EU-Israel diplomatic ties were formally established in 1959 and, despite various political tensions, their relationship has been relatively stable. In particular, EU countries have developed bilateral relations with Israel fostering strong trade, energy security, and research cooperation. Still, the EU has consistently struggled to have a strong and coherent voice in foreign policy because of internal divisions among member states and differing priorities, which originated from the lack of a truly European approach regarding Israel and South Asia.
EU-Israel Economic Relations
Economic cooperation between the EU and Israel began with the 1975 Free Trade Agreement, which established free trade for industrial and agricultural products. This agreement was later replaced by the EU-Israel Association Agreement in 1995, which entered into force in 2000. This agreement governs EU-Israel trade relations to this day. By 2022, the EU was Israel’s main trading partner, accounting for 28.8% of Israel’s trade in goods, amounting to €46.8 billion. The EU also supports Israel through various funding programs; notably they contribute €1.8 million annually to Neighbourhood, Development and International Cooperation Instrument (NDICI), which finances institutional twinning projects to align Israeli public administration with EU.In addition to trade, the EU and Israel collaborate extensively in research and innovation, fostering advancements through joint participation in Horizon Europe projects. Israel also participates in Erasmus+, enabling academic exchanges and strengthening “people-to-people” connections. Building on these strong trade and research ties, energy security and energy trade have become increasingly prominent areas of cooperation, particularly in light of global energy challenges.
In 2020 Israel became a net gas exporter, and although 64% of these exports have been committed to Egypt for 15 years, with the remainder going to Jordan, the presence of a new gas exporter near Europe was a welcome development. Since the onset of the war in Ukraine, the region’s strategic importance has significantly increased. The EU has described exports from Israel, Egypt, and Cyprus as strategic assets in its efforts to diversify the 27-nation bloc’s gas sources. In June 2022, Israel, Egypt, and the EU signed a memorandum of understanding (MoU) to boost natural gas exports to Europe, marking the first framework for substantial Israeli gas exports to the continent as Europe seeks alternatives to Russian energy.
EU-Israel Political Relations
The EU has consistently supported a two-state solution based on the 1967 borders to resolve the Israel-Palestine conflict, as outlined in the 1980 Venice Declaration and reaffirmed in the EU’s 2016 Global Strategy. Until 2005, the EU played an active, if sometimes ineffective, role in advocating for peaceful negotiations between Israel and Palestine. To advance the two-state solution, the EU employed various diplomatic, economic, and institutional instruments to foster dialogue and stability in the region. The Euro-Mediterranean Partnership (EMP), also known as the Barcelona Process, was launched in 1995 to enhance cooperation with 12 countries around the Mediterranean, seeking to promote regional stability through economic and political cooperation at regional level. The multilateral forum included Israel and Palestine as full participants opening new channels for political dialogue, confidence-building, and practical cooperation among Israel, Palestine, and their Arab and European neighbours.
The EU’s enlargement in 2004 marked a historic political and economic shift, bringing the EU and Israel geographically closer. The EU and Israel signed the EU-Israel Action Plan in 2005 under the European Neighbourhood Policy (ENP), promoting the integration of Israel into European policies and programmes. The Action Plan, the validity of which is being further extended to January 2025, outlined four key priorities: enhancing political dialogue, boosting economic integration, strengthening cooperation in justice and policing, and expanding collaboration across various sectors such as environment, energy, transport, and technology.
However, since 2005, the EU has faced mounting challenges in its declared efforts to sustain the Middle East peace process. First, the enlargement of the EU broadened its range of interests, making consensus increasingly challenging to achieve. Second, following the first military operation of Israel Defense Forces (IDF) in Gaza in 2009, Operation Cast Lead, and later Operation Protective Edge in 2014, the European approach has grown increasingly inconsistent. While Europe has criticised Israeli bombing campaigns and annexation policies, as well as the Palestinian Authority’s delegitimizing authoritarianism, this criticism has lacked concrete consequences. Third, tensions arose in November 2015 when the EU decided to label settlement products, sparking criticism of the EU by the Israeli public and government. The decision was officialized to further protest with the European Court of Justice’s 2019 ruling, which mandated that goods produced in Israeli settlements must be labelled to indicate their origin in the Occupied Palestinian Territories (OPT).
EU-Israel economic relations continue to grow because EU member states have prioritised their bilateral ties with Israel over clearly promoting EU stances on the Israel-Palestine conflict. While the EU continues to advocate for a two-state solution, conditions on the ground increasingly point toward a one-state reality. In response, the EU employed contradictory strategies. While supporting a two-state solution, the EU focused on strengthening relations with Israel. Internal divisions even widened following Hamas’s attack on Israel on 7 October 2023. While all EU member states acknowledged Israel’s right to self-defence, they disagreed on the limits of this right in light of the unprecedented death toll from Israeli military operations in Gaza. The vote on 27 October at the UN General Assembly regarding a resolution for an immediate ceasefire in the Gaza Strip, further showcased paralysis and deep divisions among EU member states. Three members of the Visegrád group – the Czech Republic, Hungary, and Slovakia – together with Croatia, voted against the UN Resolution. Germany and Italy, major defense exporters to Israel, abstained from voting. Meanwhile, France, Spain, Ireland, and Belgium voted in favour of the resolution, adopting some of the most critical European positions regarding Israel’s actions during the Gaza war.
Recommendations
1. The EU needs to formulate a coherent external strategy toward the MENA region. Although the Middle East holds a significant place in the EU’s external policy – on issues such as immigration, terrorism, trafficking, and energy needs – bilateral relations continue to underpin most of its diplomatic efforts. Consequently, it is individual member states, rather than EU institutions, that largely determine the bloc’s policy in the region.
2. The EU needs to develop a common position on the Israeli-Palestinian conflict and speak with one voice on the topic. The endorsement of a two-state solution is an empty shell if it is not accompanied by coherent policies. Europe has moved from efforts to build a Palestinian state to attempts at managing an ever-worsening “status quo” to which it clings mainly because it sees no alternative. The EU is not only Israel’s main trading partner, but also the largest external donor to the Palestinians (€1.11-€1.356 billion from 2017 to 2020); however, economic support without meaningful political engagement cannot serve as an effective solution. Moreover, by not challenging the viability of a two-state solution, European leaders avoid confronting the consequences of their Israel policy, stopping short of holding Israel accountable for its erosion.
3. In the short term, the EU needs to leverage its strong economic position vis-a-vis Israel to influence its conduct. The EU unanimously imposed sanctions on Israeli settlers in the occupied West Bank for the first time in April 2024, and again in July, citing human rights violations against Palestinians. A suspension of the EU-Israel Association Agreement – which provides for a human rights clause – could significantly impact Israel’s economy and help deliver a clearer message from the EU. Finally, Europe could also condition its cooperation and trade with Israel on progress toward a two-state solution and the protection of Palestinian rights.
For Further Thought:
Will the MENA region play a more significant role in ensuring the EU’s energy security in the future?
Given the EU’s efforts to promote regional stability through initiatives like the Euro-Mediterranean Partnership, can such initiatives still have an impact amid the current instability in the region, marked by the Israel-Gaza war, Israel’s rivalry with Iran and its allied militias, and the potential fallout from Bashar al-Assad’s ouster in Syria?
How would the EU’s enlargement to the Western Balkans and Ukraine impact its relations with Israel and the region?
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