Innovation Diplomacy vs. Economic Warfare

On September 8, twelve European and North American governments, eight of them EU members, announced they would introduce, support or consider further trade restrictions linked to Israeli settlements. Momentum is building for EU-wide action, which member states may take up at the European Council in October. Supporters describe the measures as narrowly aimed at settlement trade. Critics see the front edge of what many in Israel call economic warfare. Whichever view you take, the pressure is moving from statements to supply chains.

It is also reaching innovation. Israel’s participation in Horizon Europe, the EU’s flagship research program, has halved since 2021. The Israeli university heads’ association reports more than 1,100 boycott complaints between October 2025 and April 2026, including a 150% rise in efforts to exclude Israel from Horizon. The stakes are high. An Israel Innovation Authority report puts 2025 high-tech exports at roughly $85 billion, about 58% of all Israeli exports. Pressure on Israel’s innovation ecosystem is pressure on the core of its economy, and on the bridge connecting Israel to the world.

The familiar reflex

Israel’s early response is to offer affected firms compensation of up to 200,000 shekels and to help them find alternative markets in places like India, the UAE and Argentina. These are sensible stopgaps. But they are the economic version of the advocacy reflex I have criticized in my work on Education Diplomacy: reactive, defensive and transactional. Absorb the blow, route around it, make the case.

A different question

Innovation Diplomacy starts elsewhere. It asks not “how do we defend against pressure?” but “what makes severing a relationship costly for the other side?” There is evidence the answer is interdependence. Times of Israel reporting last December noted that European universities’ reliance on EU research funding has itself curbed boycott efforts. Where Israeli researchers and European institutions are embedded in shared work, cutting ties means cutting your own access too.

Innovation Diplomacy is the deliberate practice of building the relationships and shared infrastructure that let innovation travel reciprocally between parties, rather than being invented in one place and exported to another. It applies diplomacy’s tools of dialogue and reciprocity to innovation’s products: knowledge, methodology and solutions.

It has a method

Field research on the Israel Innovation Institute by Oliver and Rittblat describes three functions. First, create encounters among people already working in a field. Second, bring in institutional weight once trust exists. Third, reconfigure at a higher level into shared infrastructure. Communities that began as silos, such as mobility, agtech and climate, become a network.

The Global Jewish Innovation Network, powered by the Israel Innovation Institute, applies the same logic to the Jewish world. The fellowship is the encounter. Partnerships with established institutions like KKL-JNF supply the institutional weight. A Global Digital Platform is the reconfiguration, a shared marketplace rather than a set of bilateral relationships. (Full disclosure: I work on this at the Israel Innovation Institute.)

Why the Jewish world? Diaspora communities are citizens, employers, philanthropists and institution-builders in the very countries debating these measures. A reciprocal innovation network gives them something to do besides defend. They can co-develop, adapt and exchange solutions with Israeli counterparts and build real relationships with the universities, hospitals and companies around them.

The honest limits

Interdependence slows erosion. It does not prevent it, and Horizon participation halved despite deep ties. Innovation partnerships also won’t settle the political dispute over settlements that governments cite as their reason for acting. B’nai B’rith argues that measures presented as narrow could become the precedent for wider boycotts, while governments describe them as a response to settlement policy. That argument belongs to policy. Innovation Diplomacy is resilience infrastructure, and it has to be built before the pressure peaks, not after.

The choice is not between defending Israel’s innovation economy and building relationships. It is whether we build the relationships that make defense less necessary. That is a decision, and we can make it together.