The UK government is set this week to announce new rules which threaten "serious penalties" for local councils, NHS trusts and other publicly-funded bodies, including universities and possibly even student unions, which seek to impose boycotts on Israeli goods. The new regulations have been linked to a separate move to impose tighter rules on local authority pension funds, preventing them from engaging in what the government calls "politically motivated boycott and divestment campaigns against UK defence companies and against Israel".

In both cases the government is seeking to end what it calls "municipal foreign and defence policies", with local authorities and other public bodies making investment and procurement decisions on the basis of their own ethical judgements, which often differ from Whitehall's. The government argues that foreign policy is a matter for national government, not local councils. On the other hand, Labour leader Jeremy Corbyn has described the new regulations as "an attack on local democracy".

Although the new rules affect procurement and investment decisions across the board, and may even have the perverse effect of forcing NHS trusts to invest their pension funds in tobacco companies, it is clear that the UK government's main rationale in driving through the new regulations is to protect its close relationship with Israel. The Netanyahu government is pursuing a policy of aggressive 'lawfare' towards the growing international Boycott Divestment and Sanctions (BDS) campaign against its occupation of the Palestinian territory, and it appears to have recruited the British government to its cause. In a 2014 speech to the Israeli Knesset, David Cameron described BDS as "abhorrent". The fact that the new procurement policy is being announced by Cabinet Office Minister Matthew Hancock during a visit to Israel this week also rather gives the game away, as does Hancock's suggestion that boycotts "fuel antisemitism".

This is not the place to rehearse the rights and wrongs of BDS. Christians and Jews have strong views on both sides of the debate. Palestinian Christians, in their 2009 Kairos Palestine document, called on Christians around the world to engage in BDS against "everything produced by the occupation" as a means of "peaceful resistance" against injustice. Some churches in the US have approved divestment policies, as have pro-justice Jewish groups such as Jewish Voice for Peace, which reject the notion that BDS is antisemitic. The Board of Deputies of British Jews on the other hand has suggested that BDS is "a divisive strategy that is aimed at striking at the very legitimacy of Israel".

We need to see the detail of the new rules. But whatever one's view on BDS, and on Israel's continuing military occupation of Palestinian land (now approaching its 50^th year), there are at least five reasons for thinking that the UK Government's new procurement and investment rules are likely to be wrong-headed and thoroughly undemocratic:

1. They fly in the face local democracy. It is difficult to believe that the David Cameron forcing through these new restrictions is the same David Cameron who extolled the virtues of localism in this 2009 Guardian article. He said then that a Conservative government would give local councils "much more power and responsibility" and that local authorities would be granted powers that would free them to carry out any lawful activity on behalf of their community. If it is not illegal for a local authority to refuse to contract with or invest in a company complicit in Israeli's occupation (particular targets have been French urban services company Veolia and UK security company G4S), then why should Whitehall be allowed to overrule local council procurement or investment policies?

2. They confuse boycotting Israel with boycotting the occupation and settlements. When the government first talked about bringing in anti-boycott measures, the then Secretary of State for Communities and Local Government Eric Pickles pointed to the example of Leicester as evidence of a left-wing council which had pursued an "extremist" policy against Israel. But what had Leicester actually done? Well, in a November 2013 motion which explicitly recognised Israel's right to exist "in peace and free from incursion", the council simply resolved "to boycott any produce originating from illegal Israeli settlements in the West Bank until such time as it [Israel] complies with international law and withdraws from Palestinian Occupied territories." Since even the UK government regards both the settlements and the occupation to be illegal under international law, it is hard to fathom why ministers should object so strongly to Leicester's decision, which only sought to distance the council from illegal behaviour by a foreign state.

3. They contradict the government's own policy on trading with Israeli settlements. It seems unlikely that the Foreign Office was consulted on the new anti-boycott rules. This is because the FCO's own advice to UK companies looking to do business in Israel strongly urges against their dealing with settlements in East Jerusalem and the West Bank because of their illegal status and the "potential reputational implications". So companies can't deal with settlements but local councils must do so, because not to do so "fuels antisemitism"? This is utterly illogical.

4. They ignore the historical examples of South African apartheid and fair trade. There are parallels with the 1980s, when local councils were in the forefront of the campaign to boycott South Africa for its apartheid policies. It is said that by 1985 more than 120 local authorities in the UK, representing two-thirds of the British population, had taken some form of anti-apartheid action. In response, in 1988 Prime Minister Thatcher imposed restrictions on 'political action' by local councils. Mrs Thatcher was on the wrong side of history then, as Mr Cameron may be now. There is also the issue of fair trade, which is dear to the hearts of many local councils. Is this policy, which also runs counter to Whitehall's laissez-faire trade policy, also to be jettisoned because it is symptomatic of "municipal militancy"?

5. They could be the thin end of the wedge. I have written this article because the new restrictions could ultimately affect my work as Chief Executive of a Christian development charity seeking to challenge poverty and injustice in the Middle East. We have supported the Kairos Britain initiative but have no position on BDS. But we do have an ethical investment policy which states clearly that we will not invest in companies which "have a significant involvement in supporting or maintaining the Israeli occupation of East Jerusalem and the Palestinian territories". This is because much of our partners' work, for example an Anglican project providing access to maternal healthcare in the West Bank, deals with the consequences of occupation, so it would be folly simultaneously to invest in companies which perpetuate occupation. For this reason we have sold our holdings in G4S (which provides equipment and services to Israeli prisons and West Bank checkpoints) and Unilever (whose Ben & Jerry's subsidiary supplies ice cream to settlements). But if we were to be in receipt of government funding, would Whitehall then seek to influence such ethical investment policies? The government is already legislating to stop charities in receipt of public funds from engaging in campaigning activities, so this is not a far-fetched scenario.

These latest rules point to a UK government which is so intent on preserving its close relationship with Israel that it is prepared to trample on local democracy and to drive a wedge through the heart of its own stated policy towards Israel's occupation and settlement policy. They are thoroughly illiberal and, if they are confirmed, will represent a sad day for traditional British freedoms.

Jeremy Moodey is chief executive of the Christian development charity Embrace the Middle East, which has launched a Lent appeal to help support development work with disadvantaged women throughout the Middle East.