The word "relationship" in this context refers to any kind of relationship including a business relationship. And a quick search shows that the law in question appears to basically make any interaction (no matter how minor) with people from Israel or the Israeli government a crime, so it does seem that it applies here[1]. In particular note this quote:

> Furthermore, hardware and software developed in Israel or by companies that have production branches in Israel are forbidden.

(For the avoidance of doubt, I find the whole situation quite insane -- nobody benefits from governments blocking collaboration over the internet.)

[1]: https://www.jns.org/opinion/irans-anti-israel-law-desperatio...