EU officials are getting nervous about moves to limit free speech in Israel, after the Knesset voted to sanction individuals and groups that call for a boycott of settlements.
One source, speaking unofficially, said that although there could be different limits to freedom of expression in democratic societies, "we think this goes beyond those limits".
"It's a source of concern when it comes to the quality of democracy in Israel," the official told EURACTIV.
Israeli representatives in Brussels declined to comment.
The 'Bill for prevention of damage to the State of Israel through boycott', adopted on 11 July, defines promoting or, sometimes, participating in a boycott as a "civil wrong" under tort law.
Pro-boycott individuals could be liable to damages – and NGOs to the loss of their tax-exempt status – without any proof needed that material damage had been caused to those boycotted.
This means that human rights groups funded by the EU could effectively be shut down for refusing to recognise an occupation of the West Bank and East Jerusalem which the EU itself does not recognise.
Maya Kocijancic, a spokesperson for EU foreign policy chief Catherine Ashton, stressed that the EU acknowledged Israel's sovereignty and "does not advocate boycotts".
But, she told EURACTIV, "we are concerned about the impact that this legislation may have on freedom of expression for Israeli citizens and the expression of non-violent political opposition".
"We believe that freedom of speech is very important and a fundamental value of any citizen," she added. "In this respect, we are concerned, and we will raise the matter with the Israeli authorities."
A year ago, 36 Israeli theatre actors and staff refused to perform in a cultural centre in Ariel, a settlement in the West Bank.
More than 50 Israeli civil society groups then protested when legislative proposals were announced, on the grounds that they limited free speech.
Since the vote on 11 July, some liberal Israeli commentators have even argued that Israel has tipped towards "fascism".
EURACTIV understands that the issue has "caught the attention" of European foreign ministers and may be discussed at the EU foreign affairs council in Brussels next Monday (18 July).
No statement is likely, but the boycott issue, along with the revival of a proposed parliamentary inquiry into Israeli groups funded by foreign donors such as the EU, is sharpening the Brussels mood.
For many years, Israeli far right parties such as the National Union have proposed such legislation, partly as a means of impeding the work of EU-funded groups in Israel.
An EU official told EURACTIV that the moves to limit free speech in Israel would be "an element in the broader analysis" determining whether member states would support an expected Palestinian bid for statehood at the UN General Assembly in September.