EU faces pressure to sanction Israel as Palestinian statehood slips further from reach

The two-state solution has been the stated cornerstone of European Middle East policy for three decades. Yet as Israel heads toward its next election, not a single leading candidate for prime minister, from the far right to the self-described progressive camp, supports the establishment of a Palestinian state. This consensus, hardening since the last serious negotiations in 2008, leaves the European Union and its member states with a strategy that increasingly resembles crisis management rather than conflict resolution.

An Israeli consensus against statehood

The source text identifies a spectrum of Israeli politicians, Binyamin Netanyahu, Gadi Eisenkot, Naftali Bennett, Bezalel Smotrich and Yair Golan, all of whom have publicly committed to preventing Palestinian statehood. The differences between them concern the method of perpetuating the occupation: the degree of annexation, the pace of settlement expansion, the tolerance for settler violence, and whether the Palestinian Authority is allowed to survive as a security subcontractor. For Palestinians, the outcome is identical regardless of who wins.

Eisenkot, a former chief of staff often presented internationally as a moderate alternative to Netanyahu, has explicitly ruled out a Palestinian state. Golan, portrayed as the leader of the progressive Zionist camp, takes the same position. Smotrich advocates formal annexation. The disagreement is tactical, not strategic. This marks a shift from the era when a Labour-led government at least negotiated on the basis of a Palestinian state, even as settlements grew.

The Palestinian Authority trapped between survival and sovereignty

Created in 1994 under the Oslo Accords as a five-year interim body, the Palestinian Authority has now existed for more than three decades without the state it was meant to midwife. The source argues that the next Israeli government, whatever its composition, is unlikely to accept the PA's original mandate. If the current coalition remains, the PA faces deliberate collapse. If the opposition wins, the PA may be preserved, but only as a partner for security coordination, explicitly barred from pursuing sovereignty.

This dilemma is familiar in Ramallah. The phrase "requirements of the current phase" is used to justify unpopular decisions, including security cooperation with Israel and the suppression of dissent, in exchange for donor funding that keeps the administration functioning. The source contends that accepting this role, surviving while Israel consolidates control, amounts to abandoning the goal of national liberation.

Reforms without political horizon

European and international donors have long conditioned financial support on Palestinian institutional reform. The current administration has agreed to a new programme of "internationally imposed reforms" in exchange for resources that cannot overcome the Israeli consensus against statehood. The source argues these reforms are neither Palestinian-initiated nor designed to end the occupation. Instead, they function as conflict-management tools that place conditions on national liberation while settlements expand across the West Bank, including East Jerusalem.

This pattern is not new. The institution-building drive led by Salam Fayyad between 2007 and 2013, praised by the World Bank and the IMF, produced measurable improvements in governance and fiscal management. It did not alter the trajectory of Israeli policy. Settlements continued to grow. The occupation deepened. The Abraham Accords, normalising relations between Israel and several Arab states, were presented as a path to peace. The source argues they instead entrenched the status quo by demonstrating that Israel could enjoy regional integration without ending the occupation.

Legal foundations shifting beneath the political stalemate

Two developments have altered the legal landscape. The International Court of Justice issued an advisory opinion in 2024 declaring the Israeli occupation of the West Bank and East Jerusalem illegal and calling for its immediate cessation. Separately, the New York Declaration, adopted at the United Nations, reaffirmed the two-state solution on 1967 borders as the internationally agreed framework. These instruments provide a legal basis for concrete measures, including sanctions, trade restrictions and the prohibition of settlement products, that European governments have so far declined to implement at scale.

The source argues that the cost of the occupation to Israel remains lower than the cost of ending it. As long as European policy treats sanctions as taboo and frames the conflict as a technical problem of Palestinian governance, the incentive structure for Israel does not change. The discussion over sanctions is no longer taboo in European parliaments or among publics, yet the gap between discourse and action persists.

European policy at an impasse

The European Union's official position remains support for a negotiated two-state solution based on 1967 lines, with Jerusalem as the capital of both states. The EU does not recognise Israeli sovereignty over the occupied territories. It labels settlement products and excludes settlements from research funding agreements. But it has stopped short of the comprehensive measures, banning settlement goods entirely, suspending the EU-Israel Association Agreement's preferential trade terms, restricting military cooperation, that would impose a material cost on the occupation.

Member states are divided. Ireland, Spain, Belgium and Slovenia have recognised the State of Palestine and pushed for stronger action. Germany, Austria, Hungary and the Czech Republic resist any move that could be construed as delegitimising Israel. The European Commission and the High Representative for Foreign Affairs operate within the constraints of unanimity in the Council. The result is a policy that condemns settlements in statements while deepening economic ties in practice. Bilateral trade between the EU and Israel reached 46.8 billion euro in 2023, making the EU Israel's largest trading partner.

The November election test

Palestinian elections are announced for November 2026, the first since 2006. The source suggests these elections will become a referendum on the PA's strategy of accepting internationally driven reforms in exchange for survival. If the PA's opponents, whether from Hamas, the left, or independent lists, frame the vote as a rejection of the reform-for-funding bargain, the administration's legitimacy could fracture further. The Israeli government will almost certainly restrict voting in East Jerusalem, as it has in every previous election, complicating the process and the outcome.

For European diplomats, the election presents a dilemma. Support the PA's reform programme and risk appearing complicit in managing an occupation with no end. Withhold support and risk the PA's collapse, creating a security vacuum that Israel would fill directly. The source argues that neither option addresses the core problem: the absence of an Israeli partner for peace and the international community's refusal to change the cost calculus.

What a sanctions framework could target

The source proposes specific measures: banning settlement products and services from European markets, ending military trade with Israel, and suspending preferential agreements tied to human rights clauses. These steps, it argues, should be triggered by Israeli policies, settlement expansion, annexation moves, denial of Palestinian rights, not by the identity of the prime minister. The distinction matters. It shifts the debate from personalities to structures, from Netanyahu versus Eisenkot to occupation versus equality.

European officials privately acknowledge that the current approach has failed to advance a two-state solution. Some argue that maintaining channels with Israel preserves influence. Others contend that influence without leverage is illusion. The European Parliament has passed resolutions calling for a ban on settlement products. The European Court of Justice has ruled that settlement goods must be labelled. But the political decision to enforce a full ban remains unmade.

The rules-based order at stake

The source frames the issue in terms that resonate in European capitals: the credibility of the international rules-based order. If the ICJ's ruling on the illegality of the occupation carries no consequences, if UN declarations are treated as aspirational rather than operational, then the legal architecture Europeans champion in other contexts, Ukraine, the South China Sea, the Balkans, loses coherence. The argument is that normalising the occupation erodes the very system the EU claims to defend.