European Union member states are considering whether to deploy their substantial economic relationships with Israel as policy tools, following months of criticism that have failed to influence Prime Minister Benjamin Netanyahu's government. The EU is Israel's biggest trading partner, with a third of Israel's trade conducted with the bloc, yet internal divisions have prevented the union from converting this commercial leverage into diplomatic influence.
The shift in approach follows the recent election defeat of Hungary's outgoing prime minister, Viktor Orbán, who had served as a key ally to Netanyahu within European institutions. In February, during the third month of this year, Hungary was the only EU country to vote against the adoption of sanctions against violent settlers in the West Bank, blocking a measure requiring unanimity. Once Orbán's successor takes office, it is expected that the proposal will come back to the table.
Trade and Research Relationships
The EU's economic ties to Israel extend beyond conventional trade. The academic benefits Israel receives through participation in the Horizon research programme are considerable, creating additional points of potential leverage that Brussels has been reluctant to employ. Internal disunity and an overoptimistic faith in the power of persuasion have led to a reluctance by the bloc to use those relationships as leverage.
Escalating Tensions
European expressions of concern over the actions of Netanyahu's government have regularly hardened into outright condemnation in recent months. Last September, during the seventh month following initial concerns, European Commission President Ursula von der Leyen expressed horror and outrage at aid restrictions that she said created a "man-made famine" in Gaza. Brussels has inveighed against settler violence and land grabs in the West Bank, which undermine the possibility of a viable Palestinian state.
Responding to the bombing of Lebanon following the US-Israeli ceasefire with Iran, the EU's foreign policy chief, Kaja Kallas, said: "Israel's right to self-defence does not justify this destruction." The angry words and exhortations have achieved nothing, with Netanyahu and his ministers generally treating European critics with barely concealed contempt, presumably reassured by the fact that their chief allies in the White House tend to behave in exactly the same fashion.
Potential Policy Shifts
Spain is formally calling for the EU to suspend its association agreement with Israel, which gives preferential status to economic and commercial relations, on the grounds of human rights violations. Such a measure would fail to win unanimous support from key countries including Germany. But a partial suspension affecting the trade parts of the agreement—previously advocated by von der Leyen in September—would require only a weighted majority in favour. That may also prove unachievable, as was the case last autumn.
Last week, during this month, following angry exchanges between Tel Aviv and Rome over civilian deaths in Lebanon, Italy's Prime Minister Giorgia Meloni announced that the renewal of a defence cooperation agreement with Israel would be suspended "in view of the current situation." Meloni, like Orbán, could once be considered a close political ally.
Why This Matters:
The EU's consideration of economic measures against Israel represents a potential shift from diplomatic statements to concrete policy tools, testing whether the bloc can overcome internal divisions to exercise the leverage its commercial relationships provide. With a third of Israel's trade conducted with EU members and substantial academic benefits flowing through programs like Horizon, Brussels possesses significant economic cards that have remained unplayed despite months of policy disagreements. The question of whether to deploy trade relationships as diplomatic instruments raises fundamental issues about the appropriate role of economic partnerships in foreign policy and whether commercial ties should be conditioned on political alignment. The loss of Hungary's veto power following Orbán's election defeat removes a key institutional obstacle to sanctions measures, potentially enabling actions previously blocked by unanimity requirements.