Israel is up in arms over a declaration by a British government spokesman that the UK is funding political activity in Israel. British spokesman Martin Day said in an interview in Dubai with Al-Arabiya television last week that the British government was "taking practical steps towards freezing settlement activities." "For instance," Day said, "we finance projects aimed at halting settlement activities. One of these projects seeks to build new Palestinian neighborhoods in east Jerusalem and save Palestinian houses from demolition." In addition, Day said in an Arabic interview, "we also finance organizations that monitor settlement activities." He further stated that "products from the settlements do not enjoy preferential custom duties that we offer to products coming from Israel. In light of this, we can say that we are taking effective and practical steps against settlement activities." The Foreign Ministry's senior deputy director general, Rafi Barak, spoke with British Ambassador Tom Phillips two days ago and asked for an explanation. He met with the British envoy again on Wednesday to again discuss the matter and voice Israel's displeasure. Phillips, according to Barak, said he was looking into the matter. Karen Kaufman, the British Embassy's spokesman in Tel Aviv, said in response that the British government was "not involved in the actual construction of new Palestinian neighborhoods in East Jerusalem." "The UK is spending Â£450,000 over 4 years to support projects in east Jerusalem and the West Bank that help Palestinians better understand and effectively use the Israeli planning laws to gain permission both retrospectively for existing homes, and prospectively for new homes on their side of the Green Line," she said. Yossi Levy, the ministry's spokesman for the Hebrew press, characterized Day's comments as the "height of chutzpah," and said such activity was "unheard of." Foreign Ministry spokesman Yigal Palmor said, "We can't recall any other case of a democratic country funding political activities inside another democratic country." Additionally, he said, this makes no sense from their point of view because any political activities they are backing will lose credibility in the eyes of the Israeli public when it is revealed that these activities are funded by a foreign government. "How would the British feel if another country funded political activities of groups within the UK?" he asked. Barak's conversation with Phillips came fast on the heels of revelations that the British, Dutch and Spanish governments were funding Breaking the Silence, an Israeli NGO that recently published a report in which unnamed soldiers alleged IDF misconduct during Operation Cast Lead. Following The Jerusalem Post's revelations of the group's funding, Ha'aretz reported earlier this week that Israel's ambassador to Holland met with the director-general of the Dutch Foreign Ministry, complained about the Dutch embassy's funding of Breaking the Silence, and urged the funding be terminated. According to this report, the Dutch Foreign Minister - considered a strong friend of Israel - was unaware of the funding and gave instructions to launch an internal investigation into the matter.