But everyone I spoke to also agreed that the hottest, all-dominating issue in the EU-Israeli relationship was how the settlements were increasingly becoming the political prism through which all other aspects of interaction were viewed. This perception was shared equally by those who thought the policy was a great thing and by those who thought it was a disaster.

During the debates in Herzliya, it became clear that both sides are to blame for this development. On the EU side, focusing on the illegality of the settlements, and letting this argument hijack the agenda and atmospherics of the relationship, is partly an ersatz strategy intended to compensate for the absence of real foreign policy clout in the region. It allows the EU to occupy the moral high ground without much political cost. The EU can score ethical brownie points among valued target audiences without making much of a difference on the ground.

The best example of this is a 2013 European Commission directive that forbids EU member states from becoming involved in projects in illegal settlements. This much-discussed legislation has not created any kind of positive effect on the ground, but its enormous political symbolism has led to a worsening of relations, a strengthening of hard-liners on both sides, and a narrowing of the European debate on Middle Eastern affairs.

On the Israeli side, the current government still underestimates the enormous damage it does to its own reputation and credibility when it authorizes further developments of settlements in disputed areas. Not only has such a policy angered Europeans, it is also increasingly drawing flak from the United States, including from many American Jews, Israel’s strongest allies abroad.

It does not help that members of the current Israeli government rarely miss an opportunity to publicly belittle EU officials, including EU foreign policy supremo Catherine Ashton. And when assessing newly released EU documents, Israeli officials tend to highlight only those paragraphs criticizing Israel, never the ones that offer further cooperation or promise steadfast EU support.

Despite the heroic efforts of its diplomatic representatives in Brussels, the government in Jerusalem assigns too little relevance to the cultivation of good relations with the EU institutions and much rather focuses on bilateral relations with member states. As such, “Europe” is often portrayed in a way that betrays little knowledge about the intricacies and relevance of EU decisionmaking.

The danger is clear. By allowing their relationship to become emotionalized around a highly disputed topic, the two sides are giving fringe players a veto right over political progress. That poisons the atmosphere and distracts from the big strategic issues that should deserve at least as much attention, if not more.

Sensible politicians on both sides should make clear again and again that settlements are but one of many issues of strategic importance in the EU-Israeli relationship. Where is the public debate on the future political order in the Middle East after a deal on the Iranian nuclear issue? Where is the wider intellectual discourse on the impact of Eastern Mediterranean energy reserves on the great gas game in Europe? Where is a shared assessment on how to guarantee stability in Europe’s volatile Southern neighborhood amid a decreasing U.S. footprint in both Europe and the Mediterranean? Where is an honest European analysis of the threats of Islamic extremism, drawing on the immense Israeli experience in this field?

Europe and Israel share not all but many similar challenges, threats, and opportunities. Their relationship should be brimming with rich intellectual exchange at all levels. Instead, both sides risk losing what should be a truly strategic partnership by indulging in their own obsessions about the respective other. It is not too late yet, but it will take some effort to avoid an unhealthy one-issue relationship.