When conducting any type of relations between institutional structures it is crucial to understand the national model of capitalism. Such analysis facilitates negotiation with central political-economic actors, enabling a convergence of economic power to an actual political influence. In relation to the Middle East and particularly Israel, it is assumed that the EU's political influence is not matched by its economic strength. As central trade partner to Israel, it might be expected that the EU plays a prominent role in the political arena; still the prevailing viewpoint is that it does not. The EU has little real political influence, notwithstanding its economic strength and active involvement in national and regional processes. The dissonance between the EU's significant financial investment and its slight political influence is highlighted when contrasted against the international competitiveness, the US weakening position in the global arena, and the rise of new powers, such as China and India. The paper will try to provide a basis to examine how this common viewpoint can be challenged, arguing that it fails to take account of the EU tangible effects on the domestic political economy; this by considering the Israeli model of capitalism and the way the EU addresses it.
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