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Financing the Israeli Occupation Apartheid Regime, Through Investments

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The EU is Israel’s largest investor

On Tuesday 15 July, European Union (EU) foreign ministers are meeting in Brussels to decide whether to impose sanctions on Israel. This is a crucial moment for the EU to draw a red line and stop pumping billions of euros into Israel’s economy, fuelling genocide and occupation. SOMO’s analysis of trade and foreign investment into and from Israel reveals how deeply intertwined the European and Israeli economies are. Based on this analysis, SOMO calls for the immediate suspension of the EU-Israel Association Agreement, along with a full arms embargo, extensive economic sanctions and corporate accountability. 

Written by:Jasper van Teeffelen

SOMO,15 July 2025

Key findings

The EU is the largest investor in Israel worldwide, nearly twice as big as the United States (US). According to the most recent IMF data on foreign investment, EU member states held €72.1 billion in foreign investment in Israel in 2023, compared to €39.2 billion for the US.  Israel itself has invested €65.9 billion in the EU, seven times as much as in the US (€8.8 billion). That makes the EU the main destination for Israeli investment.  Despite Israel’s ongoing genocide against Palestinians in Gaza and its unlawful occupation across the Occupied Palestinian Territory, the EU increased exports to Israel by €1 billion, standing at €25.5 billion in 2023 and €26.7 billion in 2024. The EU is Israel’s largest trading partner, and its total trade with Israel in 2024, including imports and exports, amounted to €42.6 billion. This is significantly more than the US, whose trade with Israel totalled €31.6 billion in the same year.  Of all EU member states, the Netherlands is by far the largest investor in Israel and is responsible for two-thirds of EU investment in Israel. In fact, no other country worldwide has more investments in Israel. With €50 billion in investment held by Dutch companies in 2023, the Netherlands even tops the US. Conversely, the Netherlands is also the largest destination for Israeli investment, attracting six times as much investment as the US.

The EU’s deep economic ties with Israel

The European Commission and EU foreign ministers are meeting on July 15th(opens in new window)  in Brussels to decide on the EU’s course of action towards Israel. This is the result of the EU publicly recognising in June that Israel may have violated the EU-Israel Association Agreement’s article on human rights. Under the agreement, such a breach should trigger the EU to review and suspend the free trade benefits provided to Israel. Such a suspension would still only constitute the bare minimum, given the extent of Israel’s atrocity crimes and the fact that the EU continues to supply arms to Israel. 

SOMO’s analysis of EU trade and investment relations with Israel shows that the European economy is deeply intertwined with that of Israel. The EU is Israel’s largest source of foreign investment and biggest trading partner, actually increasing exports to Israel since the beginning of the genocide. This means that the EU is the main engine of Israel’s “economy of genocide(opens in new window) ”, providing the Israeli government with much-needed revenue and resources to continue its illegal occupation and genocide on the Palestinian people. 

In her most recent report(opens in new window) , titled From an economy of occupation to an economy of genocide, UN Special Rapporteur on the Occupied Palestinian Territory (OPT) Francesca Albanese investigated the complicity of private entities in international crimes connected to Israel’s genocide in Gaza and the unlawful occupation across the OPT. She states that Israel is moving from an economy of occupation to an economy of genocide. About the continuing profiting from and enabling of the genocide in Gaza, she says: “In the past 21 months, while Israel’s genocide has devastated Palestinian lives and landscapes, the Tel Aviv stock exchange soared by 213 percent, amassing $225.7 billion in market gain.”

To illustrate the extent to which the EU contributes to and profits from Israel’s economy, this briefing provides an overview of the countries with the most foreign investment into and from Israel. This is based on an analysis of Eurostat and IMF data on foreign direct investment (FDI) going into and out of Israel. It also provides an overview of EU-Israel trade, based on UN COMTRADE data. 

The EU is the largest foreign investor in Israel by a significant margin

Figure 1 shows that the EU was the largest of the five biggest investors in Israel in 2023, with the EU as a total of all EU member states. The figures presented are of so-called FDI stock: the total value of the loans and equity investments from companies from a particular country into the Israeli economy in a given year. The IMF will not release data on 2024 FDI until December 2025, but it is worth noting that, according to UNCTAD’s 2025 World Investment Report(opens in new window) , worldwide FDI into Israel increased in 2024. 

The value of the EU’s investment in Israel is nearly twice that of the United States. Together, EU member states had investments in Israel worth €72.1 billion in 2023, compared to €39.2 billion for the United States in the same year. After the EU and the US, the biggest investors in Israel are China, Canada, and Switzerland, according to the data they submitted to the IMF. Notably, in the data reported by Israel itself on its FDI, the Cayman Islands are a major foreign investor with $23 billion in 2023. Because of a huge gap in the IMF’s FDI data reported by Israel – half of their reported inward FDI is from unspecified sources – the figures in this article are based on FDI data reported by the investing countries. 

Figure 2 shows that the Netherlands is responsible for two-thirds of the EU investment in Israel. In fact, no other country invests more in Israel than the Netherlands, exceeding even the United States and investing 10 times more than Germany does. The extremely high investment from the Netherlands can partly be explained by its position as a tax haven and conduit country. Because of this, the Netherlands is the second-largest source and destination of FDI in the world, with over $5 trillion in foreign capital flowing through the country. Much of this FDI may amount to “phantom investments”, a term used by IMF researchers for investments that are not linked to real economic activities in the country, but are used to “minimise multinationals’ global tax bill”(opens in new window) . However, according to data(opens in new window)  from the Dutch Central Bank, only 12% of Dutch investment into Israel originates from special purpose entities, more commonly referred to as letterbox companies.

The EU is by far the biggest destination of Israeli investments

Figure 3 shows that the EU is by far the biggest destination for Israeli investment. Israel has invested €66 billion in the EU economy, over seven times as much as it has invested in the United States. As figure 4 shows, the Netherlands stands out as the biggest recipient by far with €47.3 billion, followed by Cyprus and Germany, which respectively have €6.9 and €4.9 billion worth of investments from Israel. 

This means that the EU, and the Netherlands in particular, greatly profit from Israel’s economy. Because of the significant corporate and economic interests, any EU action on economic sanctions against Israel will be greatly challenged by those profiting from Israeli investment. 

Trade between the EU and Israel increased in 2024 by €1 billion to over €40 billion

According to data from the European Commission(opens in new window)  and UN COMTRADE, the EU is Israel’s largest trading partner, as shown in Figure 5. One-third of Israel’s total trade in goods with the world in 2024 was with the EU. The value of EU-Israel trade that year totalled €42.6 billion, significantly more than Israel’s trade with the US(opens in new window) , which amounted to €31.6 billion in 2024. China and India were Israel’s third and fourth-largest trading partners. This means that the EU is the key supplier of both goods and resources to Israel, as well as Israel’s biggest market in terms of sales. That makes the free trade provisions included in the EU-Israel Association Agreement crucial for Israel’s economy, and suspending them could have a tremendous impact.  

Stunningly, total trade in goods between the EU and Israel actually increased by one billion euros between 2023, the year the genocide started, and 2024. The increase is due to higher exports from the EU. That means that since the beginning of the genocide, the EU has actually increased its supply of resources to Israel’s economy, providing the country with essential resources to sustain its economy of genocide and occupation. 

The EU imported €15.9 billion worth of goods from Israel, primarily machinery, transport equipment, and chemicals. Conversely, the EU exported €26.7 billion worth of goods to Israel, also mainly machinery and transport equipment.

Stop business as usual: the EU must impose economic sanctions on Israel

Under the UN Genocide Convention, all states have the obligation to employ all means reasonably available to them to prevent genocide. The exact steps required depend(opens in new window)  on the states’ “capacity to influence effectively the actions of persons likely to commit, or already committing genocide.” The EU’s capacity to exert such pressure is significant, as suspending its Association Agreement and imposing sanctions on Israel would switch off a vital engine for its economy.

Furthermore, in its July 2024 advisory opinion(opens in new window) , the International Court of Justice (ICJ) determined that Israel’s military and settler presence in the Occupied Palestinian Territories is illegal. The ICJ affirms that all states must “abstain from entering into economic or trade dealings with Israel […] which may entrench its unlawful presence in the territory” and “take steps to prevent trade or investment relations that assist in the maintenance of the illegal situation created by Israel in the Occupied Palestinian Territory.”

Rather than profiting from and fuelling Israel’s economy of genocide and occupation, the EU has the duty and opportunity to use its enormous economic leverage over Israel to demand an end to its atrocities in Gaza and the occupied West Bank. The EU must not continue to let its economic interests in Israel prevail over human lives.

It must introduce a full arms embargo and export bans on dual-use goods, high-tech goods, raw materials such as oil and gas, and all other commodities that could contribute to Israel’s ability to continue its occupation and genocide. 

As highlighted in UN Special Rapporteur Albanese’s report, many companies active in Israel directly contribute to the genocide and are endangering the lives of Palestinians. The EU must ensure full accountability of all corporate entities active in Israel. All companies active in Israel must responsibly divest where their activities risk directly or indirectly contributing to Israel’s crimes against Palestinians.

Twenty-one months into the genocide, EU governments must draw a long-overdue red line and hold Israel accountable for its actions. That should start with a full arms embargo, economic sanctions and corporate accountability.

 Written by: Written by:Jasper van Teeffelen Published on:15 July 2025

Economic sanctions now: the EU is Israel’s largest investor - SOMO 

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2025 Investment Climate Statements: Israel

EXECUTIVE SUMMARY

Israel has an entrepreneurial spirit and a creative, highly educated, skilled, and diverse workforce. It is a leader in innovation in a variety of sectors, and many Israeli start-ups find good partners in U.S. companies. Popularly known as “Start-Up Nation,” Israel invests heavily in education and scientific research. U.S. firms account for nearly two-thirds of the more than 400 research and development (R&D) centers established by multinational companies in Israel.

  Israel has 135 companies listed on the NASDAQ, the fourth most companies after the United States, Canada, and China. Israeli government agencies, led by the Israel Innovation Authority, fund incubators for early-stage technology start-ups, and Israel provides extensive support for new ideas and technologies while also seeking to develop traditional industries. Private venture capital funds have flourished in Israel in recent years.

Israel - United States Department of State 

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U.S. Aid to Israel in Four Charts

Israel has long been the leading recipient of U.S. foreign aid, including military assistance. That aid has come under heightened scrutiny over the course of Israel’s conflicts with Hamas and Iran.

Article by Jonathan Masters and Will Merrow

Council on Foreign Relations, October 7, 2025 5:12 pm (EST)

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The United States was the first country to recognize the provisional government of the state of Israel upon its founding in 1948, and for many decades it has been a strong and steady supporter of the Jewish state. Israel has received hundreds of billions of dollars in U.S. foreign aid in the post–World War II era, a level of support that reflects many factors, including a U.S. commitment to Israel’s security and the countries’ shared foreign policy interests in a volatile and strategically important part of the world. Israel is also a leading buyer of U.S. weapons systems via traditional arms sales.

The two countries do not have a mutual defense pact, as the United States has with allies such as Japan and fellow members of the North Atlantic Treaty Organization (NATO). However, Israel is among a short list of “major non-NATO allies” and also has privileged access to the most advanced U.S. military platforms and technologies.

In 2024, U.S. military aid to Israel soared to its highest level in decades during Israel’s ongoing war with Hamas in Gaza. The conflict was sparked by Hamas’s October 2023 attack that killed approximately twelve hundred Israelis—the deadliest in the country’s history. More than sixty-five thousand Palestinians, including a large share of civilians, have died in the conflict, according to the United Nations and the Hamas-run Gaza health ministry. U.S. military support also proved essential during Israel’s recent hostilities with Hezbollah in Lebanon and with Iran, helping Israel significantly degrade the military capabilities of its longtime rivals.

How much U.S. aid does Israel receive?

Israel has been the largest cumulative recipient of U.S. foreign aid since its founding, receiving over $300 billion (adjusted for inflation) in total economic and military assistance. While the United States has also provided large foreign aid packages to other Middle Eastern countries, particularly Egypt and Iraq, Israel stands apart.

The United States provided Israel considerable economic assistance from 1971 to 2007, but nearly all U.S. aid today goes to support Israel’s military, the most advanced in the region. The United States has provisionally agreed via a memorandum of understanding (MOU) to provide Israel with $3.8 billion per year through 2028, including $500 million per year for missile defense. 

Israel has been using American-made weapons against its foes—including Hamas, Hezbollah, and Iran—for decades. The Israeli military has reportedly received expedited deliveries of weapons from a strategic stockpile that the United States has maintained in Israel since the 1980s.

What military aid has the United States provided Israel since the October 7 attack?

Since the start of Israel’s war with Hamas on October 7, 2023, the United States has enacted legislation providing at least $16.3 billion in direct military aid to Israel. The aid was authorized in three pieces of legislation: a supplemental appropriations act in April 2024 which provided $8.7 billion, and appropriations acts in 2024 and 2025 which provided $3.8 billion per year in line with the MOU. Of the total, $6.7 billion is for missile defense.

In May 2025, the Israeli Defense Ministry said since October 2023 the United States had delivered ninety thousand tons of arms and equipment on eight hundred transport planes and 140 ships. The extraordinary flow of aid has included tank and artillery ammunition, bombs, rockets, and small arms. 

How does Israel use the aid?

Most of the aid is provided as grants under the Foreign Military Financing (FMF) program, which funds  countries’ purchases of U.S. military equipment and services through the Foreign Military Sales (FMS) program or in some cases through direct commercial contracts. 

Israel has historically been one of the top recipients of U.S. arms sales. In April 2025, it had 751 active FMS cases with the U.S., worth a total of roughly $39 billion. Israel has also been permitted to use a portion of its FMF aid to buy equipment from Israeli defense firms—a benefit not granted to other recipients of U.S. military aid, which are required to buy from American firms. However, this domestic procurement benefit is set to be phased out in the next few years.

U.S. aid reportedly accounted for around 20 percent of Israel’s defense budget in the years prior to the Israel-Hamas war. Israel, like many other countries, also buys U.S. military products outside of the FMF program.

Currently, $500 million per year is slated for Israeli and joint U.S.-Israeli missile defense programs, in which the two countries collaborate on the research, development, and production of defense systems used by Israel, including the Iron Dome, David’s Sling, Arrow, Arrow II, Arrow III, and Iron Beam. While the Iron Dome was solely developed by Israel, the United States has been a production partner since 2014. David’s Sling and the Arrow system were developed jointly by Israel and the United States. Iron Beam development was begun by an Israeli company, with the U.S. contractor Lockheed Martin later joining development.

While Israel does purchase some arms from other countries, the large majority of its arms imports come from the United States. In recent years, the remainder have come primarily from Germany, although in August 2025 the German government announced it would stop providing military equipment that could be used in Gaza.

How Israel’s Imports of U.S. Arms Stack Up Estimated military value of arms imports*

Israel is not the largest importer of U.S. arms, but 78% of its arms imports since 2000 have come from the United States.

*Military value is expressed as “trend-indicator-value,” a unit developed by the Stockholm International Peace Research

Institute (SIPRI) that represents the military capability of arms sales.

Note: Countries included are the largest recipients of U.S. arms sales in the Middle East.

Source:  Stockholm International Peace Research Institute Get the Facts U.S. Military Support for Taiwan: Five Charts

Are there any conditions or restrictions attached to the aid?

Transfers of U.S. military equipment to Israel, as to other foreign governments, are subject to relevant U.S. and international law. The president must notify Congress [PDF] before selling foreign powers major weapon systems or services valued above a certain dollar threshold, and lawmakers are allowed a period to review the sale. For transactions with Israel (and other close U.S. allies), the threshold that triggers a fifteen-day congressional review ranges from $25 million to $300 million, depending on the defense articles or services.

Congress can block a sale through a joint resolution, although this has never happened. In special cases, the president can bypass congressional review if they deem that a national security emergency exists. President Biden used this expedited waiver process for both Israel and Ukraine, and President Trump used it for Saudi Arabia in his first term and Israel in his second. For smaller transactions that don’t meet the dollar threshold, no congressional review is required.

The United States cannot provide security assistance to foreign governments or groups that commit gross human rights violations, a red line enshrined in the so-called Leahy Law. Some legal scholars and other critics have alleged that the United States has not applied the Leahy Law with regard to Israel as it has with other Middle Eastern countries.

Any military aid that the United States provides to recipients must only be used according to agreed-upon terms and conditions, and it is incumbent on the U.S. government to monitor the end use of the equipment it provides. For instance, the Ronald Reagan administration banned transfers of cluster munitions to Israel for several years in the 1980s after it determined that Israel had used them on civilian targets during its invasion of Lebanon.

Israel has agreed to use U.S. weapons only in self-defense. Outside of this, Biden administration officials said in mid-October 2023 that they had not placed further limitations or constraints on how Israel uses U.S. weapons, although they said that Israel should observe international law. In February 2024, four months into the Israel-Hamas war, Biden issued a national security memo requiring recipients of U.S. military aid to give written assurances that they would observe international law in their use of the aid, and that they would facilitate the delivery of U.S. humanitarian assistance in the area of armed conflict where the U.S. military aid is being used. In February 2025, the Trump administration rescinded the memo.

What is Israel’s qualitative military edge (QME)?

QME has been a conceptual backbone of U.S. military aid to Israel for decades, and it was formally enshrined in U.S. law in 2008 [PDF]. It requires the U.S. government to maintain Israel’s ability “to defeat any credible conventional military threat from any individual state or possible coalition of states or from non-state actors, while sustaining minimal damage and casualties.” QME is based on NATO military planning vis-a-vis a potential conflict with the Soviet Union and Warsaw Pact countries during the Cold War.

Under the 2008 law, the United States must ensure that any weapons it provides to other countries in the Middle East do not compromise Israel’s QME. In several cases, this has required the United States to provide Israel with offsetting weaponry as part of larger regional arms sales. QME has also ensured that Israel is the first in the region to receive access to the most sophisticated U.S. military weapons and platforms, such as the F-35 stealth fighter, of which Israel has fifty.​

Has U.S. support for Israel changed in response to the death toll and humanitarian crisis in Gaza?

Israel received widespread support from the West immediately following Hamas’s October 7 attack, but pro-Israel sentiment in the United States and many other countries has weakened as the humanitarian situation in Gaza has deteriorated. International alarm over the conditions in the enclave grew after a UN-backed monitor declaring famine in August 2025.

Many humanitarian groups have voiced concerns about Israel’s heavy air and ground assaults on Gaza, as well as its obstruction of aid to the densely populated enclave. Israel claims the high death toll is a result of Hamas using people as “human shields.” In December 2023, South Africa filed a case at the International Court of Justice accusing Israel of genocide, a claim Israel and the United States both denounced as unfounded. In May 2024, the prosecutor for the International Criminal Court (ICC) charged both Hamas and Israeli leaders with multiple war crimes and crimes against humanity. Israel and the United States rejected the charges against Israeli leaders.

Recent Economist/YouGov polls find declining support among Americans for military aid to Israel over the past year, with a plurality now favoring a decrease in aid. A 2024 Pew Research Center poll also found Americans voiced greater support for the Israeli people than for the Israeli government. Polls have consistently found that support for Israel varies by age, skewing highest among older Americans.

How Have the Biden and Trump Administrations Supported Israel?

Both the Biden and Trump administrations have provided Israel with critical military support, including aid and weapons sales. 

While Biden was an ardent supporter of Israel’s right to self-defense and provided significant military and diplomatic support, he was critical of Israeli Prime Minister Benjamin Netanyahu’s handling of the war and his government’s plans for postwar Gaza. Biden warned in December 2023 that Israel’s “indiscriminate bombing” of Gaza risked costing Israel its international support. In early 2024, the Biden administration paused a shipment of large bombs to Israel, effectively acknowledging that Israel was using American-made weapons in a manner that caused civilian deaths in Gaza and risked violating the laws of war.

The Biden administration expanded the already large U.S. military presence in the Middle East to protect U.S. installations and ships, as well as to help defend Israel. U.S. forces helped Israel neutralize two separate Iranian missile and drone attacks, in April and October 2024. U.S. forces have also been protecting merchant shipping in the Red Sea and Gulf of Aden against regular Houthi attacks. 

Trump criticized Biden for not being sufficiently supportive of Israel, and in early 2025 his administration rescinded the Biden administration’s conditions on aid, saying it had “imposed baseless and politicized conditions on military assistance to Israel at a time when our close ally was fighting a war of survival on multiple fronts against Iran and terror proxies.” 

Following the outbreak of war between Israel and Iran in June 2025, the Trump administration deployed U.S. bombers to target Iran’s nuclear sites, coordinating its military campaign with Israel. Trump has occasionally expressed disagreement with Netanyahu, stating that there is “real starvation” in Gaza after Netanyahu denied that Israel was causing hunger. 

Meanwhile, some lawmakers—primarily Democrats—have sought to condition U.S. military aid to Israel or to block sales altogether. 

Prior to the war, the U.S.-Israel relationship had experienced strains over the rhetoric and policies of Netanyahu’s government, including its plans to curb the Israeli Supreme Court’s powers and its approval of more Jewish settlements in the West Bank. The so-called two-state solution had been a long-running U.S. foreign policy goal, although the Trump administration has not pursued it. At the UN General Assembly session in 2025, some U.S. allies announced their recognition of a Palestinian state over the objections of Israel and the United States.

In recent years, some U.S. and Israeli analysts have said that U.S. aid to Israel should be reevaluated because Israel is now a wealthy country—the fourteenth richest per capita—with one of the most advanced militaries in the world. Unlike Cold War-era Israel in the 1970s, when large amounts of U.S. aid started to flow, modern Israel is more than capable of providing for its own security, and the U.S. aid unnecessarily distorts the bilateral relationship and the countries’ respective foreign policies, these observers say. CFR Senior Fellow Steven A. Cook wrote in May 2024 that U.S. military aid should be phased out over ten years and replaced with a series of bilateral agreements on security cooperation, a move he says would benefit both countries and help normalize their relations.

The late Martin S. Indyk, former U.S. ambassador to Israel and CFR Distinguished Fellow, also called for reductions in U.S. aid. “The U.S.-Israel relationship would be a lot healthier without this dependence. Time for Israel at seventy-five to stand on its own two feet,” he wrote on X in June 2023.

Some experts argue that U.S. aid actually weakens Israel’s defense industrial base while serving primarily as a guaranteed revenue stream for U.S. defense contractors.

On the other hand, supporters of continued aid say that it fosters ongoing, important collaboration between U.S. and Israeli defense industries and experts, and in the end helps the countries counter shared threats in the Middle East, particularly Iran. U.S. aid remains a “vital and cost-effective expenditure” that enhances U.S. national security, and it should not be reduced or conditioned, wrote more than three hundred Republican lawmakers in 2021. Ending U.S. military aid today “would send a message to all of Israel’s enemies that Israel’s greatest friend was stepping away, so they should double down on their plans for more, and more deadly, assaults on the Jewish state,” wrote CFR Senior Fellow Elliott Abrams in September 2023.

U.S. Aid to Israel in Four Charts | Council on Foreign Relations

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‎Impacts and Aspects of the Israeli Genocidal War on the Gaza Strip