The European Commission (EC) yesterday proposed suspending a trade arrangement covering around €5,8 billion in Israeli exports due to the war in Gaza, although the measure currently lacks sufficient support among European Union (EU) member states to be adopted.
European foreign policy chief Kaia Kallas also proposed a package of sanctions against two Israeli ministers, as well as "violent" Israeli settlers and ten senior members of the Palestinian militant group Hamas.
They are the Minister of National Security, the far-right Itamar Ben-Gvir, and the Minister of Finance Bezalel Smotrich, Reuters reported.
The nearly two-year Israeli offensive in Gaza and the worsening humanitarian situation have increased political pressure on European leaders to take action.
The European Union is Israel's largest trading partner, with trade in goods between the two countries totaling 42,6 billion euros last year, according to EU data.
If the free trade arrangement is suspended, Israeli goods would no longer be duty-free, but would be subject to tariffs that apply to all countries outside the EU that do not have a trade agreement with the bloc.
In Israel's case, this would affect exports worth approximately 5,8 billion euros, resulting in estimated annual tariffs of 227 million euros, a senior Commission official told reporters.
Israeli Foreign Minister Gideon Sarr announced on the X network that the European proposals were "morally and politically distorted" and expressed hope that they would not be adopted.
"Any action against Israel will receive an adequate response, and we hope we will not have to use them," he wrote.
Suspending the free trade arrangement, first mentioned last week by EC President Ursula von der Leyen, would require the support of a qualified majority of EU governments - 15 of the 27 member states representing 65 percent of the Union's population.
EU diplomats told Reuters that the proposal was unlikely to gain the necessary support, with much depending on Germany, which has so far been reluctant to impose EU punitive measures against Israel.
Foreign Minister Gideon Saar said that the European proposals are morally and politically distorted and said that any action against Israel will receive an adequate response.
The EC's moves followed mass demonstrations on the streets of European cities, as well as strong demands from some EU leaders, such as Spanish Prime Minister Pedro Sanchez, for the Union to take more decisive measures against Israel.
So far, however, neither trade measures nor sanctions have received sufficient support due to persistent opposition from countries including Germany, Austria, Italy and Hungary.
A German government spokesman said yesterday that Berlin has not yet formed a final position on the EU proposals and that Germany wants to keep channels of communication with Israel open.
Diplomats say it is unlikely that the proposed measures against Israeli ministers will be adopted, as they require unanimous support from EU members.
Kalas said that while public opinion is changing due to the suffering in Gaza, she still believes that "the political lines are largely where they have been."
However, as Reuters points out, these proposals mark a political turn in the EU's relations with Israel.
The Commission is also putting on hold its bilateral support to Israel, without affecting cooperation with Israeli civil society and Yad Vashem, Israel's main Holocaust memorial centre.
At a press conference, Kallas rejected claims that the EU had not done enough to put pressure on Israel.
She said the EU had deliberately taken a targeted approach to avoid punishing Israeli society as a whole and forcing Benjamin Netanyahu's government to address the humanitarian crisis in Gaza.
"I want to be very clear. The goal is not to punish Israel. The goal is to improve the humanitarian situation in Gaza," she said in Brussels. "That's why our proposals don't really affect people, but put pressure on the Israeli government to change course."
Callas said she does not support attempts to exclude Israel from Eurovision, after Spain said it would boycott the song contest if Israel participated.
The Guardian writes that the EC's proposal to suspend the trade parts of the EU-Israel Association Agreement would not mean the disappearance of Israeli goods from European supermarkets, factories or hospitals.
The EU accounts for 32 percent of Israel's total trade with the world, generating exports worth around 2024 billion euros in 16.
Israeli exports include everything from aircraft engines to pharmaceuticals, including those from Teva. However, not all goods are exported with tariffs, as pharmaceuticals, for example, are not taxed under a long-standing World Trade Organization agreement, the Guardian reports.
Trade Commissioner Maroš Šefčovič admitted that the impact of removing free trade access would be "modest".
Whatever the economic consequences, this move can be seen as highly symbolic, according to the Guardian.
"I would say that the whole context of the decision was very political... I think there were strong expectations that the European Union had to use the instruments at its disposal to respond to the humanitarian crisis," he said.
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