Economic gap: Wave of Palestinian recognitions exacerbates Israel's relations with the EU

Israel will face economic consequences if EU countries restrict trade relations with it. A third of Israeli exports are bound to EU markets, and the possible abolition of zero tariffs on goods from this country will affect shipments of €5.8 billion per year. The European Commission has already stated that they are considering a similar scenario. A complete break with the EU is unprofitable for Israel, and this will affect its actions, experts believe. In particular, he is unlikely to increase the pace and scale of the military operation in Gaza City. Meanwhile, the United States and France are already preparing plans for the post-war structure of the sector. Washington is discussing with the Arab countries the principles of peace and post—war governance in the exclave - they must guarantee the withdrawal of IDF units from the Palestinian territories, as well as the complete disarmament of Hamas and its removal from influence on the situation in Gaza.

Escalation of EU-Israel relations

The economic and political relations between the EU and Israel are moving towards escalation as EU countries continue to recognize the State of Palestine. France, Malta, Luxembourg, Portugal and Belgium were the last to make such a decision. In total, Palestine has already been recognized by more than 150 UN member states.

This process is accompanied by calls from European politicians to impose sanctions against Israel and restrict trade with it. For example, the European Commission called on member states to suspend trade preferences for Israeli goods, as well as certain sections of the Association Agreement with Israel, in particular those related to trade. Such measures may lead to the fact that Israeli exports (primarily agricultural products) will be subject to import duties, as is the case with goods from other countries.

At the same time, the dependence of the parties on each other is not comparable. For the EU, Israel is only the 31st largest partner, accounting for about 0.8% of Brussels' trade with foreign countries. But the EU's share in Israel's foreign trade is 32%. Therefore, possible restrictive measures by Brussels could seriously affect the Jewish state.

If the free trade agreement is suspended, it will affect Israeli exports to the EU worth about €5.8 billion per year, which will lead to an increase in duties by about €227 million per year, a senior representative of the European Commission told reporters the other day. But at the same time, the Reuters news agency notes that currently this measure does not enjoy sufficient support among EU countries to be adopted.

It is worth bearing in mind that the EU supplies strategically important products (fuel and machinery) to Israel. Brussels is also the main investment partner of the Jewish state. In 2023, the 27 EU member states invested €72.1 billion in Israel, which is almost twice as much as the investments of the United States, one of the important foreign policy partners of the Jewish state.

Israel's financial dependence on the EU is also due to the fact that a quarter of the country's reserves are located in Europe. A number of European experts believe that in order to increase pressure on the Jewish state, Brussels could freeze assets, as it did in the case of the Russian Federation.

— The more significant countries of the European Union recognize Palestine, the weaker the arguments that Palestine does not have the right to a certain status. This may reinforce legal and moral criticism of Israel. Economic cooperation will weaken: there will be restrictions on cooperation, a reduction in the level of contacts, and the termination of joint programs, especially in the field of security and intelligence. Investments in Israel may also decrease," Farhad Ibragimov, a political scientist and expert on the Middle East, told Izvestia.

For its part, Israel is likely to take several symbolic steps, says orientalist Leonid Tsukanov. Among them may be lowering the level of diplomatic relations with countries that have recognized the independence of Palestine. A demonstrative expansion into the Jordan Valley, where the least representatives of the Palestinian community live, is also possible.

— At the same time, Israel is unlikely to make a complete break with the Europeans, since the EU is an important trade and political partner of Israel. Most likely, Israel will not accelerate the operation in Gaza, since the initiative in the exclave still belongs to it. It is much more likely that the scale of operations in the West Bank will expand, which together should become an argument against the unwillingness of Palestine to ensure security in the territories entrusted to it," Tsukanov said.

The development of the conflict in the Gaza Strip

Israel will continue its operation in the Gaza Strip until the complete elimination of Hamas and the release of all hostages, the permanent representative of the Jewish state to the UN, Danny Danon, said on September 22. On September 16, the IDF launched a massive offensive against the city of Gaza in order to take control of it, the operation was called "Gideon's Chariot — 2." According to Bloomberg, by the end of the year, the Jewish state will spend $7.5 billion on an operation in Gaza City.

In total, more than 65,000 people have been killed since the start of the war in the exclave in October 2023, according to the Gaza Ministry of Health. In the last 24 hours alone, 61 people were killed and 220 injured, the ministry said. The total number of wounded is over 166 thousand.

Meanwhile, Hamas representatives are asking US President Donald Trump to personally guarantee a 60-day pause in the fighting. In return, the Palestinian movement promises to release half of the held Israeli hostages. The message should get into the hands of the head of the White House by the end of the week through Qatari intermediaries.

Donald Trump himself intends to discuss a post-war plan for Gaza with the Arab states in the near future. Senior officials from Saudi Arabia, the United Arab Emirates, Qatar, Egypt, Jordan, Turkey, Indonesia and Pakistan are expected to participate in this meeting.

It is expected that during the meeting, the American president will not only discuss the principles of the IDF's withdrawal from Gaza and the management of the strip without the participation of Hamas, but also ask Arab and Muslim countries to deploy their military contingent in the exclave and provide funding for the reconstruction of the Palestinian territory during the transition period.

French President Emmanuel Macron is also developing a plan for the peaceful construction of the Gaza Strip. In particular, he insists on the creation of an international mission under the auspices of the United Nations, which will deal with stabilization in the exclave. According to Macron's idea, she will have to deal with the disarmament of Hamas after the IDF withdraws from the sector.

The main objective of the mission, which France insists on, is the fight against terrorism, stabilization of the situation in the region, support for the people of the Gaza Strip and the creation of a governance system that "ensures peace and stability." Egypt and Jordan can lead it. Saudi Arabia, the United Arab Emirates and Qatar are also named as potential candidates. The mission should be funded by voluntary donors through a special fund.

The Palestinian authorities claim that after the end of the conflict, Hamas will be removed from power, and parliamentary and presidential elections will be held in the state within a year after the cease-fire in Gaza. This was stated on September 22 by Palestinian President Mahmoud Abbas, speaking via video link at the UN headquarters in New York at the high-level international conference on the peaceful settlement of the Middle East issue.

Russia also insists on the need to establish a Palestinian State. The absence of this step will fuel extremism based on a sense of injustice committed against the Palestinians, Russian Foreign Minister Sergei Lavrov said earlier.