Palestine: Economic Leverage — Divestment, Embargoes and Trade

Summary

Governments, a sovereign wealth fund and the BDS movement are escalating economic pressure on Israel over Gaza — trade cutoffs, arms embargoes, divestment and corporate boycotts — while the EU has twice declined to suspend its preferential trade pact.

What it argues

1. EU shields its trade pact

   At a Luxembourg meeting, Germany and Italy blocked a motion by Spain, Slovenia and Ireland to suspend the EU-Israel Association Agreement. A UN expert panel had called suspension a 'legal imperative,' not a matter of political discretion. At the UN Human Rights Council, the EU says it will not apply the agreement to occupied territories but opposes boycotting Israel outright. The EU, Israel's top trading partner, keeps preferential market access in place despite the rights findings against it.

2. Turkiye severs ties

   Foreign Minister Hakan Fidan says Turkiye has completely cut trade, closed its airspace to Israeli aircraft and barred Israeli ships from its ports. Ankara first cut direct trade in May 2024; the two countries had traded $7bn in 2023. Turkiye frames the total cutoff as protest over what it calls genocide, and as a growing security rupture.

3. Norway's fund divests

   Norway's $1.9 trillion sovereign wealth fund sells its stakes in 11 unnamed Israeli companies and ends outside management of its Israel investments. The move follows pressure from Norway's Finance Ministry and an NGO report linking an Israeli firm to air force operations in Gaza. State pressure is reshaping how one of the world's largest funds handles its Israel exposure.

4. Naming complicit firms

   BDS and Albanese's report name Maersk, BNP Paribas, Booking.com, Microsoft, Palantir, Eni and Dana Petroleum, along with banks and pension funds, as sustaining the occupation. BDS cites Israel's debt reaching $340bn, startup investment down 90% and a near-junk credit rating as evidence of impact; the Israel Export Institute's chairman says boycotts have changed Israel's trade landscape. Divestment and boycott campaigns target named firms and point to figures they say show financial effect.

5. Arms embargoes written into law

   Spain's parliament votes 178-169 to permanently ban arms trade with Israel and advertising of settlement products. Slovenia becomes the first EU state to ban all weapons trade with Israel; Ireland's renewed Occupied Territories Bill fails again in 2025. Embargoes already in practice since 2023 are now being locked into national law, unevenly across the EU.

6. A legal case for disengagement

   Albanese's report builds a database of roughly 1,000 corporate entities, formally notifies 45 named firms and finds 15 replied; it invokes the ICJ's ruling on the occupation's illegality. Citing the post-Holocaust industrialists' trials and South Africa's apartheid-era Truth and Reconciliation Commission, it argues corporate executives, not just companies, can face liability; Albanese faces US sanctions over the report. Sixty-plus NGOs including Amnesty and Oxfam, and a petition past one million signatures, press the EU to end its agreement on legal grounds. The UN frames continued corporate and trade ties to the occupation as legally exposed, not merely controversial.

7. Academic boycott gains ground

   PACBI says student and staff-led boycott and divestment campaigns have pushed Israel to the margins of the EU's Horizon research program. The movement calls for cultural and academic boycotts of Israeli institutions, likening it to the South African anti-apartheid campaign. The movement claims momentum in European academia after years of campaigning.

8. Unions and campaigns mobilize

   BDS calls on dockworkers' and other unions, following the UAW's lead, to join an October 30 day of action against militarisation and genocide. It has urged hospitality and tourism businesses to join its 'No Room for Genocide' visa and immigration campaign, and sets a November 20-29 labour mobilisation. Grassroots labour and tourism-sector campaigns are extending the boycott into everyday commerce.