Israel-critical capitals force von der Leyen showdown over illegal settlements

BRUSSELS — A group of EU countries wants to force the European Commission to crack down on trade with illegal Israeli settlements, ramping up a standoff with Brussels over its Middle East policy.

The group, which includes Belgium, the Netherlands and Spain, is looking to assemble a majority to force the Commission to propose limiting trade with the settlements, according to four diplomats aware of the efforts, granted anonymity to discuss the sensitive plans. The diplomats confirmed the effort but declined to identify every country supporting it.

The fight is increasingly pitting EU institutions against one another as well as dividing national capitals. On one side are countries pressing for tougher action, backed by EU foreign policy chief Kaja Kallas. On the other are Ursula von der Leyen’s Commission and countries including Germany and the Czech Republic.

Foreign ministers meeting in Brussels on Monday will stop short of deciding whether to impose tariffs or restrict imports. The immediate question is whether the countries behind the push can secure the majority needed to demand a formal Commission proposal that governments could vote on later.

Any resulting trade measure would have limited economic impact. Trade with illegal West Bank settlements makes up about 0.5 percent of the EU’s overall trade with Israel, according to the Commission’s estimate in a confidential discussion paper seen by POLITICO.

But, as has become common since Hamas’ Oct. 7, 2023 attacks against Israel and the ensuing war in Gaza, the issue ballooned to dominate the foreign ministers’ agenda ahead of Monday’s gathering, overshadowing other subjects, such as a push to finalize a 21st package of sanctions against Russia, or the bloc’s relations with Gulf countries. 

“The settlements are illegal,” said Nacho Sánchez Amor, a Spanish lawmaker on the European Parliament’s foreign affairs committee. “The best solution is simply to prohibit any import of goods produced in the settlements.”

The German-led Commission has resisted proposing new trade measures against the settlements, arguing that similar proposals have previously been tabled and rejected. The EU executive is flanked by Prague as well as Berlin, which intends to veto or abstain on any vote concerning tariffs on Israel, according to a senior EU diplomat familiar with Berlin’s thinking.

Kallas, who is due to preside over Monday’s meeting, has publicly urged the Commission to come up with new trade measures. The top diplomat is currently locked in a dispute with Israeli Foreign Minister Gideon Sa’ar over reports she used the word “apartheid” to describe the Israeli state.

Sa’ar said in a post on X on June 18 that he would cut off all contact with Kallas pending an apology or clarification of the reported comments. And while efforts are under way behind the scenes to patch up the relationship, the pair — who were in frequent contact during the Gaza war — have not spoken for at least three weeks. 

Fighting over fine print

Speaking to reporters ahead of Monday’s gathering, three of the diplomats suggested that the Commission was deliberately avoiding putting forward any measures that can quickly be put to a vote by EU ministers.

The Commission, facing a direct request from EU leaders, did announce a series of options for limiting trade with the illegal settlements in the days leading up to the foreign affairs meeting.

But the paper they circulated, which floats a licensing system as well as “prohibitive tariffs” as potential ways of targeting trade with the settlements, does not amount to a formal proposal that EU countries can vote on. In order to get that, a majority of countries must ask for one — hence the push to form a majority ahead of Monday’s meeting.

“I don’t think we are in a situation where we have the joyful cooperation of the Commission,” said a senior EU diplomat.

Then there’s the thorny issue of whether the measures are trade policy or a tool of the bloc’s common foreign and security policy (CFSP) — a crucial distinction because the former requires only a qualified majority of countries to approve it while the latter, including sanctions, requires unanimous backing.

The Commission, and Berlin, have both argued that the measures are CFSP and need unanimous backing. The countries calling for tougher measures dispute this, pointing to an opinion from the European Council’s legal service, first reported by POLITICO, which states that the measures would only need a qualified majority.

“The Council’s legal service has been very clear,” said the senior EU diplomat. “This is about trade — it’s about protecting our trade policies.”

Critics of von der Leyen say the German politician is deliberately avoiding action ahead of Israeli elections coming up in October — an approach that EU officials privately acknowledge, arguing that any new sanctions or measures against Israel could be weaponized by extremist political figures such as National Security Minister Itamar Ben Gvir.

“President von der Leyen knows the next formal FAC [Foreign Affairs Council] is not until October, by which time there will be an Israeli election,” said Barry Andrews, an Irish lawmaker from the centrist Renew group in the European Parliament. “With innocent people being killed daily, this foot-dragging has gone on far, far too long.”

Nette Nöstlinger contributed reporting from Berlin.