Foreign Minister Tzipi Livni and EU foreign ministers ushered in a new era in Israeli-European relations this week at a meeting in Luxembourg. After a year of intensive negotiations, led on the Israeli side by Yossi Gal, Rafi Barak and Ran Curiel, the EU-Israel Association Council announced an upgrade in the relations between Israel and the EU. This entails increased diplomatic cooperation; Israel's participation in European agencies and environmental, educational, agricultural, banking and space programs; and an examination of possible Israeli integration into the European single market. The move encountered stiff resistance from the usual quarters. The Arab League tried to torpedo it. Palestinian Authority Prime Minister Salam Fayad sent a letter to the leaders of the EU countries urging them not to upgrade ties unless Israel halts settlement expansion and construction of the security barrier. Hamas rebuked the 27-nation bloc for its decision, which it said showed that Europe was "still in the clutches of the US." A coalition of humanitarian organizations, meanwhile, expressed their intense disappointment that the EU failed to make the upgrade contingent on ending Israel's "abuses" of Palestinian human rights. Adam Leach, regional manager for Oxfam International, said: "As Israel's pre-eminent trade partner, the EU must use the upcoming upgrade negotiations process to ensure Israel ends the ever-worsening Gaza blockade, lifts movement restrictions and halts settlement expansion... including East Jerusalem." The International Solidarity Movement said, "In light of Israel's systematic breach of European Union, international, and human rights obligations, agreements and laws, the EU's possible upgrade of its relationship with Israel can only be viewed as a reward to unlawful behavior." THE EU'S move - and the deepening ties it heralds - is a welcome one for several reasons. First, at an auspicious time, it braces and reinforces a growing friendship. Israel has started to enjoy stronger ties with France under Nicolas Sarkozy, Britain under Gordon Brown, Germany under Angela Merkel, and Italy under Silvio Berlusconi. And speaking in Berlin on Tuesday, Czech Republic Deputy Premier Alexander Vondra said that his country intends to use its term as president of the Council of the European Union to improve relations with Israel. The announcement is welcome, too, in light of the fact that the EU remains the financial backer of the PA and the United Nations Relief and Works Agency. The EU's engagement with the region, after all, has not always been judicious. It has a history of allocating millions of Euros to NGOs based in the PA and Israel, some of which pursue partisan activities that have a less than benign influence on the conflict. As documented in a report recently published by NGO Monitor, the Israel Committee Against House Demolitions, for instance, received in 2005 a two-year grant of 473,000 euros though one of its senior staffers is reported to have called for divestment from Israel. Adalah received 513,684 euros from the EU coffers that year, though it cannot bring itself to embrace the legitimacy of Israel as a Jewish state. On the bright side, the EU has not provided any financial support to Peace Now for several years. THE UPGRADE is also welcome for the economic fruits it promises to bring to an already robust partnership. In 1995 the EU and Israel signed the Euro-Mediterranean Association Agreement (it took force in 2000), which provides for reciprocal tariff-free exports in industrial goods, and reciprocal tariff concessions in agricultural goods (with the exception of products originating in "the Israeli settlements in the West-Bank, East Jerusalem and the Golan Heights"). In terms of total trade, which in 2006 amounted to more than 23.5 billion euros, the EU is Israel's major partner. The potential for further trade, beneficial to both sides, is only beginning to be tapped. But the upgrade of relations perhaps takes on its deepest significance in light of the EU's role as a Quartet member, and the increased leverage with which Israel can now encourage the Europeans to take a firm stand against Hamas and Iran, while coaxing Palestinian relative moderates to temper their demands so as to increase chances of a bargaining breakthrough. For all these reasons, the EU announcement, and the far-reaching effects it betokens, represent a step in the right direction.