EU-Israel relations: Everything is economic

The UACES Network |

The EU should focus more on its relations with the private sector in Israel, and forget to a certain extent the politics, in order to strengthen its position as an influential external actor – argues  Shelly Gottfried.*

The EU’s economic strength and active involvement in national and regional processes is a well-known fact; however, it seems as if the private sector is mainly used as an instrument to support governmental processes, rather than a target per se. But as political channels were widely explored, it might be through a connection with domestic key actors or institutions of capital and power that a genuine shift from the EU economic strength into political power can be generated. In the case of the Mediterranean, and more specifically Israel, it is particularly interesting to examine the relations between the EU power ambitions and its engagement with the private sector, acknowledging that there is is some sort of stagnation in the pure politically-oriented cooperation. While in the first decades of the EU-Israel bilateral relations the main engines (as well as the main points of controversy) were the heritage of the holocaust on the one hand, and the Arab-Israeli conflict on the other, today there is a third and no less compelling factor – the economic dimension. This dimension needs to be approached in accordance with its central actors and leaders in the private sector, rather than as a linkage to the inter-governmental relations.

There is an obvious conditionality in the EU’s relations with Israel, between economic cooperation and political consent; this conditionality is a result of the EU position as a global normative actor, what naturally shapes the bilateral institutionalised relations. Consequently, the economic collaboration with the state of Israel cannot reach its full capacity till a political status-quo, with regards to the Arab-Israeli conflict and the peace process, is achieved. The economic dimension is in a way a hostage of the political situation. This strong conditionality is to a degree paradoxical; in the Israeli political-economic structure, an actual political influence can be consolidated through economic cooperation, however such economic cooperation cannot be fully established till a political resolution is obtained.

There are strong economic links between the EU and the private sector, as expressed in various instruments used in the bilateral relations, such as the Framework program, or the Galileo program, but those are still strongly coupled with the political bilateral relations, rather than positioned as a path of cooperation in itself. While Israel aspires to disconnect the political as possible from the economic, scientific, R&D and social cooperation, for the EU the attachment between the political and the economic is a crucial part of the agendas and policies, and it has no intention to separate them. This conflict of interests creates mutual criticism and bitterness.

The interest in expanding the trade relations is being pushed towards in Israel, where the business sector searches approximation more than all others; at the same time, it certainly exists in the EU as well, recognising the competitive advantage of Israel in this area (as demonstrated along the bilateral relations; see for example the EU-Israel Action Plan). The massive economic – trade bilateral relations are a result of both the EU’s political ambitions, and of the reciprocal economic interests, which yield a productive cooperation of both parties. The cooperation in this field is coherently successful, satisfying and versatile. It is commonly agreed that the governments are normally a step behind the market; market forces dictate moves and shape processes, motivated by economic interests rather than by political bias.

Strengthening the EU position as an influential power through the private sector can be facilitated in Israel, in light of the structure of its political economy. The latter is centred on two main axes – the state and the business sector; the centralised, somewhat family-based structure (see for example here or here) is widely built on strong inter-personal ties and shared interests. Hence, substantial influence on the private sector in Israel, particularly the business elite, leads to a political influence. The EU has the economic capacity to exercise such integrated influence; nonetheless, its economic cooperation with Israel is vastly banned to the regional framework, thus constrained by political and multilateral considerations.

Creating a somewhat isolated path of cooperation between the EU and the private sector in Israel, under EU intermediation, yet conducted by reciprocal pure economic interests solely, may establish a different route of EU influence and significant footprint in the Israeli domestic political economy. Focusing on citizens, namely economic-business actors, may prove as a more efficient strategy than the classic inter-governmental interaction. Such collaboration should be free of political considerations, but focused on private-civilian actors. This will enable an autonomous and highly effective channel to strengthen the bilateral relations and to further establish the EU power in Israel. Since it is based on EU’s strong linkage to the private sector, it will emphasise the vigour of the EU’s valuable presence in the political economy as a whole.

The outlook of such EU economic involvement within the private sector may actually transform the perception of the EU in the public eyes; therefore this increasing influence through the private powerful economic centres in the domestic political economy of Israel would transform to a political one as well.

*Shelly Gottfried is a PhD Researcher at City University, London. Currently she works as a EU research fellow at Hong Kong Polytechnic University.  In a recent UACES podcast she offered her views on the role of the EU during the Arab Spring.