The Netherlands' largest drinking water supplier Vitens announced Tuesday that it was cutting its business ties with Israel's national water corporation, Mekorot, effective immediately, Israel Radio reported.
A statement by the Dutch company said: "We can no longer pursue joint ventures with the Mekorot Corporation. Vitens attaches great importance to integrity and adhering to international laws and regulations, and after consultations with shareholders and the Dutch foreign minister, we have decided to end our dealings with Mekorot."
Vitens' client base exceeds 5 million people. The company employes 1,700 people and maintains a pipeline grid spanning 47,500 kilometers (29,500 miles). Its annual revenue amounts to 450 million euros ($619 million).
Holland's Foreign Ministry said in a statement, "The decision was independently made by Vitens. We did not require it of the company."
Mekorot was unavailable for comment.
Foreign Ministry spokesman Yigal Palmor questioned the logic behind Vitens' decision, noting that the Dutch may not want to conduct business with Mekorot, but the Palestinians do. "What we see here is an urgent need for a little common sense," he said.
"It is more than strange that this Dutch company should boycott an Israel peer that works with the World Bank on a very important regional cooperation project, which includes the Jordanians and Palestinians," he said. "This only shows that by caving in to boycott pressures, one makes absurd decisions that result in a topsy-turvy situation."
Vitens' move is seen as yet another step in the European Union's financial sanctions against Israeli companies operating beyond the Green Line.
Britain also increased its financial pressure on Israel: The British Department of Trade and Investment issues an advisory to British citizens and companies on Tuesday, warning them against pursuing business ventures with Israeli companies or communities located beyond the Green Line.
"EU citizens and businesses should be aware of the potential reputational implications involved in economic and financial activities in settlements, as well as possible abuses of the rights of individuals. Financial transactions, investments, purchases, procurements as well as other economic activities (including in services like tourism) in Israeli settlements or benefiting Israeli settlements, entail legal and economic risks stemming from the fact that the Israeli settlements, according to international law, are built on occupied land and are not recognized as a legitimate part of Israel's territory," the warning said.
"This may result in disputed titles to the land, water, mineral or other natural resources which might be the subject of purchase or investment," the advisory continued.
"Settlements constitute an obstacle to peace and threaten to make a two state solution to the Israeli-Palestinian conflict impossible," it said.
An Israeli Foreign Ministry official quoted by Army Radio attempted to undermine the advisory, saying it was a familiar British stance, although he admitted it was the first time an official advisory to that effect had been published.
A statement given to Army Radio by the British Embassy in Israel said that while the advisory was issued, "it is ultimately up to each company to decide whether to operate in the settlements. The British government certainly does not encourage or assist such activity."
The statement stressed that the British government "opposes any boycott of Israel."