399
The war in Gaza, which began in 2023 and has continued despite repeated ceasefire announcements, has caused serious disruptions and structural challenges in the global economy and international trade. This conflict has not only become one of the longest military confrontations involving the Israeli regime, but has also evolved into a global economic crisis.
The flames of war have fractured global supply chains, fueled inflationary pressures, and slowed overall economic growth worldwide. The shockwaves of this crisis have extended far beyond the battlefield — reaching from Tel Aviv to London.
Studies by international economic institutions indicate that countries which avoided direct political or military involvement in the war suffered significantly less economic damage. Economies such as China, Italy, and Nigeria, by maintaining relative neutrality, managed to preserve economic stability and even achieved positive growth in certain indicators.
In contrast, countries that actively supported one side of the conflict — particularly the United Kingdom and Germany — experienced declining economic growth, reduced investment, and rising inflation. In effect, the war triggered a chain reaction across the global economy, with the severity of its impact closely tied to each country’s level of involvement. Rising energy costs, trade disruptions, and capital flight were notably more pronounced among states that played an active role.
The European Union remains the largest trading partner of the Israeli regime, accounting for approximately 32 percent of Israel’s total goods trade with the world. A significant portion of Israeli exports and imports flows through Europe. This level of economic interdependence means that any change in trade relations — such as tariffs, reduced preferential access, or political pressure — can have substantial economic consequences for both sides.
For Israel, reduced trade with the EU would mean declining export revenues and disruptions to key industrial supply chains. For Europe, shifts in the flow of goods, services, and capital could particularly affect sectors reliant on Israeli imports, including machinery, industrial equipment, and high-tech products.
As a result, the Gaza war has had multiple economic repercussions for Europe, including the following:
Initial surge in energy prices: Following Hamas’ attacks in 2023, Brent crude oil prices rose above $90 per barrel, while European natural gas prices recorded their largest spike in six months, before later falling back to around $75. These fluctuations were driven by fears of supply disruptions in the Middle East.
Trade disruption and the Suez Canal: The war disrupted trade routes through the Suez Canal — largely due to Yemeni attacks linked to the conflict — leading to higher energy prices and increased inflation across Europe.
Impact on gas and oil markets: Rising tensions in the Middle East affected Europe’s gas supplies from the region, driving up energy prices, slowing economic activity, and complicating inflation control efforts by central banks such as the European Central Bank.
Humanitarian aid costs: Since 2023, the European Union has allocated more than €550 million in humanitarian assistance to Gaza and delivered over 5,037 tons of aid via air bridges, adding to Europe’s economic burden.
Fuel price volatility and global markets: The war increased geopolitical risk, contributing to oil price volatility and broader challenges for the global economy — particularly Europe’s energy imports, including LNG from Qatar, which accounts for 38 to 45 percent of imports in countries such as Belgium, Italy, and Poland.
Post-ceasefire price decline: Following the 2025 ceasefire agreement in Gaza, diesel prices in Europe dropped by nearly 10 percent, highlighting the direct link between the war and Europe’s energy markets.
Ultimately, despite the economic challenges imposed by the Gaza war, European states failed to reach a unified position on the Israeli regime or to protect their own financial interests. Even when the European Commission proposed limiting Israel’s access to parts of the €95 billion Horizon Europe fund, the initiative failed to secure a qualified majority among EU member states.
Had the proposal been approved, Israel would have lost access to approximately €200 million in investments and financial support from the European Innovation Council. Nevertheless, as discussions of ceasefire and peace continue, European governments must exert greater effort to overcome the economic fallout of the Gaza war and confront the excessive demands and continued aggression of the Israeli regime.
Yet two years of war have clearly demonstrated that Europe is structurally incapable of reaching consensus on this issue — choosing instead to passively endure the consequences of a conflict it helped sustain.
Translated by Ashraf Hemmati from the original Persian article written by Hakimeh Zaeim Bashi
4. rabobank.com
5. brookings.edu
6. commission.europa.eu
7. egyptoil-gas.com
8. energyintel.com
Comment
Post a comment for this article