JERUSALEM, Feb. 27 (Xinhua) -- The European Union (EU) consuls in Jerusalem and Ramallah issued a report calling for imposing economic sanctions against Israeli settlements in the West Bank and east Jerusalem, the daily Ha'aretz daily reported Wednesday.
The "Heads of Mission" report for 2012, obtained by the daily newspaper, was sent to EU member states' foreign ministries at the beginning of January 2013.
The annually-released report, written by heads of European diplomatic missions in Jerusalem and Ramallah, is considered as recommendations rather than instructions for practical steps.
The report calls upon the EU member states to "prevent, discourage and raise awareness" regarding the "problematic implications of financial transactions and direct investments within the EU in support of the settlement activities," Ha'aretz said.
It also calls upon the European states to closely examine its technological and academic cooperation with Israeli programs to ensure no grants or scholarships arrive at the hands of settlements or their residents.
"Israel is systematically undermining the Palestinian presence in Jerusalem through its policies that restrict zoning and planning and include demolitions, evacuations and discriminatory access to religious sites as well as an inequitable education policy..." the report said.
The report includes strict observation on current trade agreements between the EU and Israel to ensure that the Israeli settlements will not benefit from European funds and that products produced in Israeli settlements would be labeled as such.
"The EU should coordinate monitoring and issue a strong response in order to prevent the settlement construction in E1, including opposing forced transfer of Bedouin communities living there," the report said.
"The plan would divide the West Bank to north and south, prevent Palestinians in east Jerusalem from further urban development and cut off east Jerusalem from the rest of the West Bank," it added.
At the end of January, the United Nations Human Rights Council released a similar report criticizing Israel for its policy regarding the West Bank settlements.
The West Bank settlements were built on land Israel had annexed following the 1967 Mideast War. In the past 46 years Israel had built about 250 settlements there, according to the UN's data.
The Palestinian National Authority (PNA), which won its bid to become a non-member observing state at the UN in November 2012, accused Israel in December of planning "war crimes" with the expansion of the settlements.
Following the PNA's successful bid, the Israeli cabinet announced two months ago that it would build 3,000 new settlements in the West Bank, east Jerusalem and the E1 corridor connecting the two territories.
In response to UN's watchdog group report, the Israeli Foreign Ministry said in a statement obtained by Xinhua that "the Human Rights Council had sadly distinguished itself by its systematic one-sided and biased approach towards Israel."
Peace negotiations between Israel and the Palestinians came to a halt in 2010 due to the expansion of settlements construction.