EU, Germany, and Austria seek to suspend funds to Palestinians

“As the biggest donor of the Palestinians, the European Commission is putting its full development portfolio under review, worth a total of EUR 691 [million],” European Union Enlargement Commissioner Olivér Várhelyi posted on X.

He was among a growing number in the international community who have recoiled in the face of reports that Hamas terrorists killed entire families in their homes and hundreds of young adults at an outdoor music festival in an assault that began at 6 a.m. on Saturday morning. 

He spoke as European Union foreign ministers were set to hold a special meeting in Brussels on Tuesday to discuss Hamas' war with Israel, which the IDF has called operation “Swords of Iron.”

Várhelyi posted that “all payments immediately suspended,” "All projects put under review” and “All new budget proposals, incl. for 2023 postponed until further notice.”

There will be a “Comprehensive assessment of the whole portfolio,” he said. However, a number of officials cautioned that the post could not be considered official because a number of bureaucratic steps had to take place, including securing permission for such a move from all 27 foreign ministers in the EU bloc.

Várhelyi posted that the “foundations for peace, tolerance and co-existence must now be addressed.” “Incitement to hatred, violence and glorification of terror have poisoned the minds of too many,” he added. 

Europe provides significant aid to Gaza

Europe is one of the main sources of development aid to the Palestinian people, meaning that such a decision 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.

Palestinians in the Gaza Strip are particularly dependent on financial assistance given that Israeli restrictions on two of the Israeli-controlled crossings into Gaza limit pedestrian traffic and the entry and exit of goods in an effort to cripple Hamas and to halt its ability to produce weapons.

Austrian Foreign Minister Alexander Schallenberg said, “The extent of the terror is so horrific ... that we cannot go back to business as usual,” Austrian Foreign Minister Alexander Schallenberg said. 

“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.

In suspending  19 million euros of assistance, 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.

Germany says all aid is being re-examined

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 from the development ministry funds, and most of which had already been spent.

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