The European Union’s decision not to include Modiin in a tax break deal with Israel is likely to hurt local businesses, says Modiin area Business Association head Dror Atari. “There are dozens of legitimate Israeli businesses in Modiin and the surrounding area, and the definition of Modiin as belonging to a foreign territory is illegitimate and must be rejected,” he said.

The decision “is likely to hurt many families in the area,” he added.

The EU said Tuesday that Modiin will no longer be considered part of Israel for import purposes. EU officials argued that the city, which was never under Arab government, was built on what in 1949 was “no-man’s land” and therefore is not truly part of the country.