Israel’s deputy foreign minister says Israel would rather forego a research partnership with the EU worth hundreds of millions of dollars than accept an anti-settlement clause as part of such a deal.

New EU guidelines say partnership agreements with Israel must state clearly they are not applicable to the West Bank, Gaza and east Jerusalem, lands Israel captured in 1967. The guidelines were introduced to show the EU’s growing dismay over Israeli settlement expansion on land the Palestinians want for a state.

The issue is coming to a head over Horizon2020, a seven-year European grant program that begins in 2014. Israel is the only non-EU country invited.

Deputy Foreign Minister Zeev Elkin told Israel Radio on Friday that Israel wants to negotiate, but that “we can’t sign” if the terms remain.

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