Two weeks after the European Commission laid out a plan to impose first-of-their-kind penalties on Israel, the proposal remains stalled due to disagreements among the bloc's members.

Germany is among the holdouts asking for more time to review, European Union diplomats told DW. Without Berlin's backing, the plan is unlikely to advance.

"Humanitarian suffering in Gaza has reached unimaginable levels, with famine unfolding before our eyes," the EU's executive warned on Tuesday.

In a bid to pressure Israel to change course, it proposed barring Israeli startups from accessing part of a pot of EU research funding known as "Horizon Europe" in late July.

That marked a shift in the EU's approach: the first time the bloc had moved to back a year and a half of critical words with action.

EU says Israel is 'violating human rights'

"With its intervention in the Gaza Strip and the ensuing humanitarian catastrophe, including thousands of civilian deaths and rapidly rising numbers of spreading extreme malnutrition specifically of children, Israel is violating human rights and humanitarian law and thus is in breach of an essential principle of the EU-Israel cooperation," the European Commission wrote in its proposal on July 28.

Belgian Foreign Minister Maxime Prevot had floated August 13 as a possible date for adoption if consensus was reached, but EU sources told DW there was little shift in positions at a virtual meeting of EU ministers on Monday.

That means for now, there's no green light.

To kick in, the EU plan needs support from a so-called qualified majority of the bloc's 27 member states, a system under which more populous countries' views carry most weight.

Israel's Foreign Ministry has called Brussels' proposal to restrict funds "regrettable," and claimed any such punitive measures would only serve to "strengthen Hamas" — something the bloc refutes.

‘Smallest step' proves problematic

The stall in EU action has drawn outrage from campaigners and human rights watchdogs, which have long accused the bloc of failing to use potential leverage.

"The fact that the EU cannot even agree on the smallest step is a disgrace. The bar is on the floor, and yet the EU and some EU countries are still managing to trip over it," Oxfam's Bushra Khalidi told DW. 

The internal divisions keeping action on pause are nothing new.

Ever since the Hamas attacks on October 7, 2023, the bloc has been united in its condemnation of the militant group — classed as a terrorist organization by the EU — and in its call for the release of Israeli hostages.

But that's where the unity ends. Every word in every statement on Europe's ties with Israel has been fiercely debated ever since.

No deal

The schism among EU members now centers on whether and how to respond to an EU review which found Israeli actions in Gaza — from restricting aid entry to targeting journalists — likely amount to a breach of the deal that governs EU-Israel trade and ties.

In a leaked letter seen by DW, Israel blasted the EU investigation as a "moral and methodological failure" based on biased evidence, but the bloc sticks by its findings.

Now Spain, often seen as a fierce critic of the Israeli government, is calling for the entire EU-Israel pact to be suspended.

Other EU members including the Netherlands and Sweden — traditionally seen as less critical of Israel — want to freeze the trade element of the deal. The move would make it more difficult and expensive for Israeli firms to export to the EU, Israel's top trading partner.

Germany, on the other hand, views itself as having a historic responsibility toward Israeli security, due to its Nazi past and its systemic murder of 6 million Jews during the Holocaust.

Though Berlin is holding out on the first EU-level measures, Chancellor Friedrich Merz announced last week that Germany would halt exports of arms "that can be used in the Gaza Strip"by Israeli forces, signalling a shift in tone.

Aid agreement falls short

The EU has said its priority is get aid flowing into Gaza in the face of a deepening humanitarian crisis — and after threatening sanctions, the bloc announced what appeared to be a breakthrough last month.

"Significant steps have been agreed by Israel to improve the humanitarian situation in the Gaza Strip," EU top diplomat Kaja Kallas said in a July 10 statement on the so-called "common understanding" — which Germany also helped broker.

But weeks on, many EU capitals say this falls far short. With proposals for action caught in institutional deadlock, EU officials continue their words of condemnation.

"I call for the immediate release of all Israeli hostages by Hamas & Islamic Jihad," EU crisis management chief Hadja Lahbib said on August 3, adding that she also calls "on Israel to end its starvation of Gaza and to allow for an effective delivery of humanitarian aid at scale."

Edited by: Carla Bleiker