As Israel and the European Union this week initialed an agreement paving the way for Israel’s participation in the mega European research funding program known as Horizon 2020, they will be putting behind them what, for all the diplomatic sparks that flew between them over the past five months, was never more than a lovers’ quarrel.Of course, it did not seem that way at first. After all, when Brussels issued last July new guidelines specifying that Israeli entities located beyond the Green Line would no longer be eligible to apply for EU funding under the European research program, Jerusalem reacted as if the nation’s very security was at stake.Assuming the gravity of a leader whose country was under frontal assault, Prime Minister Binyamin Netanyahu proclaimed that “We shall not accept any external dictates on our borders.”Some of his fellow cabinet ministers were far less restrained. An act of “economic terrorism,” was how the country’s economy minister termed the guidelines, while another declared that the guidelines were “reminiscent of boycotts against Jews from over 66 years ago.”Yet if the reigning perception in Jerusalem was that the EU wished to punish Israel for its settlement policy, the political reality in Brussels suggests a radically different story.First, and as with almost anything having to do with EU policy, the primary motivations were legal and technical in nature. In this case, given that agreements between the EU and Israel have traditionally failed to specify what constitutes the “territory of the State of Israel, the guidelines sought to fill in a lacuna that has bedeviled European policymakers for years.The issue had taken on legal significance following a European Court of Justice ruling in February 2010 that products originating in the West Bank did not fall within the territorial scope of the EU’s free trade agreement with Israel. Since the ruling placed a legal imprimatur on the Union’s definition of the territory of the State of Israel, the new guidelines sought to ensure that European institutions were not found in contempt of court.Certainly, the new guidelines aimed at more than just assuaging the legalistic anxieties of Brussels’ Eurocrats. But the irony is that, despite Israeli suspicions, the guidelines did not seek to toughen EU policy toward Israel its settlement policy in the West Bank as much as to uphold the viability and legitimacy of the Union’s existing agreements with Israel.In order to recognize this point, it is necessary to appreciate the political context for the European move and the economic significance of the guidelines.The political context is the rising power of the European Parliament relative to the EU institutions in the post-Lisbon Treaty era and the growing influence within Parliament of interest groups calling for boycotting Israel.Given that the calls to boycott Israel draws justification from Israel’s occupation, the EU move to differentiate between the State of Israel and the occupied territories is tantamount to drawing a cordon sanitaire around Israel.It is an act designed to uphold and defend the very health of the relationship between the EU and Israel.As for the economic significance of the guidelines, it is virtually nil. While precise data on the volume of Israeli research financed by the EU in the occupied territories since Israel first joined the Union’s research programs in the mid 1990s is hard to come by, according to the European Commission the total number of EU-funded Israeli projects beyond the Green Line since 2001 may be no more than five.Moreover, these five projects were all conducted by a single entity – the Ahava cosmetics company – which was awarded about 1.5 million euro, a figure that represents less than one tenth of one percent of all EU research grants awarded to Israeli entities over this same period.It is perhaps no coincidence that the beneficiary of the European research funding goes by the name of Ahava, which is Hebrew for “love.” For despite the perception in Israel, the guidelines ultimately underscore the degree to which Brussels remains deeply committed to its relationship with the Jewish state – a relationship that it struggles to protect from the collateral damage that Israel’s settlement policy increasingly creates.Sharon Pardo is the co-author of Uneasy Neighbors: Israel and the E.U. (2010) and Israel and the E.U.: A Documentary History (2012); Yonatan Touval is a senior policy analyst with Mitvim, the Israeli Institute for Regional Foreign Policies.