Britain banned settlement imports. Will Europe finally follow suit?

Britain’s decision this week to ban all imports from illegal Israeli settlements carries huge moral resonance, but the real test comes next: Will the European Union (EU) – the single largest market in the world and Israel’s biggest trading partner – follow suit?

The EU conducts trade worth tens of billions with Israel every year, but it has long hidden behind the need for consensus or the lack of a majority required to use its massive economic leverage to influence Israel’s policies.

The key question is whether the UK’s decision will act as a catalyst and sway a sufficient number of European governments to act.

The timing is critical. Last month, the Israeli government called for tenders to build more than 1,200 housing units in E1 – a 4.6 square mile area in the occupied West Bank that lies between Jerusalem and the large Israeli settlement of Ma’ale Adumim. Any such expansion would make a “contiguous Palestinian state virtually impossible,” as CNN reported last month.

The EU has two options. It could find the unity needed to exert influence now, before Israel starts the construction and changes facts on the ground that later become difficult to reverse. Or it could squander the possibility of a two-state solution.

In a speech at the House of Commons, British Foreign Secretary Ed Miliband delivered a scathing admonishment of the Israeli government, accusing it of turning a blind eye to the “ethnic cleansing of Palestinians” perpetrated by “settler terrorists” in the West Bank.

Miliband cited United Nations reporting of an “average of six violent settler attacks against Palestinians per day this year, the highest on record.”

Settlement trade mostly consists of agricultural products and, as Reuters reported, represents only a fraction of the total bilateral trade between the UK and Israel. The UK’s sanctions on companies and individuals that facilitate settlement expansion – including financial institutions – could prove to be more impactful. Israel’s banks and insurance companies that back construction projects in illegal settlements may think twice before risking their business interests in the UK.

Yet, despite a scathing denouncement and a seemingly sweeping sanctions package, there is only so much the UK can do alone.

The EU – a 27-member bloc of some of the most prosperous nations in the world – has much greater leverage.

Last year, the EU and Israel traded more than €43 billion in goods. The popular debate has been about reducing arms sales to Israel, but Europe’s real power is economic; using trade as leverage would offer a genuine chance of making the Israeli establishment rethink its settlement expansion and policies in occupied territories at large.

Miliband said the UK coordinated with 11 other countries, including France and Canada, and shortly after, Paris announced that it will impose a ban on all imports from illegal settlements. Canada’s foreign minister, Anita Anand, promised the introduction of “restrictions” in the coming months. Nine other states – Denmark, Finland, Iceland, Ireland, Norway, Poland, Portugal, Spain, and Sweden – expressed their intention to introduce national restrictions, support European restrictions, or at least “actively consider” a ban on trade in goods with settlements and other measures.

The extent to which these countries will go against Israel remains unclear, but they need more countries to come on board for it to be a pan-European ban.

There is no doubt that European countries have disapproved of Israeli methods and mass killings in Gaza and, lately, the exacerbation of settler violence in the West Bank. But the bloc as a whole has failed to turn its concern into a coherent policy that has an effect on the ground.

Over the last three years, the EU and its member states have discussed several proposals about how they can persuade Israel to rein in its military campaign, send more aid to Gaza, and control the violent settlers unleashing havoc in the West Bank.

Last year, the EU conducted a review of the EU-Israel Association Agreement, which provides the legal framework for economic and political relations. It later found Israel in breach of Article 2 of the treaty, which identifies respect for human rights and democratic principles as “essential elements.”

The EU leaders then discussed a slew of options, including fully suspending the agreement, but this required unanimity to push through and was never seriously considered. Under Viktor Orbán, Hungary was one of the principal opponents of suspending the EU–Israel Association Agreement, effectively blocking the unanimity required. (Hungary’s new leader, Peter Magyar, has not joined the new national initiative but has been more willing to support EU action against Israel. This May, Hungary backed EU sanctions against some extremist settlers and entities.)

The other option was a partial suspension of trade-related provisions, which required a qualified majority vote (QMV) – at least 15 affirmative votes representing 65% of the bloc’s population. While Hungary was a convenient scapegoat, Germany’s support for Israel, alongside Italy’s, held back the bloc from moving forward.

Suspending Israel’s participation in the Erasmus+ student exchange programme or the Horizon academic research programme was also tabled. At the time, a senior EU official told me these were the “low-hanging fruit” and doable, but nothing moved forward.

Some options were outside the scope of the association agreement – including halting visa-free travel for Israelis to the EU and banning imports from illegal Israeli settlements.

According to an EU spokesperson, as of last week, the bloc had sanctioned a dozen individuals and nine entities related to illegal settlements, but there was no “clear outcome” to the discussions about other options on the table. He presumably meant a ban on imports from the settlements.

This week, in a candid conversation, a senior EU official told me that the European Commission had later tabled a new proposal, specifically laying out options to deter Israel from expanding illegal settlements, including the ban on imports, but not even 15 member states are on board.

In short, the EU has long discussed a hierarchy of possible measures, from the least to the most consequential, but has dithered on moving forward. It has a chance now, if it wants to stop Israel from expanding E1. If consensus and QMV cripple the EU from moving ahead as a bloc, the least European nations can do is take national measures.

Will they?

Trade in goods between the EU and Israel favored Europeans last year. Moreover, Europeans are likely to factor in a growing dependence on Israel’s defense industry as relations with the U.S. decline and the U.S. itself runs short on critical munitions. Germany, Greece, Cyprus, Finland, and many others import Israeli defense equipment.

For now, therefore, the chances of a pan-EU ban on imports from West Bank settlements remain low, and the odds of a suspension of trade with Israel are lower yet.