“It’s a bad decision for everyone who is pro-peace,” Israeli Finance Minister Yair Lapid told Arutz Sheva in response to the European Union’s announcement on Tuesday forbidding its member states from cooperating, transferring funds, giving scholarships or research grants to bodies in Judea and Samaria, eastern Jerusalem , and even the Golan Heights.

The new instruction, promulgated by the European Commission, which is the operative arm of the EU, sets parameters for cooperation between the EU and its members states, on the one hand, and Israeli governmental and private elements on the other. The instructions are for the years 2014 – 2020 and will go into force on Friday, July 18.

The decision also states that any future agreement signed with Israel must include a section that says the “settlements” are not part of sovereign Israel and therefore not included in the agreement.

“I know their thinking was that they’re supporting the peace process, but in fact they are harming the peace process,” he said.

“The European Union is giving full support to those extremists,” he added.

In response to how Israel will respond to the situation, Lapid said, “first and foremost we are going to talk to all of the people involved and try to convince them this is a bad decision,” he said, adding that the boycott is “against peace and should be cancelled.”

The Israeli finance minister added that in his view Israel should return to the negotiating table and do everything in its power “to achieve peace.”

Meanwhile Economics Minister Naftali Bennett and Deputy Foreign Minister Ze'ev Elkin have warned Prime Minister Binyamin Netanayhu that if he fails to bring about the cancellation of the new EU sanctions on Israel, they may opt to sabotage U.S. Secretary of State John Kerry's efforts at jumpstarting negotiations between Israel and the Palestinian Authority, Israeli daily Maariv reported Wednesday.

The EU decision bans member states from cooperating, transferring funds, giving scholarships or research grants to bodies in Judea and Samaria, eastern Jerusalem, and the Golan Heights.

"We will not accept any external dictates regarding our borders," Netanyahu said Tuesday in response to the decision.