The European Union is suspending “all payments immediately” to the Palestinians, the EU Commission announced on Monday.
Commissioner Oliver Varhelyi said the bloc was making the move because of what he called the “scale of terror and brutality” of Hamas’s attacks against Israel.
The surprise announcement came just hours after EU officials stressed that 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.
After hours of uncertainty over how deep the measures would reach and whether they would possibly also affect aid to those in immediate need, EU humanitarian aid commissioner Janez Lenarcic said the most urgently needed aid to Palestinians “will continue as long as needed”.
“While I most strongly condemn the terrorist attack,” Mr Lenarcic said, “it is imperative to protect civilians.”
Mr Varhelyi said that “as the biggest donor of the Palestinians, the European Commission is putting its full development portfolio under review,” which he said amounted to 691 million euros (£597 million).
It was not immediately clear what funds were included and excluded.
Mr Varhelyi said the measures include that “all payments (be) immediately suspended. All projects put under review. All new budget proposals … postponed until further notice.”
EU foreign ministers are due to meet in Muscat, Oman on Tuesday to discuss the situation and see what actions should be taken. Mr Varhelyi’s announcement seemed to pre-empt the discussions.
“There can be no business as usual,” Mr Varhelyi said on X, formerly known as Twitter.
“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,” the commissioner wrote.
During an earlier briefing on Monday, the EU 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.
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 700 million euros (£604 million) of humanitarian aid to Palestinians in the Gaza Strip and the West Bank.
The Development Ministry in Berlin said there was no direct German financing of the Palestinian Authority, but a total of 250 million euros (£216 million) is currently 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 EU Commission, development minister Svenja Schulze said in a statement that 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.
Ms Schulze said Germany wants 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 that 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 is not suspending the humanitarian aid it provides separately via international NGOs and the UN, the Foreign Ministry said.
Ministry spokesperson Christian Wagner said Monday that much of the 72 million euros (£62 million) pledged this year has been paid out, and payments will continue because they support “life-saving work”.
Austrian Foreign Minister Alexander Schallenberg told Oe1 radio on Monday that all development aid payments will be “put on ice for now”. He put the funds affected at about 19 million euros (£16 million).
He said Austria will review all projects with the Palestinian areas and consult with its international partners on further steps.
The secretary-general of the Norwegian Refugee Council, an international aid organisation, has warned that the Israeli government’s vow to besiege and blockade the Gaza Strip would spell “utter disaster” for the more than two million Palestinians living in the small territory.
“There is no doubt that collective punishment is in violation of international law. It’s clear as that,” Jan Egeland told The Associated Press.
“If and when it would lead to wounded children dying in hospitals because of a lack of energy, electricity, and supplies, it could amount to war crimes.”
Mr Egeland also slammed donor countries for halting humanitarian assistance to Gaza after the attack.