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Economic sanctions now: the EU is Israel’s largest investor [1]

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Date: 2025-07-15 04:50:00+00:00

On Tuesday 15 July, European Union (EU) foreign ministers are meeting in Brussels to decide whether to impose sanctions on Israel. This is a crucial moment for the EU to draw a red line and stop pumping billions of euros into Israel’s economy, fuelling genocide and occupation. SOMO’s analysis of trade and foreign investment into and from Israel reveals how deeply intertwined the European and Israeli economies are. Based on this analysis, SOMO calls for the immediate suspension of the EU-Israel Association Agreement, along with a full arms embargo, extensive economic sanctions and corporate accountability.

Posted in category: Long read Written by: Written by: Jasper van Teeffelen Published on: 15 July 2025 reading time 6 minutes









Key findings The EU is the largest investor in Israel worldwide, nearly twice as big as the United States (US) . According to the most recent IMF data on foreign investment, EU member states held €72.1 billion in foreign investment in Israel in 2023, compared to €39.2 billion for the US.

Israel itself has invested €65.9 billion in the EU, seven times as much as in the US (€8.8 billion). That makes the EU the main destination for Israeli investment .

Despite Israel’s ongoing genocide against Palestinians in Gaza and its unlawful occupation across the Occupied Palestinian Territory, the EU increased exports to Israel by €1 billion , standing at €25.5 billion in 2023 and €26.7 billion in 2024.

The EU is Israel’s largest trading partner , and its total trade with Israel in 2024, including imports and exports, amounted to €42.6 billion. This is significantly more than the US , whose trade with Israel totalled €31.6 billion in the same year.

Of all EU member states, the Netherlands is by far the largest investor in Israel and is responsible for two-thirds of EU investment in Israel. In fact, no other country worldwide has more investments in Israel. With €50 billion in investment held by Dutch companies in 2023, the Netherlands even tops the US. Conversely, the Netherlands is also the largest destination for Israeli investment, attracting six times as much investment as the US.

The EU’s deep economic ties with Israel

The European Commission and EU foreign ministers are meeting on July 15th(opens in new window) in Brussels to decide on the EU’s course of action towards Israel. This is the result of the EU publicly recognising in June that Israel may have violated the EU-Israel Association Agreement’s article on human rights. Under the agreement, such a breach should trigger the EU to review and suspend the free trade benefits provided to Israel. Such a suspension would still only constitute the bare minimum, given the extent of Israel’s atrocity crimes and the fact that the EU continues to supply arms to Israel.

SOMO’s analysis of EU trade and investment relations with Israel shows that the European economy is deeply intertwined with that of Israel. The EU is Israel’s largest source of foreign investment and biggest trading partner, actually increasing exports to Israel since the beginning of the genocide. This means that the EU is the main engine of Israel’s “economy of genocide(opens in new window) ”, providing the Israeli government with much-needed revenue and resources to continue its illegal occupation and genocide on the Palestinian people.

In her most recent report(opens in new window) , titled From an economy of occupation to an economy of genocide, UN Special Rapporteur on the Occupied Palestinian Territory (OPT) Francesca Albanese investigated the complicity of private entities in international crimes connected to Israel’s genocide in Gaza and the unlawful occupation across the OPT. She states that Israel is moving from an economy of occupation to an economy of genocide. About the continuing profiting from and enabling of the genocide in Gaza, she says: profiting from and enabling the genocide in Gaza: “In the past 21 months, while Israel’s genocide has devastated Palestinian lives and landscapes, the Tel Aviv stock exchange soared by 213 percent, amassing $225.7 billion in market gain.”

To illustrate the extent to which the EU contributes to and profits from Israel’s economy, this briefing provides an overview of the countries with the most foreign investment into and from Israel. This is based on an analysis of Eurostat and IMF data on foreign direct investment (FDI) going into and out of Israel. It also provides an overview of EU-Israel trade, based on UN COMTRADE data.

The EU is the largest foreign investor in Israel by a significant margin

Figure 1 shows that the EU was the largest of the five biggest investors in Israel in 2023, with the EU as a total of all EU member states. The figures presented are of so-called FDI stock: the total value of the loans and equity investments from companies from a particular country into the Israeli economy in a given year. The IMF will not release data on 2024 FDI until December 2025, but it is worth noting that, according to UNCTAD’s 2025 World Investment Report(opens in new window) , worldwide FDI into Israel increased in 2024.

The value of the EU’s investment in Israel is nearly twice that of the United States. Together, EU member states had investments in Israel worth €72.1 billion in 2023, compared to €39.2 billion for the United States in the same year. After the EU and the US, the biggest investors in Israel are China, Canada, and Switzerland, according to the data they submitted to the IMF. Notably, in the data reported by Israel itself on its FDI, the Cayman Islands are a major foreign investor with $23 billion in 2023. Because of a huge gap in the IMF’s FDI data reported by Israel – half of their reported inward FDI is from unspecified sources – the figures in this article are based on FDI data reported by the investing countries.

Figure 2 shows that the Netherlands is responsible for two-thirds of the EU investment in Israel. In fact, no other country invests more in Israel than the Netherlands, exceeding even the United States and investing 10 times more than Germany does. The extremely high investment from the Netherlands can partly be explained by its position as a tax haven and conduit country. Because of this, the Netherlands is the second-largest source and destination of FDI in the world, with over $5 trillion in foreign capital flowing through the country.

Much of this FDI may amount to “phantom investments”, a term used by IMF researchers for investments that are not linked to real economic activities in the country, but are used to “minimise multinationals’ global tax bill”(opens in new window) . However, according to data(opens in new window) from the Dutch Central Bank, only 12% of Dutch investment into Israel originates from special purpose entities, more commonly referred to as letterbox companies.

The EU is by far the biggest destination of Israeli investments

Figure 3 shows that the EU is by far the biggest destination for Israeli investment. Israel has invested €66 billion in the EU economy, over seven times as much as it has invested in the United States. As figure 4 shows, the Netherlands stands out as the biggest recipient by far with €47.3 billion, followed by Cyprus and Germany, which respectively have €6.9 and €4.9 billion worth of investments from Israel.

This means that the EU, and the Netherlands in particular, greatly profit from Israel’s economy. Because of the significant corporate and economic interests, any EU action on economic sanctions against Israel will be greatly challenged by those profiting from Israeli investment.

Trade between the EU and Israel increased in 2024 by €1 billion to over €40 billion

According to data from the European Commission(opens in new window) and UN COMTRADE, the EU is Israel’s largest trading partner, as shown in Figure 5. One-third of Israel’s total trade in goods with the world in 2024 was with the EU. The value of EU-Israel trade that year totalled €42.6 billion, significantly more than Israel’s trade with the US(opens in new window) , which amounted to €31.6 billion in 2024. China and India were Israel’s third and fourth-largest trading partners. This means that the EU is the key supplier of both goods and resources to Israel, as well as Israel’s biggest market in terms of sales. That makes the free trade provisions included in the EU-Israel Association Agreement crucial for Israel’s economy, and suspending them could have a tremendous impact.

Stunningly, total trade in goods between the EU and Israel actually increased by one billion euros between 2023, the year the genocide started, and 2024. The increase is due to higher exports from the EU. That means that since the beginning of the genocide, the EU has actually increased its supply of resources to Israel’s economy, providing the country with essential resources to sustain its economy of genocide and occupation.

The EU imported €15.9 billion worth of goods from Israel, primarily machinery, transport equipment, and chemicals. Conversely, the EU exported €26.7 billion worth of goods to Israel, also mainly machinery and transport equipment.



Stop business as usual: the EU must impose economic sanctions on Israel

Under the UN Genocide Convention, all states have the obligation to employ all means reasonably available to them to prevent genocide. The exact steps required depend(opens in new window) on the states’ “capacity to influence effectively the actions of persons likely to commit, or already committing genocide.” The EU’s capacity to exert such pressure is significant, as suspending its Association Agreement and imposing sanctions on Israel would switch off a vital engine for its economy.

Furthermore, in its July 2024 advisory opinion(opens in new window) , the International Court of Justice (ICJ) determined that Israel’s military and settler presence in the Occupied Palestinian Territories is illegal. The ICJ affirms that all states must “abstain from entering into economic or trade dealings with Israel […] which may entrench its unlawful presence in the territory” and “take steps to prevent trade or investment relations that assist in the maintenance of the illegal situation created by Israel in the Occupied Palestinian Territory.”

Rather than profiting from and fuelling Israel’s economy of genocide and occupation, the EU has the duty and opportunity to use its enormous economic leverage over Israel to demand an end to its atrocities in Gaza and the occupied West Bank. The EU must not continue to let its economic interests in Israel prevail over human lives.

It must introduce a full arms embargo and export bans on dual-use goods, high-tech goods, raw materials such as oil and gas, and all other commodities that could contribute to Israel’s ability to continue its occupation and genocide.

As highlighted in UN Special Rapporteur Albanese’s report, many companies active in Israel directly contribute to the genocide and are endangering the lives of Palestinians. The EU must ensure full accountability of all corporate entities active in Israel. All companies active in Israel must responsibly divest where their activities risk directly or indirectly contributing to Israel’s crimes against Palestinians.

Twenty-one months into the genocide, EU governments must draw a long-overdue red line and hold Israel accountable for its actions. That should start with a full arms embargo, economic sanctions and corporate accountability.



Do you need more information? Jasper van Teeffelen Researcher

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[1] Url: https://www.somo.nl/economic-sanctions-eu-is-israel-largest-investor/

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