Still facing threat of economic boycott measures from EU because of settlement policy, Israel trys to make it less dependent on European market

IsraelBy Yossi Lempkowicz

The EU is today Israel’s largest import and export market and accounts for around a third of Israel’s total trade. In 2012, 35 % of Israeli imports come from the EU while 27 % of Israeli exports go to the EU. On Sunday (18 May), the Israeli government approved a three-year plan to strengthen its economic ties with at least five Latin American countries. Moreover, Israel is also looking to strengthen economic ties with Asia, putting emphasis on promoting bilateral trade with India, China, Japan and other Asian countries.

Israel is looking to vary its export goals and increase its economic immunity to fluctuations in global markets. In South America, Israel’s plan focuses on Costa Rica and the four countries that make up the Pacific Alliance – Columbia, Mexico, Chile and Peru. These five countries have a combined GDP of more than $3 trillion and constitute 40% of Latin America’s GDP.

“We are making a very concentrated and focused effort to vary our markets, from our previous dependence on the European market, to the growing Asian and Latin American markets, in which Israel needs to take a small market share and bring about growth, employment and social welfare in the State of Israel,” Israeli Prime Minister Benjamin Netanyahu said Sunday at the weekly cabinet meeting.

“This is a strategic and – I think – a very promising effort. It has already begun to show results and will continue to do so. I would like all ministers, each in his or her own field, to join this important effort,” Netanyahu said.

Overall, in 2013, Israel’s exported goods were worth $66.58 billion around the globe. But only 2%, an amount worth $1b., went to the Pacific Alliance states. The Pacific Alliance is the sixth largest economy in the world. 26% of foreign investment in Latin America, over $70b., goes to those countries.

According to the Israeli Prime Minister’s Office, Israeli technology as well as its expertise in infrastructures, agriculture and science is in high demand in Latin America. MO said.

While the EU promised a “special privileged partnership” to Israel and the Palestinians with an “unprecedented package of economic and political support” in the framework of a peace agreement, the recent collapse of talks between the two parties, Israel fears that the EU would resume to pressure Israel on the settlement policy and would decide to restrict the import of goods made in Judea and Samaria (the West Bank).

“I would encourage Israel to increase exports to China and India instead of the EU,” said Oded Eran, a former Israeli ambassador to the EU, told a group of journalists visiting Israel with the Europe Israel Press Association (EIPA).

“India wants to deepen its co-operation with Israel without making any linkage to the Palestinian issue,” he stressed. At their meeting in Brussels last week, EU foreign ministers issued a statement on the collapse of Israeli-Palestinian talks in which they called on Israel to “avoid any unilateral action which may further undermine peace efforts and the viability of a two-state solution”, mentioning in particular the “continued settlement expansion”.

In a veiled threat the statement added: “The European Union will continue to closely monitor the situation and its broader implications, and will act accordingly.”

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Category: A Frontpage, China, EU, India, Israel, Japan, Politics, Trade, Trade agreements, World

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