Israeli Prime Minister Benjamin Netanyahu’s first trip to Europe since regaining power will be dominated by talks on Iran’s post-election chaos and the Middle East peace process, above all where he stands on the creation of a Palestinian state, and the expansion of Israeli colonies.
But there is much else besides, notably trade relations between Israel and the EU.
With trade worth over 25 billion euros a year, Israel is one of the EU’s biggest commercial partners in the European-Mediterranean zone, as represented in the EuroMed group set up after the Barcelona treaty in the 1990s.
The European Union exports slightly more to Israel than it imports, and enjoys a useful trade surplus of around three billion euros a year. Under the terms of its European neighbourhood policy between 2007 and 2010 it has provided Israel with 14 million euros of aid to bring its company and commercial laws into line with the EU’s.
For the Palestinians however free trade is less of a concern than survival. Commercial ties between Ramallah and Brussels are all but non-existant. Even if trade were flourishing, internal divisions and the Israeli blockade of Hamas-controlled Gaza would limit any action Brussels could take. Business crawls at a snail’s pace for any Palestinian entrepreneur.
The situation means the Palestinian Authority cannot reinforce the economy and deliver benefits to its supporters. The Palestinians get by mainly thanks to EU aid, their biggest donor, through the UN or the Pegasus reform and development programme.
Since 2000 the European Commssion has sent over 3.4 billion euros in aid to the Palestinians. In 2007, when Hamas took over Gaza, the annual aid was at its height, over 560 million. This year it will be around 440 million.
Apart from food and clothing the aid is designed to help build the institutions of a future state, which the EU considers vital if there is to be peaceful cohabitation with Israel. But any fresh demands of the new Israeli government could scupper all this.