European Union leaders have warned companies and financial institutions from participating in construction projects linked to illegal Israeli settlements, including E1 plan, warning that involvement could expose them to serious consequences under international law, according to a statement issued Friday following a two-day summit in Brussels.

The EU leaders have also condemned Israel's continued expansion of illegal settlements and escalating violence by Israeli settlers against Palestinians in the occupied West Bank.

The E1 plan is a proposed settlement project in the West Bank that would divide the Palestinian territory in two and bury the idea of a Palestinian state.