Individual State Level Relations

Germany

Israel's biggest trade partner in the EU is Germany. Furthermore Germany is one of Israel's closest European allies and a major European player in the peace process between Israel and her neighbours. This was illustrated recently when Germany's secret service was involved in the prisoner exchange deal between Israel and Hezbollah. The start of relationship between the two countries was difficult. This is due to the fact that Hitler's Germany was the instigator of the Holocaust which killed six million European Jews. Therefore upon Israel's establishment, it took 17 years before Israel agreed to establish diplomatic relations with Germany. However the process took many painful steps by those who had survived the holocaust and even included riots in Israel by those opposed. However after the establishment of relations Germany took great steps to repair the relationship between the two countries through financial reparation as well as high level exchanges between its politicians and citizens with their counterparts in Israel. These include the twinning of 100 German towns and districts between the two countries. Furthermore there are a number of joint programmes in areas including science. Programs include the Minerva Society which partners with Israel's prestigious Weizmann institute. German companies have also entered the Israeli market with examples including companies such as VW, Siemens, Henkel and SAP. Number of Israeli companies operating in Germany have also started to grow recently, so much so that a number of Israeli companies have started to list on the Frankfurt DAX stock exchange. Security relations between the two countries are also strong. Germany is the supplier of the world class Dolphin submarines to Israel. In turn Israel has supplied sophisticated Unmanned Aerial Vehicle to Germany.

United Kingdom

On a country by country basis the UK is Israel's second largest trading partner in the EU. Israel also has strong political relations with the United Kingdom. This is due to the fact that Palestine which later became Israel is a former British colony. As a result English is widely spoken and taught in Israel as the third main language (after Arabic). Furthermore the Israeli legal system is based on the British system. Israel's Armed forces, especially its Special Forces unit (Sayeret Matkal) and its Paratroops brigade are modeled on their British counterparts. Furthermore the Israeli Defence Forces was set up by Jewish soldiers who served with the British Army in the Second World. The UK is also home to to Europe's third largest Jewish community which has strong ties with Israel. The political and economic relationship between the two countries has improved recently due to the warm relationship between Tony Blair Israel's leaders. As a matter of fact every single British Prime Minister since Ted Heath has visited Israel, sometimes on more than one occasion. The UK is home to many Israeli students. It also serves as an important export market for Israeli high tech and agriculture products. Israel is the UK's largest export market and trading partner in the region and as a result is an important market for British manufacturers. Joint projects between the two countries include the Britain-Israel Industrial R&D Fund (known as BRITECH) as well as Science Networking Development Scheme (SNDS) which aims to encourage co-operation between practicing scientists in both countries.

Denmark and Holland

Although economic relations between Israel and the two aforementioned countries are small, nevertheless historically the political relationship between them has been strong. This is largely due to the fact that large group of individuals and even government officials from both countries were active in saving members of their Jewish community during WWII. After Israel's establishment Holland was instrumental in assisting Israel's efforts to bring out hundreds and thousands of Soviet Jews. Furthermore Holland was one of the few European countries who actively assisted Israel during the Yom Kippur war by allowing oil tankers destined for Israel to stop off at its ports. Equally Denmark has enjoyed good relations with Israel for many years, although this has been worsening recently due to the recent intifada.

Entity level

The EU as a block is Israel's biggest trading partner. Approximately 40% of Israeli imports come from the EU, and about 30% of Israeli exports are sold to the EU. Furthermore Israel has a Free Trade Agreement (called the Association Agreement) with the EU. According to the EU the Agreement confirms the existence of free trade in manufactured goods and it reinforces the arrangements for free trade in industrial products, which have been in force since the late 1970s. It also calls for progressive and reciprocal liberalisation of trade for agricultural products. A new Association agreement was signed between Israel and the EU in July 2003.

Other milestones in the EU – Israel relations include:

• Israel was the first and only non-European country to be fully associated to the European Community's Framework Programme for Research and Technical Development;
• Up until 2002 Israeli organisations participated in 623 cooperative projects with EU partners, Representing an estimated total funding of around 165 million Euro;
• the European Commission initiated negotiations with Israel with a view to conclude a Cooperation Agreement on Galileo (EU project for a Global Navigation Satellite System) by mid-2004;
• Israel can participate in Tempus projects, aimed at the development of Universities' networks and restructuring of higher education
• The new Erasmus Mundus programme (scholarships to third country students), which becomes operational in the course of 2004, will involve Israel.

Israel's relations with the EU have lead to increased investment by EU countries in Israel as well as increased opportunity for the export of Israeli goods.

Trade Volumes

Israel exports to the EU, excluding diamonds, totaled $7.86 billion, and imports totaled $12.45 billion.

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