For a long time, it has been clear that Israel has a major point of vulnerability stemming from its economic dependence on two huge markets. The “United States is Israel’s largest single trading partner.” The European Union (EU) is the origin of 34.5% of Israeli imports and the destination for 26.1% of Israel’s exports. Moreover, foreign direct investment involving the EU and Israel is in the billions of euros. (US too)
Israel has trade agreements with both the United States and EU.
What would happen if either the EU or US got so fed up with Israeli policy on settlements that it used economic pressure against Israel, whether that meant a boycott, divestment, sanctions, suspending a trade agreement, or something else? The Israeli economy would be in big trouble.
There is already a boycott, divestment, and sanctions movement (BDS). But in Europe and the United States, this movement has largely been a movement of individuals and non-governmental organizations pushing a form of ethical consumption (h/t Shareen Hertel). National governments have not embraced the BDS movement.
Yet now, after the UN vote in favor of elevating the state of Palestine at the United Nations, Israel has initiated several retaliatory measures and many Western European governments are upset about the Israeli moves. The Netanyahu government supported construction of 3000 more units in the settlements, most importantly including construction in the E1 area east of Jerusalem. Israel will also hold back over $100 million in Palestinian tax revenue.
The fact that Western Europe is not happy with Israeli settlements is old news. But given Western Europe’s unprecedented support for the Palestinian side in the recent UN vote – whether through voting yes in support or by abstaining – the fact that Britain and France may recall their ambassadors from Israel and that Israeli ambassadors in France, Britain, Sweden, Spain, and, yes, Denmark (h/t @TalShalev1 and @besasley), have been called in for consultations is especially noteworthy.
One starts to get the feeling there is a rising tide of displeasure among EU governments. So where does it go from here? Three questions:
1. Will the Netanyahu government recognize the danger and back off a bit or take some conciliatory gesture? Given how rooted the settlements are in the Israeli right and given historic suspicion of the Europeans (home of the Holocaust and centuries of anti-Semitism), a major Israeli shift in direction seems unlikely at this point.
2. Will the EU or its member states continue to ramp up the pressure if Israel moves forward however it pleases? I imagine so, but we are still a long way from actual EU or individual European state economic pressure. This may be a little bit of tough love, but not that tough.
3. Would such pressure work? If Europe even took such steps, would they matter? In Israel, the tension would be between the damage to Israel’s globalized economy and the many who would suffer economically (really everyone in Israel because the globalized sector is a key reason for the high per capita income and funding the social welfare system on which so many rely) and the worldview that sees everyone against Israel no matter what Israel does.
The latter view denies much or any Israeli responsibility for external reactions. It is not what we do, it is that they hate us. Always have, always will. Therefore, if we change what we do, they will still not accept us. It will not stop with settlements; it is about the existence of the state. As the recent Likud primaries demonstrated, politicians holding such views are popular on the Israeli right.
I doubt we will get to that point, because the idea of putting economic pressure on Israel has been around for years and never been realized. But if we do see such European pressure, watch out because today’s Israeli leadership might try to dig in its heels, economic downturn be damned.