How vulnerable is Israel to sanctions?
So far, measures have had little effect. That could change
The outcry was immediate. On August 11th Itamar Ben-Gvir, Israel’s minister of national security, said that his country could permanently occupy the Gaza Strip. “Sanctions,” Josep Borrell, the EU’s foreign-policy chief, hit back, “must be on the agenda”. It was unclear whether Mr Borrell meant they would be placed on Mr Ben-Gvir or Israel itself; either way, European support for measures targeting Israel is growing. A few months ago Micheál Martin, Ireland’s foreign minister, and a supporter of sanctions, said that his colleagues were beginning to consider the question of “what if” they went for them.
Well, what if? Europe would not be the first to introduce such policies. Indeed, it already targets violent settlers in the West Bank, along with America and Britain. Criticism of Israel by the International Court of Justice has incensed people around the world, while governments worry that rulings condemning the country’s invasion of Rafah, in Gaza, could lead to them being sued in domestic courts if they sell weapons to the aggressor. Others simply want to undermine Israel by any means. In May Turkey announced a total trade embargo. South Africa may follow. The EU would choose less sweeping measures, perhaps targeting goods that could supply the country’s armed forces. Yet this could hurt Israel nonetheless.
Policies introduced by countries in the global south are more likely to damage themselves than Israel. South American countries, including Colombia and Chile, have banned the export or import of anything with a military purpose. Even if they and others were to upgrade to a broader Turkey-style embargo, Israel would hardly feel the pinch because its trade with the global south is spread thin. Its commodity imports from such countries can also be easily replaced. It gets about as much oil and gas from Russia as it does from Brazil, and Vladimir Putin would be unlikely to turn away any additional demand. Israel does not buy fighter jets from Colombia; Colombia sources all of its jets from Israel’s defence-tech industry.
European sanctions would be another matter. Nearly a third of Israeli imports come from the eu. Even measures targeted at the country’s military imports—as are being sought by Belgium, Ireland and Spain, and as have been put place at a national level by some countries already—would be painful. Germany is Israel’s second-biggest supplier of ammunition and weapons, after America. Italy also provides a lot of arms. Worse still, the same circuits go into computers as drones. Since the EU is Israel’s biggest supplier of technological and mechanical components, any military measures could hinder its tech industry, which accounts for 20% of Israeli GDP.
For sanctions to work, they must do enough harm to change the target’s behaviour. When it comes to military goods, America would almost certainly plug any gaps in Israel’s arsenal. But the government would be less assured of support to replace revenue that it lost from the tech sector. On August 13th Fitch, a rating agency, downgraded Israel’s credit rating on the grounds of its state’s stretched finances. The government’s budget deficit is projected to reach 8% of gdp this year, owing to higher military spending. Tech firms contribute a handy 36% of income-tax receipts and 10% of corporate-tax revenues.
For now Israel is protected by the fact that all members of the EU carry a veto against sanctions, and countries including Austria, Finland and Germany remain opposed to their introduction. That could change, however—perhaps if Israel’s conduct deteriorates further. Although the country’s leaders can shrug off Chilean or South African threats, they are much more vulnerable to European action. ■