EU contemplates imposing trade sanctions and suspending benefits on Israel due to the ongoing conflict in Gaza
The European Union (EU) has taken a significant step in its relationship with Israel, announcing the suspension of trade-related provisions of its Association Agreement and the imposition of sanctions. This decision comes following a review of Israel's compliance with Article 2 of the Agreement, which found that actions taken by the Israeli government represent a breach of essential elements relating to respect for human rights and democratic principles.
The trade suspension concerns the core trade-related provisions of the EU-Israel Association Agreement, resulting in imports from Israel losing their preferential access to the EU market. This means that these goods will be charged duties at the level applied to any other third country without a free trade agreement with the EU.
The EU foreign policy chief, Kaja Kallas, stated that suspending trade concessions and imposing sanctions would send a strong message that the war must end, the suffering must stop, and the hostages must be released. The proposed sanctions also extend to Hamas, extremist Israeli ministers, and violent settlers.
The breach of Article 2 of the Association Agreement by Israel's government undermines the two-state solution. The breach refers to the rapidly deteriorating humanitarian situation in Gaza following the military intervention of Israel. The blockade of humanitarian aid, the intensifying 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 are part of the breach.
The measures cover future yearly allocations between 2025 and 2027, as well as ongoing institutional cooperation projects with Israel and projects funded under the Regional EU-Israel cooperation facility. The EU is putting on hold bilateral EU support to Israel, with the exception of support to civil society and Yad Vashem.
The EU is entitled to suspend the Association Agreement unilaterally due to the breach. The EU Commission has also proposed sanctions on Hamas, extremist Israeli ministers, and violent settlers. The decision to adopt the suspension of the EU-Israel trade agreement requires a qualified majority in the EU Council.
Kallas announced the review of the agreement on May 20, 2025, referring to human rights violations by Israel, although no full suspension decision was formally adopted by the Council at the July 15, 2025 meeting. This decision marks a significant shift in the EU's approach to Israel, underscoring the importance it places on upholding human rights and democratic principles in its international relations.
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