The European Union has proposed suspending parts of its free trade agreement with Israel, a move that could affect nearly €5.8 billion in Israeli exports, the European Commission announced on Wednesday.
The measures would also include sanctions on what the EU described as “extremist Israeli ministers,” violent West Bank settlers, and Hamas. In addition, Brussels said it would halt bilateral support for the Israeli government while maintaining funding for Israeli civil society and the Holocaust memorial Yad Vashem.
Israel counts the EU as its largest trading partner, accounting for 32% of its international trade. Should the suspension take effect, Israeli goods would face duties similar to those imposed on countries without preferential access, costing exporters an estimated €227 million annually, according to a senior Commission official.
European Commission President Ursula von der Leyen said Israel’s actions breached Article Two of the Euro-Mediterranean Agreement, which requires respect for human rights and democratic principles.
“The horrific events taking place in Gaza on a daily basis must stop. There needs to be an immediate ceasefire, unrestrained access for all humanitarian aid, and the release of all hostages held by Hamas,” von der Leyen said. She added that the EU remains committed to humanitarian aid, the two-state solution, and measures to respond to “serious recent developments in the West Bank.”
Dubravka Šuica, EU Commissioner for the Mediterranean, confirmed that while €14 million had been allocated for bilateral cooperation with Israel between 2020 and 2024, €9.4 million remains uncontracted. “Until further notice, we will not proceed with the joint identification of new actions or the signature of contracts,” she said.
The EU pledged €20 million in continued support for Yad Vashem and over €10 million for Israeli civil society organizations. At the same time, it announced €1.6 billion in aid for the Palestinian Authority over the next two years and plans to establish a Palestine Donor Group to coordinate future assistance for Gaza and support reforms within the PA.
Ireland backed the EU’s proposed measures, with Irish foreign minister Simon Harris describing it as a “critical turning point.”
“Today’s publication by the European Commission of a proposal to suspend the core trade-related parts of the EU’s Association Agreement with Israel is hugely significant. There is a genocide taking place in Gaza and the findings of the UN Commission of Inquiry earlier this week make clear that this is the case,” Harris said on Wednesday.
Israeli Foreign Minister Gideon Saar on the other hand condemned the proposals, calling them “morally and politically distorted” in a post on X. EU diplomats, however, cautioned that the measures may not receive the required approval from all member states, with Germany seen as a key obstacle to any penalties against Israel.