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| An Israeli settlement |
(Scroll down for video) Israel slammed the decision by the E.U. that prohibits funding Israeli companies that operate beyond the Green Line.
Israeli leaders condemned the European Union ban, but also recognized the increasing isolation of the country by constructing Jewish settlements in the West Bank and East Jerusalem.
The E.U. decision marked a new international program against Israeli settlements built on land captured in the 1967 war, reinforcing the Palestinian demand for these territories and encourage Israeli debate about the wisdom of the settlement enterprise.
"We will not accept any external edicts of our borders," Netanyahu said, adding that the borders can only be resolved through direct negotiations with the Palestinians.
Netanyahu said Europeans must face bigger problems in the region, including the civil war in Syria and Iran's nuclear program.
Netanyahu's finance minister and senior coalition partner, Yair Lapid, warned that the move reflects the deterioration of Israel's position on the world stage.
"The latest move is part of a long series of decisions that lead to isolation of Israel in the world. Time is not on our side, and every day that Israel is not in peace negotiations is a day in which our international position deteriorates even more," he said.