The European Union’s decision not to include the West Bank in agreements with Israel is a sign the government should start peace talks, Finance Minister Yair Lapid said on Tuesday.

“This decision is one of a long line of decisions leading to Israel’s isolation from the world,” Lapid said. “Time is not on our side, and every day that Israel is not in peace talks is a day that our international standing worsens.”

At the same time, the Yesh Atid chairman criticized the EU’s actions, saying it comes with terrible timing and harms US Secretary of State John Kerry’s efforts to restart negotiations.

“The EU’s decision sends a signal to the Palestinians that there is no international or economic price for their continual refusal to return to talks and leads them to believe that Israel will have to give in to economic and diplomatic pressure,” the finance minister explained.

Lapid added that he plans to explain to Israel’s friends in the EU that their directive will not help them reach their goals, and will keep peace away rather than bring it closer.

Right-wing MKs expressed outrage at the European Union’s announcement, calling it racist and using Holocaust metaphors.

“This is a decision marked with racism and discrimination against the Jewish people that is reminiscent of boycotts against Jews from over 66 years ago,” Construction and Housing Minister Uri Ariel said.

Ariel called for the government not to sign any agreements that include an article saying Judea and Samaria are not part of the sovereign State of Israel.

Knesset Finance Committee chairman Nissan Slomiansky, also from Bayit Yehudi, pointed out that “the Middle East is on fire and thousands of people are killed each month,” and recommended the EU deal with the real problems in the region.

“Meanwhile, we’ll continue building and developing,” Slomiansky said.

Deputy Minister for Liaison with the Knesset Ofir Akunis (Likud Beytenu), a close ally of Prime Minister Binyamin Netanyahu, called the EU’s decision an unfortunate mistake.

“Steps like this, before the Palestinians even said they are ready to return to negotiations, push talks away and do not bring them closer.

Judea and Samaria are not occupied, they are the cradle of the homeland of the Jewish people,” Akunis said.

MK Eli Yishai (Shas) said the EU was taking illegitimate, unilateral action.

“The EU’s stance is important, but what is more important is the opinion and faith of the citizens of Israel, and the government must ensure them defense and security,” Yishai added.

Yishai called for Netanyahu to announce, in response to the boycott, that he will stop freezing construction in Jerusalem.

MKs on the Left saw the EU directive as a wake-up call for the government.

“Increasing diplomatic isolation harms the country and the market and is a strategic threat no weaker than advance weapons pointed at us,” opposition leader Shelly Yacimovich (Labor) said.

At the same time, Yacimovich said it is unfortunate that, rather than help the US in their efforts to renew peace talks, the EU “focuses on boycotts and sanctions.”

“Prime Minister Netanyahu must immediately start negotiations with the Palestinian Authority and work toward a final agreement,” she said. “This is not for the Europeans, the Americans or the Palestinians, but for Israel. US Secretary of State John Kerry’s efforts continue, which is why I call for the prime minister to make every effort, and as opposition leader I commit to giving him a political safety net.”

Science, Technology and Space Minister Yaakov Peri (Yesh Atid) denounced on Tuesday the expected European Union move to sign scientific agreements with Israel only if they involve institutions that do not have any connection with institutions and individuals beyond the Green Line.

The move by the European Commission could harm 40 percent of research and development academic grants in Israel, the minister said.

“Israel has been running from the truth, and the EU accepted it for us,” MK Nachman Shai (Labor) said. “A red line has been drawn between Israel and Judea and Samaria. For Europe, Israel is not Judea and Samaria, and Judea and Samaria are not Israel.”

Shai said that when boycotts and sanctions follow, the government shouldn’t say it didn’t know they were coming.

“The fantasy the Right is trying to spread, that the status quo is for our own good, was defeated yet again by the EU’s decision,” MK Omer Bar-Lev (Labor) said, warning that this is another step in the delegitimization of Israel and a sign that action is necessary to ensure Israel remains a democratic state with a Jewish majority.

Meretz chairwoman Zehava Gal- On connected the European Union decision to the Tisha Be’av fast, saying the Temple was destroyed because of “religious extremism pushing for a rebellion against Rome.

“Like then, today Israel is going against the entire democratic world and insisting to build settlements and continuing the occupation,” Gal-On wrote on Facebook.

“The EU policy not to allow trade with companies in the territories is a yellow card to the Israeli government and is a direct result of continued construction in settlements and outposts and a diplomatic freeze.”

Although there is not a boycott of Israel yet, and there is a differentiation between the sides of the Green Line, Gal-On said that if the occupation and settlement building continue, “the religious settlement extremism will bring our destruction, as it did then.”

Peri said the expected European decision that scientific agreements will have a clause saying they are not relevant to Israeli academic institutions with dealings outside the Green Line “will endanger our scientific connections with the EU.

The technical implementation of the decision is liable to prevent Israeli scientists from participating in R&D projects of the EU with large grants compared to scientists in other countries.”

As academic institutions in the territories, such as Ariel University, do not have any financial involvement with the EU currently, the new EU policy refers to the other Israeli universities inside the Green Line that have connections with academic institutions or academic participants who live in the territories.

Peri added that such a criterion will force Israeli scientists to compete “with one hand tied behind their backs” for research grants from the EU. Academic institutions within the state borders will have to declare their research project has no involvements in the territories if they want EU financing.

Every year, Israeli academics successfully compete for prestigious grants in the European R&D projects.

The seventh such framework program has so far funded 1,900 Israeli research projects carried out in the universities, industry and hospitals – for a total of 750 million euros.

Peri instructed his staff to study the budgetary significance of all scientific research and technological applications that are being developed as government projects and to prepare a new budget if the EU decision is carried out.

Meanwhile, MK Hilik Bar (Labor) submitted a “Two States Bill” stating the final status of the West Bank can only be determined as part of a peace agreement leading to a two-state solution.

Bar’s legislation comes in response to calls on the Right to annex part or all of Judea and Samaria.

“Unilateral annexation will make a two-state solution impossible and will end Israel’s future as a Jewish and democratic state, landing a deadly blow to Zionism,” Bar said.

“Our bill will give MKs the choice: two states for two peoples, or one state for two peoples.”

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