Israel would rather forgo hundreds of millions of dollars in EU research grants than accept an anti-settlement clause Europe wants written into any new partnership deal, Israel’s deputy foreign minister said Friday, a day after Prime Minister Benjamin Netanyahu convened top Cabinet ministers to stake out a position.

The deputy minister, Zeev Elkin, said Israel still hopes to soften the terms of Horizon 2020, a seven-year Europe-wide research grant program that begins in 2014 and has a budget of 80 billion euros. If it joins, Israel would pay in about 600 million euros and likely receive more than one billion euros in grants.

Israel successfully participated in the outgoing European grant program. “We want to sign and we are ready to negotiate, but if the conditions are as they are today, which are unprecedented... We can’t sign,” Elkin told Israel Radio.

The new EU guidelines say any 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, in part, to show the EU’s growing dismay over Israeli settlement expansion on war-won land the Palestinians want for a state. The settlements, home to about 5,60,000 Israelis, are deemed illegal by most of the international community, including the EU.

Israel’s 1967 annexation of east Jerusalem into its capital has not been recognised by most countries in the world. Negotiations between Israel and the EU on signing Horizon 2020 are to begin in the coming days. On Thursday, Netanyahu met with Cabinet ministers to try to find a way out of the dilemma. Netanyahu presides over a centre-right coalition that includes prominent pro-settler politicians and would likely find it difficult to accept the EU’s new “territorial clause.”

However, turning down the research partnership could cause significant harm to Israeli research and economic interests. Zehava Galon of the dovish Meretz Party said the government is acting recklessly by endangering Israel’s participation in the grant program.

“This is what a sinking ship looks like when its captains decide to establish the State of Judea (biblical term for the West Bank) while destroying the future of Israel,” Galon told Israel Radio.

“Because this is destroying the scientific future of Israel, Israeli research.” Elkin said Israel was faced with a decision of principle. Losing access to Horizon 2020 would be considerable, mainly “in terms of promoting Israeli science and its need to compete with scientists around the world,” Elkin said. However, “Israel cannot discriminate (between different areas), as the EU demands now, with special certificates and commitments.”

It remains unclear how much wiggling room, if any, negotiators would have. Europe might want to avoid a showdown with Israel at a time when Israeli-Palestinian peace talks are finally underway, following a five-year freeze. Negotiations resumed last month.

However, the EU appeared unlikely to agree to the changes sought by Israel, since their new wording “reiterates the long-held position that bilateral agreements with Israel do not cover the territory that came under Israel’s administration in June 1967,” as the bloc’s foreign policy chief, Catherine Ashton, put it last month. On Friday, her spokesman Michael Mann said the EU Commission, the 28-nation bloc’s executive arm, is aware of media reports that Israel is planning to seek clarifications.

“We stand ready to organise discussions during which such clarifications can be provided and look forward to continued successful EU-Israel cooperation, including in the area of scientific cooperation,” Mann said.

Laub reported from the West Bank. Associated Press writer Juergen Baetz in Brussels, Belgium contributed to this report.