap the UK government's built for itself.

Washington's now going directly after the financial firms that move Iran's money. On Friday, the U-S Treasury Department designated Golden Global, a small investment firm in Istanbul, along with two of its subsidiaries.

It's the latest escalation in Operation Economic Outcast. As we said last week, that operation is Washington's pivot from airstrikes to secondary sanctions to isolate Tehran. The Treasury says Golden Global facilitated tens of millions of dollars worth of transactions for the I-R-G-C's expeditionary arm.

The lender itself rejected the Treasury's allegations. But the American claim is incredibly specific. According to the Treasury's Office of Foreign Assets Control, Golden Global wasn't just turning a blind eye to a few bad clients — it was established specifically to serve as central infrastructure in the Iranian regime's shadow banking network.

They call it the Rahbar network. The mechanics of it are what make Istanbul so central. Golden Global allowed Iran to take the revenue from oil sold to China and transfer it directly to Turkey. Once the funds hit the Turkish accounts, money changers converted them into cash and physical gold to bypass cross-border monitoring.

Which makes perfect sense of the geography. The argument from the right points out that Turkey has a large physical gold market, a dense exchange-house sector, and the protection of NATO membership, which usually shields its lenders from the kind of hostile screening Western compliance departments apply to the rest of the Middle East.

But that NATO shield just cracked. This marks the first time a lender in a NATO ally's been hit in the current campaign. And the specific Turkish target Washington chose says a lot about how policymakers are trying to manage Ankara.

The reading from Nziv treats the designation as a highly calculated warning shot. They look at Golden Global's massive profitability. The firm posted a forty-three point eight percent return on equity, and this reading says that number just explains the risk premium that small lenders charge when willing to serve sanctioned economies.

Golden Global only has about thirty-four million dollars in equity. For this reading, going after a target that small is exactly the strategy. It lets the U-S send a tough message to global banks without collapsing the Turkish lira or sparking a severe diplomatic crisis with Ankara.

Because secondary sanctions force foreign lenders to choose between doing business with the targeted state and maintaining access to the U-S dollar clearing system. You don't have to sanction the massive Turkish banks to get their attention.

And the U-S is already applying targeted restrictions to the larger players. They recently used the Patriot Act to restrict dollar transactions for the U-A-E branches of Egypt's Banque Misr over its ties to Iran. So the smaller lenders get destroyed, and the larger ones get their dollar access throttled.

The people who want a harder line on Turkey think that piecemeal approach is exactly the problem. The case from the right is that Turkey only answers pressure and nothing else. They point out that Washington gave Golden Global a blocking designation confined to just one firm, and that Ambassador Tom Barrack actually assured Ankara that they shouldn't read the narrow measure as a judgment on Turkey.

Right, the fear in that reading is that Washington's still treating Turkey as a host to isolated bad actors, rather than a structural part of Iran's shadow banking system.

But the Treasury Secretary is looking at the strategy from a very specific angle. He says the whole point of this economic pressure is to force Tehran back to the negotiating table.

The fear there is that hurting Iran and changing the outcome of the war are two very different things. If the economic blockade fails to alter the war's trajectory, Washington's just daring Iran to retaliate in ways that could inflict far greater damage on the global economy.

And Tehran's openly making that threat. The Iranian parliament speaker, Mohammad Baqer Qalibaf, warned that if Iran is prevented from exporting oil from the Persian Gulf, no one will be able to export oil.

It's a credible threat when your currency is collapsing. The rial just crossed the psychological threshold of two million to the dollar. With inflation hitting sixty-six percent in July, the regime is running out of economic breathing room.

But Treasury Secretary Scott Bessent is leaning all the way into the pressure. He told Reuters that the Treasury plans to roll out new secondary sanctions every week, starting with the lenders.

He explicitly warned that they'll likely sanction another lender next week, declaring that the game is over.

So Washington's betting it can dismantle the architecture of Iran's shadow economy, node by node, before the pressure inside Tehran explodes outward.

The airspace over post-Assad Syria is getting crowded. On August 18th, Israeli warplanes struck the Abu al-Duhur airbase in Syria. The explanation from Jerusalem is straightforward: they had intelligence that Turkey intended to deploy radar systems and unmanned aerial vehicles at the base.

As we said last week, Israel's already secured a buffer zone in the south, but the geography further north is collapsing. The traditional buffers are gone, and everyone writing about this week's strike starts from the same baseline reality: the Israeli and Turkish armed forces are now operating in the same physical space. For Sinan Ciddi, writing for FDD, the Israeli strike was a necessary defense because Ankara's expanding its footprint across three continents. He points out that just weeks ago, Turkey signed the Mecca Joint Defense Agreement with Saudi Arabia and Pakistan.

And Ciddi takes the threat literally. He pulls up a 2024 speech where the Turkish president boasted that Turkey might enter Israel as it had entered Karabakh and Libya. The official Turkish line is that their troops are in Syria by invitation, but Ciddi notes that Human Rights Watch found the Turkish army controls vast stretches of Syria’s Kurdish north. So when the American ambassador, Tom Barrack, pronounced the raid an unnecessary escalation, Ciddi's response is that Washington is mismanaging Turkey's aggressive military expansion. The argument here is that the Trump administration needs to look past Iran and prepare for the very real potential of an aggressive Turkey.

The strategic reading from the center sees the collision differently. The argument there is that Israel's applying an old playbook to a new reality. Israel's Campaign Between the Wars doctrine was originally designed to stop Iranian weapons transfers, but now it's being applied to conventional Turkish defense infrastructure. By doubling down on its Campaign Between the Wars concept, this camp argues Israel is dragging itself into an interstate friction it can't sustain. And it's a friction that extends to the sea. The Turkish navy is trying to contain Israel’s strategic depth at sea and physically break the new geopolitical hierarchy Israel is building with Greece.

Because the target isn't a proxy militia anymore. Turkey provides direct political and military sponsorship for the new Damascus administration. And the Americans are actively backing that stabilization effort. In fact, Washington's removal of Syria from the State Sponsors of Terrorism list validates the Turkish approach. Which makes Israel's choice of how to handle this strike incredibly revealing.

How so?

By intentionally bypassing the direct joint fusion cell established in January under American supervision. And the Americans are pushing back hard. Ambassador Barrack says US intelligence reviewed Israel's claims about a troop buildup and found that the data did not align with realities on the ground.

The friction isn't contained to Syrian airspace, either. It's bleeding into the intelligence war between the two states. The people making this case point out that a systematic counterintelligence campaign launched by the Turkish National Intelligence Organization and Turkish law enforcement has effectively dismantled Mossad's networks inside Turkey. The two governments are actively degrading each other's capabilities.

Which brings us to the proposals for managing the fallout. The center's answer is that Israel has to stop treating Turkish influence in Syria as a zero-sum game. The argument is that Israel must avoid interpreting every instance of military cooperation between Turkey and Syria as evidence that the country is becoming a forward base for Erdogan. Both Damascus and Ankara denied that there were plans to establish a permanent Turkish presence there.

The assumption in that camp is that Israel’s long-term interest, though, lies in the existence of a stable Syrian republic. A government that can actually control its own territory and keep Hezbollah from rebuilding. And they note that President Ahmed al-Sharaa has been careful to cultivate relations with the United States to avoid becoming a total Turkish client. To manage the airspace, the people making this case suggest a trilateral or quadrilateral Israeli-Syrian-Turkish-American mechanism could be established to prevent direct friction.

That requires a massive conceptual shift in Jerusalem. The Israeli security establishment is used to enforcing its red lines unilaterally. A joint mechanism means asking for permission, or at least giving advance notice, in an airspace they used to own entirely.

What happens next depends on whether the two armies build a diplomatic mechanism to manage the proximity, or keep trying to enforce the old lines with airstrikes.

Over in the North Atlantic, the German armed forces are testing a new kind of deterrence. Defense officials say Germany successfully tested an Israeli ballistic missile in the North Atlantic overnight. This is the LORA system, built by Israel Aerospace Industries, and the timing isn't a coincidence.

Berlin ran this test just hours after Berlin publicly blamed Russia for an attempted drone attack at Leipzig/Halle Airport. German planners are looking at a Russian hybrid campaign on their own soil, and they realize they have a massive gap. Germany doesn't currently have ballistic missiles in its arsenal. They rely on cruise missiles, which are significantly slower. German forces have about six hundred Taurus missiles, and are working on an upgraded version of its Taurus cruise missile, with production scheduled to start in twenty twenty-nine. But they can't wait five years for a deterrent. So they're testing this system, which Germany's defense ministry says can reach targets up to five hundred kilometers away.

That test is one piece of a quiet, massive shift across the continent. The right's writers are tracking the scope of this. The value of defence agreements between Israel and European Union member states relating to air defence has passed fifteen billion euros in under five years. European democracies are effectively buying the Israeli shield.

A column in JNS Opinion looks at how this works in practice, starting with Finland. A twenty twenty-five poll found nearly half of Finns favor recognizing a Palestinian state. But according to the Finnish broadcaster Yle, the government proposed extending its defense-industrial cooperation agreement with Israel through twenty thirty-four.

That's a ten-year extension, signed quietly. And European defense procurement cycles often take years to finalize, meaning these Israeli contracts will lock in defense interoperability well into the twenty thirties. The Finnish armed forces have committed more than eight hundred million euros to Israeli weapons systems over the last decade, buying everything from David's Sling interceptors to anti-tank missiles.

They're doing this against the fury of their own voters. A 2025 poll found that nearly half of the Finnish public wants to recognize a Palestinian state, with only a quarter opposed. Across Western Europe, the numbers are even starker. A 2025 YouGov poll showed that up to seventy percent of the public in major European states views Israel unfavorably. These defense partnerships completely contradict public sentiment.

But the governments are looking at a different map. The column puts the dynamic plainly. That's the map they point to. Finland shares a thirteen-hundred-kilometer border with Russia. The states that actually share that border don't have the luxury of a boycott. Czech officials now explicitly compare the threat Russia poses to Central Europe with the threat Iran poses to Israel.

The contrast with the states that feel safe makes that point. Iceland is small, wealthy, and secular, like Finland, but it has no army, and a 2024 survey showed a majority favored cutting diplomatic ties with Israel. Norway borders Russia too, but its energy wealth and domestic defense industry give it the room to maneuver and recognize a Palestinian state.

You see this dynamic accelerating in the Eastern Mediterranean, where the threat is Turkey. Greece just signed an agreement worth over three billion euros with Israel to develop the Achilles Shield — a massive, multi-layered air defense network.

The argument from the center is that Athens used to be one of the PLO's strongest European champions. Back in nineteen eighty-two, Greece sent ships to Beirut to safely evacuate Yasser Arafat and his fighters. After the Turkish invasion and military control of northern Cyprus in nineteen seventy-four, Greece hoped to counter Ankara by building an alliance with the Arab world.

Now, the Greek government realizes diplomacy isn't going to stop a drone. What Greece needs now isn't the diplomatic shield they once tried to build with the Arab world, but the physical shield Israel builds.

Nobody in this week's writing thinks the political condemnations are going to slow down the defense contracts. You've got states like Ireland, Spain, the Netherlands, and Belgium, who are spurning and seeking to boycott. But they aren't the ones staring down a hostile border.

What this consensus leaves out is the paradox it creates for the embargo efforts we covered earlier. Western Europe condemns the war, but European capitals are buying the systems that the war produces. Israel isn't just selling individual rockets. It's the export of an entire defence architecture, developed under enemy fire.

The German Chancellor, Friedrich Merz, defended the arms trade by arguing that Israel's survival depends on German weapons. But the underlying reality flows in the other direction. European capitals are waking up to their own vulnerabilities. They can issue statements about global law, but when they look at their own skies, they realize they need the technology that only Jerusalem is currently testing in real time.