In a significant move during the annual State of the Union address on Wednesday, European Commission (EC) President Ursula von der Leyen announced a partial suspension of the Association Agreement with Israel, citing violations of human rights principles enshrined in the agreement.

Von der Leyen condemned the actions and rhetoric of what she described as extremist members of the Israeli government. "The actions and statements by the most extremist ministers of the Israeli government, which incite violence, undermine the vision of a viable Palestinian state, and we must not let that happen," she stated.

The Association Agreement, established in June 2000, was designed to foster fair competition and free trade between EU Member States and Israel, which ranks as the EU's 31st largest trading partner, accounting for almost 0.8 percent of its total trade in goods with the world in 2024. The agreement also serves as a framework for political dialogue between the EU and Israel.

A recent review in June 2025 of Article 2 of the agreement, which mandates that relations and all provisions within the agreement be grounded in human rights and democratic principles, led to this decision. This review was prompted by actions including Israel’s blocking of humanitarian aid to Gaza, and was supported by 17 EU Member States. This clause allows for the taking of 'appropriate measures' if one party violates these principles, which can include suspending parts of the agreement.

Additionally, Von der Leyen announced the formation of a Palestine Donor Group aimed at supporting the reconstruction of Gaza. This initiative will include a dedicated instrument for funding and logistical support. The EC is also preparing sanctions targeting Israeli extremists, as part of its response.

The partial suspension of the trade agreement marks a pivotal moment in EU-Israel relations, reflecting the EU's commitment to human rights and its willingness to enforce the terms of its international agreements when they are contravened. The development promises to influence not only trade but also political relations between the EU and Israel moving forward.