During the summer of 2026, the E.U. found itself at one point trying to make the unnecessarily arduous and utterly artificial distinction between trade and foreign policy as if they were mutually exclusive. This task was foisted on the Council of Ministers due to the domain-specific application of the state veto, which is to say, the requirement of unanimity. The sheer artificiality was outdone only by the absurdity of any of 27 states still being able to veto proposed federal law and policy in some but not all policy domains, and thus hamstring the E.U. even when the good of the whole, supported by the vast majority of states and E.U. citizens, supported action on the federal level. The global context at the time with respect to international relations belied a stark separation of trade from foreign policy.
In declaring a recommencement of a naval blockade on Iranian ports on July 13, 2026, for example, U.S. President Trump also said the U.S. would “be reimbursed, at the rate of 20% on all cargo shipped for any and all costs necessary to do the job of providing safety and security” to ships passing through the Hormuz Strait.[1] As a countering move of rhetoric, “Iran’s military command insisted it would not allow the US to ‘interfere’ in the key conduit for oil and gas, while also warning its Gulf neighbours—who have borne the brunt of Tehran’s attacks—against cooperating” with the U.S.[2] Clearly, trade itself, and especially protecting its conduit, can be seen as being closely intertwined with foreign policy in this case. The rising price of oil was clearly on Trump’s mind, especially with the “midterm” elections less than four months away, but also standing up to the Iranian military attacks on ships in the strait was also a probable motive, rather than merely to make “toll” money on shipping in the Middle East. In other words, political economy, rather than just business and economics, best describes the interlacing of trade and foreign policy.
In fact, historically, the field known today as economics spun out of political economy. Even in Adam Smith’s Wealth of Nations, a non-mercantilist, regulative role of government in protecting competitive markets and even the role of the state in covering the “social” costs of capitalism, such as in providing housing and food to the unemployed, for example, are salient. Left to its own devises, a competitive market could concentrate into an oligopoly or even a monopoly as the refining industry did in the last quarter of the nineteenth century in North America, where oil was first discovered.
Therefore, it can be regarded as a legal fiction of sorts that the E.U. would treat a legislative proposal to ban trade with Israeli settlements, such as covered most of the land in the West Bank by 2026, illegally according both to international and E.U. law, as a matter of trade rather than foreign policy so only qualified majority voting rather than the unanimous consent that is necessary on foreign-policy proposals would be needed to pass the Council of Ministers. Referring to that council, the E.U.’s federal foreign minister Kallas reported, “The option that got the most support was banning the trade with the illegal settlements.”[3] She was referring to the E.U.’s states, which are represented both in the European Council and the Council of Ministers, similar to U.S. states being represented in the U.S. Senate. In American parlance, the consensus among “senators” was to ban all trade with Israeli settlements in the occupied territories, which by 2026 was down to the West Bank as Israel had razed Gaza to the ground in a holocaustic genocide. That the consensus was not instead to ban all trade with Israel as well as its illegal settlements, given the state-sponsored destruction of Gaza, is another question, which presumably would also qualify to be decided in the Council by qualified majority vote rather than unanimity, for trade even as foreign policy is still trade.
That the E.U. still made such a distinction as to the voting threshold in 2026 even as the Union was considering adding more states to the east even though foreign policy and trade had become so integrally related in international relations generally can be said to be artificial, and thus irrationally political rather than having merit in the functioning of the E.U.’s federal system. In fact, even at 27 states, the requirement of reaching unanimity on legislation and policy in the European Council and the Council of Ministers (aka Council of the E.U.) had already made it very difficult to pass even widely favored proposals due to Viktor Orbán’s “Euroskeptic” (i.e., anti-federalist) ideology. In other words, he was able to undercut the E.U. from within, and yet even months after his fall from power in the E.U. state of Hungary, the matter of subjecting the matter of deciding how to vote on whether to ban trade with illegal settlements was still arduous! Even though Kallas was the foreign minister of the E.U. (under the stealth misnomer of “High Representative” to satisfy anti-federalists), banning trade falls under trade primarily, and thus qualified-majority voting rather than unanimity. Perhaps a more robust, courageous, foreign-policy proposal worthy of human-rights and even just international-law proponents would have been to ban trade with Israel en toto, but even such a proposal would fall under trade and thus rightly be subject to qualified-majority voting. Moreover, with 27 states, and thus 27 political opinions of sitting governors, that the Councils still subjected any decision to unanimity especially after Viktor Orbán suggests that the need to distinguish trade from foreign policy anyway could and should have been obviated by common sense.
That on 13 July, 2026, “a majority of member states . . . backed framing the measures as a trade rather than a foreign policy tool, which would avoid the need of all E.U. [state] governments to unanimously back the move” should have been enough because, simply put, banning trade is about trade, which is subject to qualified-majority voting.[4] The “move” should not have been needed in the first place, were enough Europeans convinced that the very existence of the state-veto in the Councils is an antiquated notion based on the former days before the E.U. when the states were fully sovereign, rather than semi-sovereign in a political union, which also has some governmental sovereignty. In fact, qualified-majority voting itself is an instance of such sovereignty because states on the losing end of such a vote must obey the decision nonetheless.
Therefore, the very continuance of the state veto is predicated on denial. Put another way, the world was moving forward; why, then, were the E.U. state governments so utterly intractable, so beheld to their own power, even as the E.U. was poised to add even more states without first jettisoning the requirement of unanimity in the two councils that represent states? Perhaps the Parliament and the Commission should have been delegated more authority at the federal level until the states could get their act together in the two federal councils.
2. Ibid.
3. Mared G. Jones, “Full Ban on Israeli Settlement Trade Gets ‘Most Support’ from EU Countries, Kallas Says,” Euronews.com, 13 July, 2026.
4. Ibid.
