Germany, Austria suspend bilateral aid to Palestinians after Hamas attack

Austria and Germany said on Monday they were suspending aid worth tens of millions of euro to Palestinians in response to Islamist group Hamas' deadly attack on Israel to ensure funds were not flowing into the wrong hands.

Both countries said they wanted to review their engagement with the Palestinian territories, and discuss that with Israel and international partners. Berlin said it wanted to ensure it was fostering peace in the region and send a sign of solidarity.

European Union foreign ministers will hold an emergency meeting on Tuesday to discuss the situation, including reviewing aspects of development aid, the EU's top diplomat said on Monday. Total EU assistance earmarked for the Palestinian people under the 2022 budget allocation was 296 million euros.

Europe is one of the main sources of development aid to the Palestinian people, meaning the decisions could have major repercussions should other countries follow suit.

The United Nations estimates that around 2.1 million people in the Palestinian territories need humanitarian assistance, among them 1 million children.

Austrian Foreign Minister Alexander Schallenberg said the country was suspending aid totalling around 19 million euros ($20 million) for a handful of projects.

Neutral Austria's ruling conservatives have adopted one of the most pro-Israel stances in the European Union in recent years. The Israeli flag has been hoisted above the chancellor's office and the Foreign Ministry after the shock Hamas assault launched from the Gaza Strip on Saturday.

"The extent of the terror is so horrific ... that we cannot go back to business as usual. We will therefore put all payments from Austrian development cooperation on ice for the time being," Schallenberg told ORF radio in comments confirmed by a spokeswoman, adding the estimate of funds and projects affected.

Schallenberg did not distinguish between Gaza, a Palestinian enclave ruled by Hamas, and the much larger West Bank run by the Western-backed Palestinian Authority led by President Mahmoud Abbas, whose Fatah movement is a rival to Hamas.

 Solidarity with Israel

In Germany, Development Minister Svenja Schulze of the Social Democrats said no payments were currently being made for bilateral aid projects as Berlin re-examined its engagement with the Palestinian territories.

"This is also an expression of our unbreakable solidarity with Israel," she told a news conference. "We are in contact with our partners there and reviewing everything again."

Germany's development ministry has earmarked 250 million euros in development funds for bilateral projects in the Palestinian territories for this and next year. It did not say how much of that it had already disbursed this year.

German politicians have over the past days emphasized their country's particular duty towards Israel and its security given the historic responsibility for the Holocaust. The Israeli flag was projected on Saturday night onto Berlin's landmark Brandenburg Gate.

A spokesperson for the Greens-run foreign ministry said it would continue to disburse the 73 million euros it had earmarked for Palestinians - which were separate to the development ministry funds, and most of which had already been spent.

The foreign ministry funds via international organizations and the United Nations meaning Germany is bound to disburse what it has pledged, a government source said.

Some politicians in Germany pushed back against the decision to suspend aid.

The foreign ministry's commissioner for humanitarian assistance Luise Amtsberg said government did not finance the Palestinian Authority but rather suffering people, giving them access to food and healthcare.

"We constantly verify, that our help really does get to the people who need it," she said.

Hamas, and not all Palestinians, were responsible for the attack, said Gregor Gysi, a prominent member of the far-left opposition Left party.

Asked if Italy would follow suit, the foreign ministry spokesperson said this was not under discussion.

A spokesperson for Prime Minister Rishi Sunak, asked whether Britain planned to follow Austria and Germany, said Britain had previously provided aid to Palestinian refugees via the United Nations and he was not aware of plans to change the approach.

($1 = 0.9491 euros)