Hamas Israel attack: European Union reverses earlier announcement it was suspending development aid to Palestinians

The European Union late on Monday reversed an earlier announcement by an EU commissioner that the bloc was “immediately” suspending development aid for Palestinian authorities and instead said it would urgently review such assistance in the wake of the attacks on Israel by Hamas to make sure no money was misused.

“There will be no suspension of payments” at the moment, a terse European Commission statement said on Monday, five hours after EU Commissioner Oliver Varhelyi had said all payments from the development programme for Palestinians would be “immediately suspended. All projects put under review. All new budget proposals … postponed until further notice”.

No immediate explanation for the reversal was given. A full European Commission statement always trumps a statement from an EU commissioner, but the reversal on a €691 million ($1.2 billion) programme capped an embarrassing day at the EU’s executive at a time of extreme geopolitical sensitivities.

Since Saturday, support of the 27-nation bloc for Israel had been steadfast, including that the country had now every right within international law to defend itself in the war with Hamas.

The surprise announcement by Varhelyi on development aid came just hours after EU officials stressed no EU money whatsoever was going to Hamas in the first place, and that contacts had been frozen for 16 years. The EU considers Hamas a terror group.

Palestinians transport a captured Israeli civilian (centre) from Kibbutz Kfar Azza into the Gaza Strip. Photo / AP

After hours of uncertainty over how deep the measures would reach and whether they would possibly also affect aid to those in immediate need, the European Commission said there was no suspension for now, but said it started “an urgent review of the EU’s assistance for Palestine”.

“The objective of this review is to ensure that no EU funding indirectly enables any terrorist organisation to carry out attacks against Israel,” the statement said. The EU says it already has strict rules in place to screen and vet beneficiaries and to make sure no such funds are made available to terrorists.

The statement said the European Commission would “equally review if, in light of the changed circumstances on the ground, its support [programmes] to the Palestinian population and to the Palestinian Authority need to be adjusted”.

EU foreign policy chief Josep Borrell also criticised Varhelyi, insisting “the suspension of the payments — punishing all the Palestinian people — would have damaged the EU interests in the region and would have only further emboldened terrorists”.

The EU says it’s the biggest donor to the Palestinian people and has been advocating for years for the two-state approach that has guided international diplomacy since the 1993 Oslo peace accords between Israel and the Palestine Liberation Organisation.

Some of its programmes, though, have been dogged by allegations that funds could be siphoned off for unintended use.

EU foreign ministers are slated to meet in Muscat, Oman, and by videoconference on Tuesday to discuss the situation and determine what actions should be taken.

“The foundations for peace, tolerance and coexistence must now be addressed. Incitement to hatred, violence and glorification of terror have poisoned the minds of too many,” Varhelyi wrote.

During an earlier briefing on Monday, the European Commission sought to draw a clear line between Hamas, which it considers a terrorist organisation, and the Palestinian people, who are in need of humanitarian aid. The commission said humanitarian aid wouldn’t be affected by the review.

According to the bloc, it has provided humanitarian aid to help meet Palestinians’ basic needs since 2000 through the European Commission’s humanitarian aid department (Echo) and the UN Office for the Co-ordination of Humanitarian Affairs (Ocha). Since 2000, Echo has provided €700m of humanitarian aid to Palestinians in the Gaza Strip and the West Bank.

The EU’s most populous member, Germany, and its neighbour Austria, said they were suspending development aid for the Palestinian areas for the moment.

The Development Ministry in Berlin said there was no direct German financing of the Palestinian Authority, but a total of €250m ($438 million) is pledged in German aid — half of that for bilateral projects via Germany’s overseas aid agency and development bank and the other half for the UN agency for the Palestinians, UNRWA.

Like the European Commission, Development Minister Svenja Schulze said Germany took great care that its aid for Palestinians “serves peace and not the terrorists”.

“But these attacks on Israel are a terrible watershed, so we will review our whole commitment to the Palestinian areas,” she added.

Schulze said Germany wanted above all to discuss with Israel “how we can best serve peace in the region and security for Israel with our development projects”. She noted Israel also has an interest in Palestinians being able to live in long-term stability, and said Germany will also co-ordinate with its international partners.

Germany isn’t suspending the humanitarian aid it provides separately via international non-governmental organisations and the UN, the Foreign Ministry said. Ministry spokesman Christian Wagner said much of the €72m pledged this year had been paid out, and payments will continue because they support “lifesaving work”.

Austrian Foreign Minister Alexander Schallenberg told Oe1 radio on Monday that all development aid payments would be “put on ice for now”. He put the funds affected at about €19m.

He said Austria wouldl review all projects with the Palestinian areas and consult with its international partners on further steps.