European Commission President Ursula von der Leyen on suspending the EU trade deal with Israel set out a major policy shift in Strasbourg on 10 September 2025, proposing to pause bilateral EU support to Israel, sanction extremist ministers and violent settlers, and suspend the trade chapter of the EU–Israel Association Agreement amid the Gaza humanitarian crisis.
What suspending the EU–Israel trade deal would mean
The EU–Israel Association Agreement underpins preferential trade between the two sides. Suspending the trade chapter would withdraw tariff preferences for Israeli goods entering the EU, signalling a tougher EU stance in response to alleged violations of international humanitarian law.
Von der Leyen also floated a “Palestine Donor Group” to channel funds for Gaza’s reconstruction, while safeguarding cooperation with Israeli civil society and Holocaust remembrance initiatives such as Yad Vashem.
How the EU could approve the suspension
Trade-related measures linked to an association agreement can be decided by qualified majority in the Council if proposed under EU trade rules. By contrast, targeted sanctions against individuals (for example, cabinet members or violent settlers) fall under the Common Foreign and Security Policy and typically require unanimity.
This split makes the package politically complex: a partial trade suspension could, in principle, advance with a qualified majority, while sanctions may be constrained by divisions among member states.
Immediate steps: funding pause and targeted designations
Von der Leyen announced the pause of bilateral EU support to Israel, with exceptions for civil society programmes and Holocaust remembrance. She also called for listings of “extremist ministers” and violent settler actors, citing the need to deter incitement, settlement expansion and attacks on civilians. Any such listings would need Council approval and a robust legal basis.
Reactions from Israel and inside the EU
Israel’s government condemned the proposals. Foreign Minister Gideon Sa’ar called the statements “regrettable” and argued that they repeat “false propaganda” and risk strengthening Hamas.
In the European Parliament, the announcements drew mixed reactions—from support among Greens and Left groups to criticism from conservative and liberal MEPs who warned about strategic repercussions and the symbolism of freezing trade ties with “the Middle East’s only democracy.”
Trade ties in numbers: why the EU matters to Israel
The EU is Israel’s largest trading partner. In 2024, total goods trade reached €42.6 billion; 34.2% of Israel’s imports came from the EU, and 28.8% of Israel’s exports went to the EU. Two‑way services trade amounted to €25.6 billion in 2023.
A suspension of trade preferences would therefore touch a significant share of Israel’s international commerce and could affect sectors such as machinery, transport equipment and chemicals.
Denmark support the suspention
Ahead of the speech, Denmark’s Foreign Minister (Udenrigsministeren) Lars Løkke Rasmussen signalled support for EU measures including sanctioning Israeli ministers and suspending the trade chapter to uphold international law.
Copenhagen’s line places a Nordic capital among those urging the EU to translate words into action, while other member states remain reluctant.
What to watch next
The Commission will now table formal proposals. Council dynamics will determine the outcome: a qualified majority could carry a trade‑chapter suspension, while unanimity is needed for sanctions listings. Key capitals—including Germany and Italy—will be decisive.
Von der Leyen also aims to launch the Palestine Donor Group in the coming weeks. The EU’s choices will shape its credibility on human rights conditionality and its broader policy in the Middle East.
