The European Union Announces Suspension of Some Clauses of the Partnership Agreement with "Israel" and Imposes Sanctions Against Hamas and Extreme Settlers

SadaNews Translation - Following the announcement by European Commission President Ursula von der Leyen in the State of the Union address, the European Commission today presented its proposal to the Council of the European Union to suspend certain trade-related clauses in the Partnership Agreement between the EU and Israel ("the Agreement"), along with its proposals to impose sanctions on Hamas, extremist ministers, and violent settlers.

The statement also mentioned that the Commission decided to suspend bilateral support for Israel, except for support directed towards civil society and "Yad Vashem". Practically, this decision affects the annual allocations planned between 2025 and 2027, in addition to the current institutional cooperation projects with Israel, and projects funded through the regional cooperation mechanism between the EU and Israel, according to SadaNews translation.

These proposals came as a result of reviewing Israel's commitment to Article 2 of the Agreement, which concluded that the actions taken by the Israeli government constitute a violation of the fundamental elements related to respecting human rights and democratic principles, giving the EU the right to unilaterally suspend the Agreement.

It was noted that the suspension specifically includes: the deterioration of the humanitarian situation in Gaza following the Israeli military intervention, the imposition of a blockade on humanitarian assistance, the escalation of military operations, and the Israeli authorities' decision to proceed with the settlement plan in the "E1" area of the West Bank, threatening to undermine the two-state solution, as translated by SadaNews.

European Commission President Ursula von der Leyen said: "The horrific events occurring in Gaza daily must stop. There must be an immediate ceasefire, unrestricted access for all humanitarian assistance, and the release of all hostages held by Hamas. The EU will remain the largest donor of humanitarian aid and a steadfast advocate for a two-state solution. In light of these initial commitments, and considering the recent serious developments in the West Bank, we propose to suspend trade concessions with Israel, impose sanctions on extremist ministers and violent settlers, and suspend bilateral support for Israel, without affecting our cooperation with Israeli civil society or "Yad Vashem"."

Suspension of Trade Clauses:

The suspension targets the core trade clauses of the Agreement, meaning that imports from Israel will lose their preferential access to the European market. Consequently, these goods will be subject to tariffs as applied to any other third country that does not have a free trade agreement with the EU, based on SadaNews translation.

Next Steps:

Suspension of Trade Clauses:

The European Commission proposed a decision to the Council to suspend certain trade-related clauses that fall under the EU's common trade policy.

The Council needs to adopt the decision by qualified majority.

The decision will take effect on the date of its adoption.

Upon the adoption of the decision, the EU-Israel Partnership Council will be notified of the suspension, with implementation beginning 30 days after notification.

Sanctions Against Hamas, Extreme Ministers in the Israeli Government, and Violent Settlers:

The package includes four draft bills comprising 9 proposals to include ministers and settlers (under the EU's human rights sanctions regime), alongside an enhanced package of listings against 10 members of Hamas's political bureau, based on a new listing criterion under the Hamas sanctions regime.

The Council needs to approve the decision by unanimity.

Background:

Following Israel's recent decision to impose a blockade on the passage of humanitarian assistance to Gaza, the humanitarian situation has deteriorated in an unprecedented and unbearable manner, owing to ongoing bombardments, military operations, mass displacement, and the collapse of essential services.

The EU's High Representative provided an overview to the Foreign Affairs Council on June 23, 2025, concluding that there are indicators that Israel may be in violation of Article 2 of the EU-Mediterranean Agreement, which guarantees respect for human rights and democratic principles as a core element of the Agreement.

The EU and Israel in Trade:

The EU is Israel's largest trading partner, accounting for 32% of Israel's total trade with the world in 2024. Total trade between the EU and Israel in 2024 was approximately 42.6 billion euros, of which 15.9 billion euros were imports from Israel and 26.7 billion euros were exports to it, as reported by SadaNews.

EU Bilateral Support for Israel:

The EU's financial support for Israel covers the European Neighbourhood, Development and International Cooperation Instrument (NDICI) for the period between 2021 and 2027. Israel was expected to receive nearly 6 million euros annually between 2025 and 2027. Institutional joint projects have also been suspended, including twinning programs and projects funded through the regional cooperation mechanism between the EU and Israel, which benefit Israel within the framework of the "Abraham Accords" by approximately 14 million euros.

Sanctions Against Violent Settlers:

Under the EU's global human rights sanctions regime, nine individuals and five entities linked to violent extremism in the West Bank and Jerusalem have so far been listed, in addition to imposing a blockade on humanitarian assistance to Gaza, as followed by SadaNews.

On December 7, 2020, the EU established a global human rights sanctions regime that applies to actions such as genocide, crimes against humanity, and serious human rights violations (such as torture, extrajudicial killings, and arbitrary detention).

Recent Developments:

On June 27, 2024, the European Council reiterated its strong condemnation of the operation carried out by Hamas against Israel on October 7, 2023, and also condemned the ongoing violence by extremist settlers in the West Bank, including East Jerusalem.