{"id":331457,"date":"2025-08-09T20:58:32","date_gmt":"2025-08-09T20:58:32","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/331457\/"},"modified":"2025-08-09T20:58:32","modified_gmt":"2025-08-09T20:58:32","slug":"why-the-eu-could-stop-israel-but-wont","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/331457\/","title":{"rendered":"Why the EU could stop Israel \u2013 but won’t"},"content":{"rendered":"

Donald Trump\u2019s imposition of historically unprecedented tariffs this week marked the dawn of a new geopolitical era \u2013 and Europe barely noticed.<\/strong><\/p>\n

The US president\u2019s sweeping levies<\/a>, which included the world\u2019s inaugural \u201csecondary tariffs\u201d on India, upended the global economy and triggered an astonishing thaw<\/a> in relations between New Delhi and China. Meanwhile, EU leaders largely pontificated about what they should do to end the two wars raging just beyond the bloc\u2019s borders \u2013 and then, predictably, did almost nothing.<\/p>\n

The conflicts in Ukraine and Gaza are broadly similar in the death, destruction, and mental and physical trauma they have caused. The reasons for Europe\u2019s inability to influence them, however, are vastly different.<\/p>\n

In Ukraine\u2019s case, the reasons are economic. After imposing eighteen rounds of sanctions on Russia, Europe, quite simply, doesn\u2019t have that much left to sanction<\/a>. Moreover, the Kremlin\u2019s capacity to continue the war is overwhelmingly dependent on factors far beyond Brussels\u2019 control, Moscow’s deepening ties with Beijing chief among them.<\/p>\n

In the case of Gaza, however, the main impediments are political. Many EU countries \u2013especially those still wracked with guilt over their culpability for the Holocaust \u2013 are deeply averse to any measures that could significantly impede Israel\u2019s war effort.<\/p>\n

If this internal political resistance were to shift \u2013 and, with Germany\u2019s announcement<\/a> earlier today that it would suspend some weapons shipments to Israel, there are signs that it already has \u2013 the EU could, in theory, inflict severe economic pain on the country.<\/p>\n

The EU is Israel\u2019s top trade partner<\/a>, accounting for more than a third of its imports (which include strategically critical goods, like fuel and machinery) and a quarter of its exports. Unlike the bloc\u2019s pre-war relationship with Russia, this dependence is also strikingly asymmetric: Israel is the EU\u2019s 31st biggest trading partner, ranking behind Morocco and Algeria as the bloc\u2019s third-largest in the broader Mediterranean region.<\/p>\n

This reliance extends to the financial sphere. Europe is, by some distance, Israel\u2019s largest investment partner<\/a>: the 27 EU member states held investments worth \u20ac72.1 billion in Israel in 2023 \u2013 almost double the US.<\/p>\n

Underscoring this financial dependence, roughly a quarter<\/a> of the Bank of Israel\u2019s reserves are held in Europe. In principle, these could also be immobilised \u2013 much like Russia\u2019s central bank assets have been \u2013 and their \u2018unfreezing\u2019 made conditional on Israel\u2019s ending the war (or paying for Gaza\u2019s reconstruction).<\/p>\n

Finally, Europe\u2019s ability to inflict pain on Israel is further bolstered by the fact that the country\u2019s economy is already under deep strain.<\/p>\n

Almost two years of continuous war have caused Israel to suffer weak growth, labour shortages, a swollen budget deficit, and general geopolitical uncertainty \u2013 sparking warnings<\/a> that the country\u2019s credit rating could soon be downgraded to \u201cjunk\u201d status.<\/p>\n

External obstacles<\/strong><\/p>\n

Israel\u2019s profound vulnerability to EU sanctions is, in fact, widely recognised by analysts.<\/p>\n

\u201cThe potential suspension or downgrading of EU-Israel trade ties would add significant pressure\u201d on Israel, wrote Lize de Kruijf<\/a>, a project assistant at the Atlantic Council, a US think tank.<\/p>\n

\u201cGiven the scale and interdependence of EU-Israel trade, such a move could affect Israel\u2019s economic resilience and, by extension, its ability to sustain long-term military operations in Gaza,\u201d she added.<\/p>\n

The Economist<\/a> similarly noted last year that even EU export restrictions on military-related goods could \u201churt\u201d Israel. \u201cAlthough the country\u2019s leaders can shrug off Chilean or South African threats, they are much more vulnerable to European action,\u201d it stated.<\/p>\n

These (and other<\/a>) analyses invariably stress the EU\u2019s internal political obstacles to such proposals \u2013 namely, the deep resistance by many of its member states. But what they miss \u2013 and what this week\u2019s events underscore \u2013 are the external political obstacles, i.e. Trump.<\/p>\n

This year the US president has shown clearly that he regards trade as a means to achieve various political ends. Just last week, Trump explicitly warned<\/a> Canada that its decision to recognise Palestine \u201cwill make it very hard for us to make a Trade Deal\u201d \u2013 before promptly hiking tariffs on Ottawa to 35%. It is overwhelmingly likely that, if the EU imposed severe sanctions on Israel, Trump\u2019s retaliation would be at least as swift \u2013 and more devastating.<\/p>\n

But Trump might not even need to impose tariffs at all. EU officials have effectively admitted<\/a> that the main reason for the massively asymmetric \u201ctrade deal\u201d with the US was their fear that Trump might abandon Ukraine. Any threat to withdraw US military support for Europe or Kyiv would almost certainly cause the bloc to rescind sanctions on Israel \u2013 and then apologise to Trump for the inconvenience.<\/p>\n

Strategic short-sightedness<\/strong><\/p>\n

There is something of an irony here. On Tuesday, the EU effectively endorsed Trump\u2019s \u201csecondary sanctions\u201d tariffs on India \u2013 which are, ostensibly, designed to force New Delhi to stop purchasing Russian oil and, thus, end the Ukraine war.<\/p>\n

\u201cWe welcome any pressure, and in particular US pressure on Russia, to accept a ceasefire through any means necessary,\u201d a Commission spokesperson said.<\/p>\n

Such statements are not only a strategic mistake, insofar as they likely hamper the EU\u2019s ability to mitigate the impact of Trump\u2019s tariffs through strengthened ties with India and other countries in the Global South.<\/p>\n

They also set a dangerous precedent: by endorsing Trump\u2019s use of tariffs for nakedly political ends, Brussels risks inadvertently legitimising their use against Europe.<\/p>\n

\u201cYou can stop wars with tariffs,\u201d Trump claims<\/a>. Although the claim itself is debatable, the natural inference is that the US president also believes he can use tariffs to prevent others from stopping them.<\/p>\n

And, in Europe\u2019s case, he\u2019s probably right.<\/p>\n

Economy News Roundup<\/strong><\/p>\n

The EU\u2019s promise to invest over a trillion dollars in US energy and infrastructure is \u201cin no way binding\u201d, Brussels says. <\/strong>\u201cThe commitments\u2026 we have transmitted to the US administration [are] aggregate intentions as regards energy spending and as regards investment in the US economy by EU companies,\u201d a European Commission spokesperson said on Thursday. The comments came two days after US President Donald\u00a0Trump\u00a0<\/a>threatened to hit the EU with a 35% tariff if it fails to deliver on its commitment to invest $600 billion in US infrastructure over the next three and a half years. Read more.<\/a><\/p>\n

Brussels pushes back on German criticism of trade deal. <\/strong>A Commission spokesperson said on Tuesday that the EU executive was \u201csurprised\u201d by German Finance Minister Lars Klingbeil’s claim that the bloc is “too weak” on trade policy. “It is most surprising to us to hear that a minister from the member state in question has expressed that view given that nothing has happened here […] without the clear signal received from our member states,” the spokesperson said. Read more.<\/a><\/p>\n

EU could scrap digital laws to appease US. <\/strong>Bernd Lange, chair of the European Parliament\u2019s international trade committee, told Euractiv that \u201cthere is a risk\u201d that the EU\u2019s landmark Digital Services Act (DSA) and Digital Markets Act (DMA) could be jettisoned to finalise last month\u2019s preliminary trade deal with the US. The DSA, which targets harmful online content, has been repeatedly criticised by US officials for enabling \u201cdigital censorship\u201d and the \u201csilencing\u201d of Brussels\u2019 political opponents. The DMA, meanwhile, has been central to the Commission’s antitrust probes and fines targeting US tech giants like Google, Apple, and Meta, drawing backlash from Trump and Silicon Valley. The Commission has repeatedly claimed<\/a> that the bloc\u2019s digital rulebook is not up for discussion during trade talks with Washington. \u00a0Read more.<\/a><\/p>\n

EU and US agree on how to cut out China. <\/strong>Despite offering\u00a0sharply conflicting<\/a> official accounts of last month\u2019s trade deal, Brussels and Washington both strongly committed to bolstering their \u201ceconomic security\u201d \u2013 a thinly veiled allusion to reducing their dependence on Beijing for strategic products and protecting their industries from increasingly fierce Chinese competition. Economic security has also been \u201cone of the easier issues\u201d discussed by EU and US negotiators in recent months, a senior EU official said. Analysts noted that the near-identical language used by Brussels and Washington suggests that the EU, which is officially committed to \u201cde-risking but not decoupling<\/a>\u201d from China, is becoming increasingly sympathetic to America\u2019s tougher line. Read more.<\/a><\/p>\n

Brussels suspends US countermeasures despite lack of auto tariff relief. <\/strong>The Commission said on Monday that it will delay the imposition of retaliatory duties worth \u20ac93 billion on US goods despite Washington\u2019s failure to follow through on its pledge to slash auto levies from 27.5% to 15%. The reduction of US car duties is crucial for Europe’s long-suffering auto industry, which is struggling to keep pace with increasingly fierce competition from Chinese electric vehicle manufacturers. The US accounts for more than a fifth of the EU’s car exports, with \u20ac40 billion worth of autos shipped to America in 2024. Read more.<\/a><\/p>\n

The Economy Brief will be on pause for summer, returning from 29 August.<\/p>\n

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