The European Commission presented today its proposal to the Council to suspend certain provisions of the EU-Israel Association Agreement, as well as its proposals for sanctions against Hamas, extremist ministers, and violent settlers.

The Commission is also suspending its bilateral support to Israel, except for support to the Civic Society and Yad Vashem. According to the Commission, this affects future annual allocations between 2025 and 2027, as well as ongoing institutional cooperation projects with Israel and projects funded under the
EU-Israel Regional Cooperation Mechanism.

As the Commission underlines, “the proposals follow a review of Israel’s compliance with Article 2 of the Agreement, which found that the actions taken by the Israeli government constituted a violation of essential elements relating to respect for human rights and democratic principles. This gives the EU the right to suspend the Agreement unilaterally. In particular, this violation refers to the rapidly deteriorating humanitarian situation in Gaza following Israel’s military intervention, the blocking of humanitarian aid, the intensification of military operations and the decision of the Israeli authorities to advance the settlement plan in the so-called E1 area of the West Bank, which further undermines the two-state solution.”

The amount to be suspended amounts to €14 million

According to Brussels sources, EU financial support to Israel is covered by the Neighbourhood, Development and International Cooperation Instrument (NDICI) for Global Europe (NDICI-GE) for the period 2021 to 2027. In this context, Israel was to receive an average of €6 million per year under the current MFF between 2025 and 2027. In addition, the EU will also suspend institutional cooperation projects, including twinning programmes and projects under the EU-Israel Regional Cooperation Mechanism that benefit Israel in the region under the Abrahamic Agreements. The amount to be suspended is around €14 million.

According to the same sources, the EU Council has so far listed nine individuals and five entities linked to violent extremism in the West Bank and East Jerusalem, as well as to the obstruction of humanitarian aid in Gaza. On 17 September, the European Commission presented its proposal to the Council to suspend certain trade-related provisions of the Euro-Mediterranean Agreement between the EU and Israel as a matter of particular urgency.

The proposal responds to the rapidly deteriorating humanitarian situation in Gaza following Israel’s military intervention, including the recent major attack on Gaza City, the blockade of humanitarian aid and human rights violations, which effectively undermine a two-state solution.

Why Brussels wants unilateral suspension of the agreement

Brussels sources stress that by these actions, Israel is violating an essential element of the agreement concerning respect for human rights and democratic principles. This gives the EU the right to unilaterally suspend the Agreement.

The suspension concerns certain trade-related provisions of the Agreement, and in practice means that imports from Israel into the EU will lose their preferential access to EU markets and that these goods will be charged like any other third country with which the EU does not have a free trade agreement.

Key products affected by Israel’s exports include fresh and processed fruit and vegetables, processed food, as well as tyres for agricultural vehicles, chemicals and plastics. For these products, the EU accounts for about 29% of Israel’s exports. The resulting tariff increase would range from 0% for medical devices to over 30% for foodstuffs. However, as sources in Brussels underline, the suspension of an agreement is a two-way street. This means that the relevant provisions are suspended for both sides. Since the Commission is proposing to suspend trade preferences, this applies in both directions, meaning that Union exports to Israel will also be subject to Israel’s general import duties.

To €42.6 billion in bilateral trade in goods

The EU is Israel’s largest trading partner, accounting for 32% of Israel’s total goods trade with the world in 2024. Israel is the EU’s 31st largest trading partner.

Bilateral trade in goods between the EU and Israel in 2024 was €42.6 billion.

EU imports from Israel amounted to €15.9 billion, the main ones being:

1. machinery and transport equipment (€7 billion, 43.9%)
2. chemicals (€2.9 billion, 18%); and
3. other manufactured goods (€1.9 billion, 12.1%).

EU exports to Israel amounted to €26.7 billion, namely

1 machinery and transport equipment (€11.5 billion, 43%),
2. chemicals (€4.8 billion, 18%) and
3. other manufactured goods (EUR 3.1 billion, 11.7%).

Trade in services between the EU and Israel amounted to €25.6 billion in 2023 (the EU imports €10.5 billion and exports €15.1 billion).

Member states oppose sanctions on Israel

Nevertheless, most in Brussels believe that the Commission’s proposals are unlikely to be easily approved by the EU Council, as member states such as Germany, Italy, the Czech Republic, Austria, and Hungary oppose the imposition of sanctions on Israel.

It is noted that the EU Council must approve the Commission’s proposal by qualified majority, meaning that the proposal must be voted for by 55% of member states – in practice, this means 15 out of 27 member states and at the same time supported by member states representing at least 65% of the total EU population.