EU weighs trade ban on Israeli settlements as Italy shifts stance

The European Commission circulated an options paper on Wednesday outlining a full or partial trade ban on Israeli settlements in the occupied Palestinian territories, export licensing requirements, or prohibitive tariffs. Foreign affairs ministers will discuss the paper at their meeting on Monday. The document fulfils a request made by twenty member states last month and reinforced at the recent European Council summit.

The debate over these measures exposes deep political divisions within the bloc. France and Sweden support restricting trade, while Germany and the Czech Republic remain cautious. Italy is emerging as the potential deciding vote.

"Italy has said several times they are open to exploring potential options," a diplomatic source noted. Giorgia Meloni's traditionally pro-Israeli government has begun shifting its stance following domestic pressure and a diplomatic spat with National Security Minister Itamar Ben Gvir. Italy's Permanent Representation to the EU declined to comment, stating Rome is still analysing the document.

A legal route to bypass vetoes

The most significant aspect of the paper is not the trade restrictions themselves, but the legal mechanism used to implement them. The Commission has historically viewed such measures as foreign policy, requiring unanimous approval from all member states. However, the options paper leaves open the possibility of using a commercial policy basis, which only requires a qualified majority.

The Council's legal service has orally advised that a commercial policy basis is viable depending on the proposal's details. The EU's diplomatic service has also urged a flexible interpretation of the treaties to serve foreign policy objectives. Deputy Chief Spokesperson Olof Gill declined to confirm whether the paper signals a change in the Commission's position.

Despite this progress, a formal proposal remains distant, with the next formal Foreign Affairs Council not scheduled until October. That timeline aligns with Israeli elections, which several EU governments view as the catalyst for recent actions in the West Bank and East Jerusalem. Israel rejects the illegal designation of the settlements, classifying them as "temporary sites".

"At least the options are on the table now, but this will be yet another delay," MEP Lucia Annunziata said. "Every decision must be assessed not only on its political message, but on whether it actually improves the situation on the ground, avoids unintended consequences for civilians, and preserves the EU’s ability to play a constructive role in the region," MEP Hildegard Bentele said.

"There is no consensus on this," an EU diplomat said. "But we are already happy that it is there."