An Israeli flag is set next to a European Union flag at the European Union Commission headquarters in Brussels on June 23, 2016. / AFP PHOTO / THIERRY CHARLIER

The European Union is planning to impose penalties if Israel puts into action plans to apply sovereignty to settlements in the West Bank

The EU and many of its members have voiced their objection to Israel making any ‘unilateral’ steps in regards to settlements, saying that doing so is a serious threat to the future of the two-state solution.

A classified document that the Israeli delegation in the EU forwarded to the Foreign Ministry in Jerusalem on EU reaction to sovereignty predicts that should it go ahead, the Europeans will immediately boycott diplomatic visits, halt student exchanges and cancel billions of shekels worth of grants in favor of Israeli research.

The report is based in part on talks held by Israeli diplomats with European ambassadors stationed in Brussels. Various European countries, including some as close to Israel as Britain, have warned recently that there will be consequences to any sovereignty move.