EU Commission chief to propose new measures targeting Israel

By Lili Bayer and Andrew Gray

BRUSSELS (Reuters) - The European Commission will propose sanctioning extremist Israeli ministers and the suspension of trade-related measures in a European Union agreement with Israel, European Commission President Ursula von der Leyen said on Wednesday.

The proposals, announced by von der Leyen in a speech to the European Parliament in Strasbourg, reflect growing EU criticism of Israel's conduct of the war in Gaza and increased pressure on the bloc's executive body to take action.

The proposals would need broad or unanimous support among the EU's member states, which is likely to be hard to achieve as the bloc is deeply divided on the Middle East. But von der Leyen made clear the proposal was also meant to be a political signal.

"What is happening in Gaza has shaken the conscience of the world," von der Leyen said in her State of the Union speech, an annual address setting out her priorities for the year ahead.

Von der Leyen acknowledged the divisions within Europe on Gaza but pledged the Commission would do what it can on its own.

"We will propose sanctions on the extremist ministers and on violent settlers. And we will also propose a partial suspension of the Association Agreement on trade-related matters," she said.

She did not name the ministers or outline which "trade-related measures" the Commission would propose to suspend.

Israeli Foreign Minister Gideon Saar said on Wednesday that von der Leyen's comments were "regrettable", adding that the president is aware of Israel's efforts to assist humanitarian aid and that suffering in Gaza is due to Hamas.

"The President of the Commission errs in yielding to the pressures of elements that seek to undermine Israel–Europe relations," the minister wrote in a post on social media platform X.

The European Union is Israel's biggest trading partner, with trade in goods between the two amounting to 42.6 billion euros ($49.9 billion) last year, according to the EU.

According to a July options paper prepared by the EU's diplomatic service, a suspension of the entire trade chapter of the Association Agreement governing relations with Israel would withdraw trade preferences for Israeli products entering the EU.

It would require a qualified majority vote among EU governments - the support of 15 out of 27 EU members representing 65% of the EU population.

DIVISIONS ON ISRAEL POLICY

EU members including Ireland, Spain, Denmark, Sweden and the Netherlands have called for the suspension of an EU free trade pact with Israel. But others such as Germany, Hungary and the Czech Republic have opposed such steps.

EU sanctions on individuals require unanimous backing from member states. Hungary has blocked an existing proposal to sanction violent settlers.

"I am aware it will be difficult to find majorities. And I know that any action will be too much for one, and too little for others. But we must all take our own responsibility," von der Leyen said.

Spain welcomed the Commission president's announcement.

"We Europeans cannot have normal relations with Israel when there is a flagrant, systematic, daily violation of human rights in Gaza," Spanish Foreign Minister Jose Manuel Albares said.

Von der Leyen also said that the Commission will put its bilateral support for Israel on hold, without affecting work with Israeli civil society and Yad Vashem, Israel's main Holocaust memorial centre. She did not provide details on how much funding would be impacted.

The Commission had previously proposed curbing Israeli access to its flagship research funding programme but failed to garner sufficient support from EU member countries for the move.

Diplomats say Berlin's view on the proposal is key, and Germany has said it is so far unconvinced.

The Commission chief said the body will set up a Palestine Donor Group next month, including an instrument for Gaza reconstruction.

(Reporting by Lili Bayer and Andrew Gray in Brussels and Emma Pinedo Gonzalez in Madrid; Editing by Benoit Van Overstraeten and Ros Russell)