If the EU wants, she can meet Israel’s export and research

Does the European Union have to suspend its cooperation agreement with Israel? That question is rapidly gaining political weight in Europe, now that the indignation about Israeli action in Gaza is increasing.

At the same time, the question arises: what would the consequences for Israel be if the EU would (temporarily) stop the so -called association agreement with the country?

This Tuesday the association agreement is on the agenda of EU Ministers of Foreign Affairs, who meet in Brussels. An important reason for this is one letter From the Dutch Minister Caspar Veldkamp (NSC) to EU-BuitenlandChef Kaja Kallas, sent on 6 May. Veldkamp asks Kallas to ‘re -assess’ whether the Israeli government still complies with Article 2 of the Convention. States it That relations between the EU and Israel must be based « on respect for human rights and democratic principles. »

Veldkamp gave a motion from GroenLinks-PvdA and CDA, which was hired in the Lower House in March. Last week, a further motion from D66 received to suspend the treaty immediately, No majority.

The discussion in Brussels about Article 2 is a small, first step that can lead to suspension of (parts of) the treaty, although this is very uncertain. Would such a step really harm Israel? Experts think so.

The association agreement with Israel, which has been in force for 25 years this year, has several parts. There is a political component: political consultation takes place in a so -called associate council. In addition, there is an important economic leg: a free trade agreement. Import duties for over and over again for industrial products have been completely abolished by the EU and Israel, which have been reduced for agricultural products. Israel also participates in Horizon Europe, an important research program.

Partial suspension

Suspension of the entire agreement by the EU is unlikely: this requires unanimity between the 27 EU member states. That is a high political hurdle to take. But for the display of individual parts of the agreement, a majority of member states are sufficient, Hugh Lovatt explains, researcher for think tank European Council on Foreign Relations.

For the time being, all EU countries want to hold on to the political dialogue – also countries that have been expressing substantial criticism of Israel, such as Ireland, says Lovatt on the phone.

The suspension of the free trade agreement (or parts thereof), and/or the stopping of Israeli participation in Horizon Europe.

Cancellation of free trade would certainly touch Israel, although the effect cannot be predicted exactly. The EU is the most important market for Israel. Around a quarter of Israeli goods export goes to the EU, as well as more than 20 percent of Israeli services export (the agreement regulates less about services). Israel mainly supplies EU countries machines and machine parts, technical equipment (including defense equipment), chemicals and agricultural products. The service export from technologically highly developed Israel is mainly in the IT atmosphere.

Canceling the association agreement with Israel requires unanimity of the EU member states, a majority is sufficient for suspension of parts of it

Israeli exporters who use the agreement should pay higher import duties if free trade is lost. On average, the EU has an import rate of 5 percent for countries without free trade agreement, although this differs per product group. « Israeli companies run the risk of deteriorating their competitive position on the EU market, » says Lovatt.

The loss of trade benefits in Europe can « cause substantial damage to Israeli export, » says Nizam Feldman, political economist at the University of Haifa, by telephone. Just if the EU would send the signal to Israel that the free trade can die, it can harm the Israeli economy, he thinks. « Uncertainty about import duties can already have quite a lot of economic impact, as we now see with Trump’s import duties. »

Also consequences for EU

Feldman describes the economic relationship between the EU and Israel as « asymmetrical »: the EU market is more important for Israel than the other way around. For the EU, Israel is only the 25th trading partner. That does not mean that Europe has no interest in trade with Israel. This applies to export, but also to import. Israel is part of delivery chains from which the EU benefits, says Feldman.

For example, the American Intel produces chips in Israel. In addition, EU countries get defense technology from the country. Several European countries have placed orders for, or expressed interest in Israeli anti -aircraft systems. If the free trade agreement is suspended, individual EU member states with large commercial interests in Israel can « negotiate exceptions, » says Feldman.

Michal Wojnarowicz, researcher at the Polish think tank Pism and Israel specialist, expects that it will be politically difficult to obtain majorities in Brussels for suspension of parts of the agreement. But, he e -mails, only the discussion about reconsideration is already « meaningful. » « At the beginning of this year this was not seen as an option. »

That there is discussion about reconsideration of the agreement is in itself meaningful. At the beginning of this year this was not yet seen as an option

In fact, the association agreement was in need of modernization, he writes. In the current agreement, for example, little is in the field of technology and services trade, « the most important engines of the Israeli economy ». Now the debate in the EU is precisely the ‘reverse’ side: towards suspension. « This alone is a negative signal for the Israeli economy, also towards the financial markets. »

Investigative money

If the EU were to throw Israel from Horizon Europe, this would not pass unnoticed in the country. Between 2021 and 2024, Israeli researchers and companies received 1.1 billion euros in subsidies From this program, which aims to stimulate research and innovation. For example, it concerns prestigious academic fairs of the European Research Council (ERC) and financing for start-ups. Israel himself pays for this EU fund (budget: 95.5 billion euros in the period 2021-2027). But historically, Lovatt says, the country has always been a « net receiver » of horizon money. Exclusion from Horizon would « become substantial, » says Academicus Feldman.

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