EU recommends suspending Israel free trade agreement

The European Commission today announced that it is recommending imposing sanctions on extreme Israeli ministers, suspending the free trade agreement between Israel and the EU and establishing a fund for the Palestinians. In doing so, the EU Commission supported last week’s statement by President Ursula von der Leyen.

Of Israel’s total trade with the EU (€43 billion), the free trade agreement applies to 37%. Its suspension “would cost Israel a lot of money,” as Kaja Kallas, the EU’s foreign relations chief, said yesterday. She also estimated that the proposal would be approved by the commissioners. This is another measure that increases pressure on Israel. Kallas added, “The aim is not to punish Israel, but to improve the humanitarian situation in Gaza.”

There is no surprise in this step. Von der Leyen announced it in a committee meeting last Wednesday. She also published a very detailed presentation, which stated that she would recommend suspending the free trade relationship.

The European College of Commissioners, which meets next week, is expected to back the sanctions, since it can be assumed that the president would not have announced it otherwise. It will also impose sanctions on senior Israeli ministers and establish a fund for the Palestinians. In addition, the Commission backed the announcement to withhold millions of euros in bilateral funds from Israel. This step, unlike the others, will not be a recommendation but a decision. All this was detailed last Wednesday.

The Israeli side is expressing “surprise” and “unfairness” at the expected decision of the European Commission, but these measures have been known for at least a week. More importantly – it will not immediately cancel the free trade agreement but will only forward the decision to the EU Council and its foreign ministers. Only Lithuania has so far expressed public opposition to the move.

The writing was on the wall

The decision represents a significant increase in pressure on Israel, but Jerusalem’s attempt to present it as if it were a “decision made in haste… without any prior notice… at lightning speed without consulting us” (in the words of Foreign Minister Gideon Sa’ar’s statement), does not hold water.

For months now, the EU has been threatening Israel, under pressure from public opinion, with a series of sanctions, if it does not prove that it is listening to the EU’s allegation about the humanitarian situation in Gaza. Sa’ar has promised big and bold initiatives, but the Israeli side has not fulfilled its commitments. The government is ignoring EU requests. Israelis are being assured that Europe is “dependent” on Israeli weapons, that Brussels is afraid to act against Israel, that it will be content with condemnations.

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But when the EU increased efforts to exert pressure, Jerusalem claims that this was an unexpected step. In fact, behind the scenes, not much has changed in the past month, apart from Israeli ignoring a series of EU decisions, to the point where the EU is threatening to impose sanctions. The Israeli government brought the current move on itself, completely ignoring the EU.

Israel now finds itself dependent on two countries – Germany and Italy. Germany has made it clear that it does not consider civil sanctions an appropriate measure, but it is not known if it will change its mind. Italy has already shown signs for two months that it is “wavering”. The bombing of the only Catholic church in Gaza prompted Prime Minister Giorgia Meloni to break her silence and strongly condemn the Israeli actions in Gaza as “Unacceptable.”

Particularly striking is the silence of the US, which apparently is not trying to exert pressure to block the EU move. The silence from Washington is tantamount to acquiescence. Apart from a few comments by the ambassador to Israel, the White House does not seem eager to intervene in EU-Israel relations.

It seems as if Prime Minister Benjamin Netanyahu suddenly discovered the threat from the EU – Israel’s biggest trading partner – and that Israel’s situation is much more serious than he previously thought. If this was behind Netanyahu’s “Sparta speech” about international isolation then his judgment is flawed. The writing has been written in clear letters on the wall since May.

Anyone who expresses surprise is only revealing the lack of seriousness with which business is currently being conducted on the Israeli side.

Published by Globes, Israel business news – en.globes.co.il – on September 17, 2025.

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