Europe’s Middle East moment, If It chooses to seize It

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By any objective measure, the European Union should be a major player in the Middle East. It is the largest donor to the Palestinians, a top trade partner for Israel, and home to both deep historical ties and geopolitical proximity.

Yet, in moments of crisis — whether during the latest Israel-Iran confrontation or the ongoing collapse of Gaza — Europe often finds itself on the diplomatic sidelines, issuing carefully worded statements while the United States and regional powers take the lead.

That pattern need not continue. The Middle East is entering a volatile new phase. The risk of regional war, already high after U.S. strikes on Iranian nuclear infrastructure and Israeli retaliatory actions, is rising. At the same time, the Israeli-Palestinian conflict — long considered frozen — is beginning to thaw, not in the direction of peace, but of renewed confrontation and realignment. In such a moment, Europe has both the interest and the leverage to play a far more strategic role.

But first, it must overcome its own divisions — and confront uncomfortable truths.

 Diplomacy, Not Just Money

Europe’s presence in the Middle East has often been defined by financial assistance rather than political leadership. The EU has long been the largest donor to the Palestinian territories, contributing to the budgets of UNRWA and the Palestinian Authority. While this support is vital for humanitarian and developmental goals, it lacks the political force required to shape outcomes. To be taken seriously, Europe must step up diplomatically — not just financially.

The EU should reassert its role within the Middle East Quartet, which includes the United Nations, the United States, and Russia. Though the Quartet has been dormant – and is a de facto trio by now, it remains a platform for high-level engagement. More importantly, the EU should empower a dedicated Special Envoy for the Middle East Peace Process, with a robust mandate to mediate between Israeli and Palestinian leaders and liaise with regional actors like Egypt and Jordan. This would restore the EU’s voice in a domain where it often defaults to deference.

 The Leverage Europe Forgets It Has

The European Union has more leverage than it often acknowledges. Israel’s economy is closely tied to Europe’s: the EU is its largest trading partner and a vital partner in research, innovation, and energy cooperation. The EU’s Association Agreement with Israel — granting preferential trade terms — could serve as a lever to influence Israeli policy, especially on settlement expansion, human rights, and military operations.

Similarly, the EU’s role as a financial supporter of Palestinian institutions gives it influence, provided this aid is tied to reforms in governance, accountability, and non-violence. Europe should adopt a conditionality approach — not to punish, but to align aid and cooperation with international norms. In both cases, the message must be clear: engagement and funding are contingent on concrete commitments to peace, not just process and a “buying time” opportunistic approach.

 Iran, the Nuclear Question, and the E3’s Burden

The Iran nuclear issue remains one of the most pressing security threats in the region, and Europe is uniquely positioned to address it. The so-called E3 — France, Germany, and the UK — were key architects of the Joint Comprehensive Plan of Action (JCPOA), which curtailed Iran’s nuclear program in exchange for sanctions relief. Though the agreement is now under severe strain, the E3 retain diplomatic credibility with Tehran that Washington does not.

Europe should double down on its diplomatic channels with Iran to prevent further escalation. At the same time, it must engage Israel and Gulf states in parallel conversations to reassure them that diplomacy does not mean naivety. This dual-track approach — engagement with Iran, reassurance to Israel — is difficult but essential. Only Europe, given its standing with all parties, can realistically broker such a balance.

 Norms Matter — But Realpolitik Does Too

Europe prides itself on being a 'normative power,' grounded in international law and human rights. While these values should remain central, they must be paired with a clearer understanding of regional dynamics. Statements condemning violence or supporting two-state solutions are insufficient without practical follow-through.

The EU must identify its red lines — for example, unilateral annexation of Palestinian territory or indiscriminate military actions — and determine what consequences such actions would trigger. Equally, Europe should be prepared to reward progress with tangible incentives, such as deeper integration into European research or energy frameworks. Norms without enforcement become noise; realpolitik without values loses direction. Europe must walk both paths.

 A Moment to Lead

The current geopolitical environment offers the EU a narrow but critical window for leadership. The United States is distracted by domestic political turbulence and by a rather erratic presidential foreign policy. Russia is bogged down in Ukraine. China remains an outsider in Middle East diplomacy. This opens space for the EU to step up — but only if it speaks with a coherent voice and acts decisively.

This means reconciling internal divisions. While some member states, like Ireland and Spain, advocate for stronger recognition of Palestinian rights, others, such as Germany and Hungary, prioritize relations with Israel. The EU must accept these differences while forging consensus on core principles and policies. It must also demonstrate that Europe is not just a payer, but a player — one capable of shaping outcomes rather than reacting to them.

To do so, the EU must back its rhetoric with action, and its values with strategy. The alternative is further irrelevance in a region where its interests are deeply at stake.

Vlad Olteanu, Senior Counsel EU Law & Policy at Loyens & Loeff, and former political analyst specialising in EU policies, external relations, and multilateral diplomacy.

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EU Middle East USA