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Official: Israel can limit damage of any economic boycott if talks with Palestinians fail

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A general view of the West Bank Jewish settlement of Psagot near Ramallah, Monday, Jan. 27, 2014. The Palestinians' "extreme and reckless" rejection of an Israeli suggestion that some Jewish settlers remain in a future Palestinian state proves that they don't want peace, Prime Minister Benjamin Netanyahu's office said Monday. The harshly worded statement follows a flurry of back-and-forth condemnations sparked by an Associated Press report that Netanyahu believes all Jewish settlers should have the right to remain in their homes in a future Palestine. (AP Photo/Sebastian Scheiner)The Associated Press

A senior government official says Israel has the tools to limit the damage of any economic boycott, dismissing fresh warnings that the country's economy would be badly hurt if U.S.-led peace talks with the Palestinians fail.

The comments reflect how boycott concerns have become central to Israel's public discourse.

Finance Minister Yair Lapid said Wednesday that Israel will become increasingly isolated and lose markets in Europe if it fails to strike an agreement with the Palestinians.

Intelligence Minister Yuval Steinitz told Israel Radio on Thursday that Israel "has the tools to prevent boycotts." He didn't elaborate but said an "erroneous" deal that compromises Israel's security would do more economic damage.

A small but growing number of European businesses have limited trade recently with Israeli firms involved in West Bank settlements.